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Business Model
Development 101101
Business Model Development 101
Donald Ardiel B Arch MDE OAA MRAIC PMPDonald Ardiel, B.Arch, MDE, OAA, MRAIC, PMP
Business Model
Development 101
Develop a Business Model Involving a 101
Nanny Goat• What does a nanny goat do?What does a nanny goat do?
3 2 1 045
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Development 101101
“d ”“disruptive”
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Dear Sir or Madam,
We are a 3d service studio in China which canWe are a 3d service studio in China, which can supply 3d interior/exterior rendering, 3d walkthrough/flythrough animation, 360 degree panaroma, products design and other visualization.
Please contact us if you need.
Best Regards,est ega ds,
Dick YuanThree Circles Design StudioAdd : Rm 1222 Diamond Mansion LiuquanluAdd.: Rm. 1222, Diamond Mansion, LiuquanluRoad, Zibo City, Shandong Province, the P.R.ChinaE-mail: [email protected]
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Development 101101
Business Model
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What’s different now? Just about everything. Let’s start with clients, who for y gfar too long had to contend with an A/E/C industry that was suffering from steadily declining productivity, where 30 percent of all projects did not meet schedule or budget and 37 percent of all construction materials wound up as waste To put it bluntly this was not a sustainable business model Clients are
• 30 percent of all projects did not meet schedule or budget • 37 percent of all construction materials wound up as waste.• Traditional approaches are no longer a sustainable businesswaste. To put it bluntly, this was not a sustainable business model. Clients are now increasingly turning to professional project management firms which understandably expect a different level of performance. Creative thinking is still highly valued, but gone are the days where budget or schedule overruns
• Traditional approaches are no longer a sustainable business model.
• Clients are now increasingly turning to professional project management firmscan be tolerated. Also fast disappearing is any appetite for silo thinking or non‐
collaborative behavior among the project team members, including architects, engineers, consultants and constructors. Instead, there seems to be a refreshing new appreciation of the fact that design and construction is a team
management firms• Disappearing is any appetite for silo thinking or non‐collaborative behavior among the project team members
refreshing new appreciation of the fact that design and construction is a team sport.Retrieved from http://www.di.net/articles/post‐recession‐strategies‐life‐cycle‐design‐dba/
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Development 101101
What’s different now? Just about everything Let’s start with clients who for• Business is rebounding but fees are not risingWhat s different now? Just about everything. Let s start with clients, who for far too long had to contend with an A/E/C industry that was suffering from steadily declining productivity, where 30 percent of all projects did not meet schedule or budget and 37 percent of all construction materials wound up as
bl l h bl b d l l
• Business is rebounding, but fees are not rising. • Clients are expecting better service, more detailed documentation, faster schedules, and better cost control. C t f t l t d t h l i iwaste. To put it bluntly, this was not a sustainable business model. Clients are
now increasingly turning to professional project management firms which understandably expect a different level of performance. Creative thinking is still highly valued, but gone are the days where budget or schedule overruns
• Costs for talent and technology are rising … squeeze on profits
• Doing so requires shedding some old habits.P j
g y , g y gcan be tolerated. Also fast disappearing is any appetite for silo thinking or non‐collaborative behavior among the project team members, including architects, engineers, consultants and constructors. Instead, there seems to be a f hi i ti f th f t th t d i d t ti i t
• Projects• Processes• Peoplerefreshing new appreciation of the fact that design and construction is a team sport.Retrieved from http://www.di.net/articles/post‐recession‐strategies‐life‐cycle‐design‐dba/
• Performance
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Development 101101
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Development 101Making Sense 101Making Sense
Sense Making:The Cynefin FrameworkThe Cynefin Framework
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Development 101Complex 101p
DisorderComplicated
Chaos
SimpleSimple
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Development 101Complex
• The domain of best practice• Solutions to problems are known 101p• Solutions to problems are known. • Cause and effect relationships are established• Leaders sense, categorize and respond, g p
• Sense the facts of the situation• Categorize the facts• Respond based on established practice• Respond based on established practice
• Answers are self‐evident• Realm of Known‐knowns
Chaos
SimpleSimple
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Development 101Complex
• Domain of the Experts• Whether desire to invest 101p• Whether desire to invest
resources to determine the solution
• Multiple correct answers• at least one correct answer
Complicatedexists• Not everyone can see the cause
and effect relationshipChaoand effect relationship. • Leader – sense, analyze, respond
• Sense the facts of the situation• Analyze the facts – realm of the
expert• Respond• Respond
• Knowable
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Development 101Complex 101p
• Domain of the Emergent• Domain of the Emergent• Understanding is only achieved in retrospect.• Search for emerging patternsg g p• New business models can be developed• Leader – probe, sense, respond
(• Probe to explore the problem (experiments, design explorations)
• Sense the facts and patterns as they emergep y g• Respond to the emergent patterns
• Realm of unknown‐unknowns
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Development 101
• Domain of rapid response• Search