business model canvas (dr. htet zan linn)
DESCRIPTION
Understanding 9 Building Blocks of Business Model CanvasTRANSCRIPT
BUSINESS BUSINESS MODEL MODEL CANVASCANVAS
Idea to Business Workshop
BUSINESS IDEABUSINESS IDEA
Who does What
Whom What Outcome
BUSINESS MODELBUSINESS MODELHow Organization
creates
capturesdelivers
valuevalue
BUSINESS MODEL BUSINESS MODEL CANVASCANVAS
11
22
55
44
66
7788
33
99
CUSTOMER SEGMENTATIONSCUSTOMER SEGMENTATIONS
11
Different groups of people or organizations an enterprise
aims to reach and serve
CUSTOMER GROUPS …CUSTOMER GROUPS …
Mass market (e.g., consumer electronics)
Niche market (e.g., supplier-buyer relationship)
Segmented (e.g., watch industry)
Diversified (e.g., cloud computing)
Multi-sided (e.g., credit card)
11CUSTOMER SEGMENTATIONS
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASCS
mass marketmass market
VALUE PROPOSITIONSVALUE PROPOSITIONS
the bundle of products and services that can create value
for a specific customer segments
1122
22VALUE PROPOSITIONS
VALUES MAY BE …VALUES MAY BE … Quantitative (e.g., Price, Speed of Service)
Qualitative (e.g., Design, Customer Experience)
22VALUE PROPOSITIONS
VALUES SPECTRUMVALUES SPECTRUM
Newness
Performance
Customization
Getting the JOB Done
Design
Brand/ Status
Price
Cost Reduction
Accessibility
Convenience/ Usability
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASCS
mass marketmass marketseamless
music experience
seamless music
experience
CHANNELSCHANNELS
how a company communicates with and reach its customer
segments to deliver a value proposition
1122
33
Sales Force
Web Sales
Own Stores
Partner
Stores
Wholesaler
------------------------------------------------------------------Channel TypesChannel Types
---------------------------
------------------------------------------------
---------------------------
---------------------------
Ow
n Dir
ect
Part
ner
Ind
irect
Channel PhasesChannel Phases
How do we raise aware-
ness about our
company’s products and
services?
1. Awareness 1. Awareness
Sales Force
Web Sales
Own Stores
Partner
Stores
Wholesaler
------------------------------------------------------------------Channel TypesChannel Types
---------------------------
------------------------------------------------
---------------------------
---------------------------
Ow
n Dir
ect
Part
ner
Ind
irect
Channel PhasesChannel Phases
How do we help
customers evaluate our
organization’s Value
Proposition?
2. Evaluation 2. Evaluation
Sales Force
Web Sales
Own Stores
Partner
Stores
Wholesaler
------------------------------------------------------------------Channel TypesChannel Types
---------------------------
------------------------------------------------
---------------------------
---------------------------
Ow
n Dir
ect
Part
ner
Ind
irect
Channel PhasesChannel Phases
How do we allow custom-
ers to purchase specific
products and services?
3. Purchase3. Purchase
Sales Force
Web Sales
Own Stores
Partner
Stores
Wholesaler
------------------------------------------------------------------Channel TypesChannel Types
---------------------------
------------------------------------------------
---------------------------
---------------------------
Ow
n Dir
ect
Part
ner
Ind
irect
Channel PhasesChannel Phases
How do we deliver a
Value Proposition to
customers?
4. Delivery4. Delivery
Sales Force
Web Sales
Own Stores
Partner
Stores
Wholesaler
------------------------------------------------------------------Channel TypesChannel Types
---------------------------
------------------------------------------------
---------------------------
---------------------------
Ow
n Dir
ect
Part
ner
Ind
irect
Channel PhasesChannel Phases
How do we provide post-
purchase customer
support?
5. After sales 5. After sales
TRICKTRICK
To find the right balance between the
different types of channels to integrate
them in a way to create a great customer
experience, and to maximize revenue
Customer Segments, Value Proposition and
Channels
1122
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33CHANNELS
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASVP CR CS
CH
Apple comApple com
mass marketmass market
retail storesretail stores
Apple storesApple stores
seamless music
experience
seamless music
experience
Customer RelationshipsCustomer Relationships
44CUSTOMER RELATIONSHIPS
CR - CR - CUSTOMER CUSTOMER RELATIONSHIPSRELATIONSHIPS
Types of relationships a company establishes
with specific customer segments
Range from Personal to Automated
44CUSTOMER RELATIONSHIPS
TYPES OF CRTYPES OF CR Personal assistance Personal assistance (human interaction)
Dedicated personal assistance Dedicated personal assistance (customer representative)
Self-serviceSelf-service (no direct relationship with customer)
AutomatedAutomated (self-service with automated processes)
CommunitiesCommunities (connections between community members)
Co-creation Co-creation (beyond the traditional customer-vendor relationship to co-create values with customers)
Building Strong with Customer Segments, Value
Propositions and Channels
112233
44CUSTOMER RELATIONSHIPS
44
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASVP CR CS
CH
i Tunes storei Tunes store
Apple comApple com
mass marketmass market
lovemarklovemark
switchingcosts
switchingcosts
retail storesretail stores
Apple storesApple stores
seamless music
experience
seamless music
experience
REVENUE STREAMSREVENUE STREAMS
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55REVENUE STREAMS
REVENUE STREAMSREVENUE STREAMS
1. Transaction revenues resulting from one-time customer payments
2. Recurring revenues resulting from ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support
There are several ways to generate Revenue Streams:
Asset sale
Usage fee
Subscription fees
Lending/Renting/Leasing
Licensing
Brokerage fees
Advertising 5555
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASVP CR CS
CH
R$
Some music
revenuesSome music
revenues
largehardwarerevenues
largehardwarerevenues
i Tunes storei Tunes store
Apple comApple com
mass marketmass market
lovemarklovemark
switchingcosts
switchingcosts
retail storesretail stores
Apple storesApple stores
seamless music
experience
seamless music
experience
KEY RESOURCESKEY RESOURCES
The Key Resources Building Block describes the most
important assets required to make a business model work
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66
66KEY RESOURCES
Key Resources can be categorized as follows:
1
Physical
2
Intellectual
3
Human
4
Financial
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASVP CR CS
KR CH
R$
Some music
revenuesSome music
revenues
largehardwarerevenues
largehardwarerevenues
i Tunes storei Tunes store
Apple comApple com
mass marketmass market
lovemarklovemark
switchingcosts
switchingcosts
retail storesretail stores
Apple storesApple stores
i Tunes softwarei Tunes
software
i Pod hardware
i Pod hardware
Apple brandApple brandPeoplePeople
seamless music
experience
seamless music
experience
KEY ACTIVITIESKEY ACTIVITIES
The Key Activities Building Block describes the most important
things a company must do to make its business model work
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77KEY ACTIVITIES
Key Activities can be categorized as follows:
1
Production
2
Problem
Solving
3
Platform/
Network
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASKA VP CR CS
KR CH
R$
Some music
revenuesSome music
revenues
largehardwarerevenues
largehardwarerevenues
i Tunes storei Tunes store
Apple comApple com
mass marketmass market
lovemarklovemark
switchingcosts
switchingcosts
retail storesretail stores
Apple storesApple stores
i Tunes softwarei Tunes
software
i Pod hardware
i Pod hardware
Apple brandApple brandPeoplePeople
Content &
agreementsContent &
agreements
marketingmarketing
hardware design
hardware design
seamless music
experience
seamless music
experience
KEY PARTNERSHIPSKEY PARTNERSHIPS
The Key Partnerships Building Block describes the network of
suppliers and partners that make the business model work
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88
88KEY PARTNERSHIPS
We can distinguish between four different
types of partnerships:
1.Strategic alliances between non-
competitors
2.Coopetition: strategic partnerships
between competitors
3.Joint ventures to develop new businesses
4.Buyer-supplier relationships to assure
reliable supplies
88KEY PARTNERSHIPS
3 motivations for creating partnerships
1. Optimization and economy of
scale
2. Reduction of risk and
uncertainty
3. Acquisition of particular
resources and activities
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASKP KA VP CR CS
KR CH
R$
Some music
revenuesSome music
revenues
largehardwarerevenues
largehardwarerevenues
i Tunes storei Tunes store
Apple comApple com
mass marketmass market
lovemarklovemark
switchingcosts
switchingcosts
retail storesretail stores
Apple storesApple stores
OEMsOEMs
record companies
record companies
i Tunes softwarei Tunes
software
i Pod hardware
i Pod hardware
Apple brandApple brandPeoplePeople
Content &
agreementsContent &
agreements
marketingmarketing
hardware design
hardware design
seamless music
experience
seamless music
experience
COST STRUCTURECOST STRUCTURE
The Cost Structure describes all costs incurred to operate a
business model
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88COST STRUCTURE
Two broad classes of business model Cost
Structures:1. Cost-driven
2. Value-driven
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASKP
C$
KA VP CR CS
KR CH
R$
Some music
revenuesSome music
revenues
largehardwarerevenues
largehardwarerevenues
i Tunes storei Tunes store
Apple comApple com
mass marketmass market
lovemarklovemark
switchingcosts
switchingcosts
retail storesretail stores
Apple storesApple stores
peoplepeople manufacturing
manufacturing
OEMsOEMs
record companies
record companies
marketing &
salesmarketing &
sales
i Tunes softwarei Tunes
software
i Pod hardware
i Pod hardware
Apple brandApple brandPeoplePeople
Content &
agreementsContent &
agreements
marketingmarketing
hardware design
hardware design
seamless music
experience
seamless music
experience
The nine business model
Building Blocks form the basis
for a handy tool, which we call
the Business Model Canvas.
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVAS
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVAS
Key Partners
CostStructure
Key Activities
Key Resources
ValueProposition
CustomerRelationships Customer
Segments
Channels
RevenueStreams
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVASKP
C$
KA VP CR CS
KR CH
R$
Some music
revenuesSome music
revenues
largehardwarerevenues
largehardwarerevenues
i Tunes storei Tunes store
Apple comApple com
mass marketmass market
lovemarklovemark
switchingcosts
switchingcosts
retail storesretail stores
Apple storesApple stores
peoplepeople manufacturing
manufacturing
OEMsOEMs
record companies
record companies
marketing &
salesmarketing &
sales
i Tunes softwarei Tunes
software
i Pod hardware
i Pod hardware
Apple brandApple brandPeoplePeople
Content &
agreementsContent &
agreements
marketingmarketing
hardware design
hardware design
seamless music
experience
seamless music
experience
THE BUSINESS MODEL CANVASTHE BUSINESS MODEL CANVAS
left brain
logicright brain
emotion
left canvas
efficiencyRight canvas
value
Un-Un-BundlingBundlingBusinessBusinessModelsModels
John Hageland Marc Singer, who coined
the term “unbundled corporation,”believe that companies are composed of threevery different types of businesses with differenteconomic, competitive, and cultural imperatives:
Customer Relationship businesses, product innovationbusinesses, and infrastructure businesses. Similarly,
Treacy and Wiersema suggest that companiesshould focus on one of three value disciplines:
operational excellence, product leadership,or customer intimacy.
Hagel and Singerdescribe the role of Customer
Relationship businesses as fi nding andacquiring customers and building relationships
with them. Similarly, the role of product innovationbusinesses is to develop new and attractive products and
services, while the role of infrastructure businesses is to buildand manage platforms for high volume, repetitive tasks.
Hageland Singer argue that companies should separate thesebusinesses and focus on only one of the three internally.
Because each type of business is driven by diΩerentfactors, they can confl ict with each other or
produce undesirable trade-oΩs within thesame organization.
On thefollowing pages we
show how the idea of unbundlingapplies to business models. In the fi rstexample, we describe the confl icts and
undesirable trade-oΩs created by a “bundled”business model within the private bankingindustry. In the second example we show
how mobile telecom operators areunbundling and focusing on new
core businesses.
Early market entry enables chargingpremium prices and acquiring largemarket share; speed is key
High cost of customer acquisitionmakes it imperative to gain large walletshare; economies of scope are key
High fixed costs make large volumesessential to achieve low unit costs;economies of scale are key
Battle for talent; low barriers to entry;many small players thrive
Battle for scope; rapid consolidation;a few big players dominate
Battle for scale; rapid consolidation;a few big players dominate
Employee centered; coddling thecreative stars
Highly service oriented; customercomes-first mentality
Cost focused; stresses standardization,predictability, and efficiency
The Private Banking ModelThe Private Banking Model
Other Product
Providers
AdviseProduct R & D
Marketing
PlatformManagement
Brand/ Trust
Product IP
Transaction
Platform
Platform Management
HR: R & D
HR: Private Bankers
Custom-TailoredWealth
ManagementServices
FinancialProducts
TransactionManagement
Management & Advisory Fees
Product & Performance Fees
Transaction Fees
PersonalNetworks
Sales Force
TransactionPlatform
IntimatePersonal
Relationship
Key AccountManagement
WealthyIndividuals& Families
Private Banks
Private Banks
IndependentFinancialAdvisors
Relationship BusinessRelationship Business Product Innovation BusinessProduct Innovation Business Infrastructure BusinessInfrastructure Business
Unbundling the Mobile Telco
The Long TailThe Long Tail
The Transformation of theThe Transformation of theBook Publishing IndustryBook Publishing Industry
Old Model
A New Model
LEGO®’s New Long Tail
Multi-SidedPlatforms
Google’s Business Model
Wii versus PSP/XboxSame Pattern, Different Focus
PSP/Xbox Focus
Wii versus PSP/XboxSame Pattern, Different Focus
Wii Focus
Apple’s Evolution intoa Platform Operator
FREE as aBusinessModel
(How) can you set it free?
Advertising: A Multi-SidedPlatform Model
Metro
Free Advertising:Pattern ofMulti-SidedPlatforms
Freemium: Get the Basicsfor Free, Pay for More
Flickr
Open Source:Freemium with a Twist
Red Hat
Skype
Skype versus Telco5+ years old400 million+ users100 billion+ freecalls generated2008 revenues ofU.S. $550 million
The Insurance Model:Freemium Upside Down
REGA
“Every industry that becomesdigital eventually becomes free.”
—— Chris AndersonEditor-in-Chief, Wired Magazine
“The demand you get at a price of zero is many times higherthan the demand you get at a very low price.”
—— Kartik HosanagarAssistant Professor, Wharton
“We can no longer stand by and watch others walk off withour work under misguided legal theories.”
—— Dean SingletonChairman, Associated Press
“Google’s not a real company. It’s a house of cards.”—— Steve Ballmer
CEO, Microsoft
Bait & Hook
Bait & Hook of Free Mobile Phones
Razor & Blades : Gillette
OpenBusinessModels
Procter & Gamble:Connect & Develop
Outside-In
GlaxoSmithKline’sPatent Pools
The Connector:Innocentive
“Open Innovation is fundamentallyabout operating in a worldof abundant knowledge, wherenot all the smart people workfor you, so you better go findthem, connect to them, andbuild upon what they can do.”—— Henry ChesbroughExecutive Director, Center for Open InnovationHaas School of Business, UC Berkeley
“Nestle clearly recognizesthat to achieve its growthobjective it must extendits internal capabilitiesto establish a large numberof strategic partneringrelationships. It has embracedopen innovation and worksaggressively with strategicpartners to co-createsignificant new market andproduct opportunities.”—— Helmut TraitlerHead of Innovation Partnerships, Nestle
“Long known for a preferenceto do everything in-house, webegan to seek out innovationfrom any and all sources,inside, outside the company.”—— A.G. Lafl eyChairman & CEO, P&G
PatternsOverview Unbundling Business Models The Long Tail
Multi-Sided Platforms FREE as a Business Model Open Business Models
Customer Insights
Building Business Models on Customer Insights
Visual ThinkingThe Value ofVisual Thinking
Different
Types of
Visualization
for Different
needs
Telling a Visual Story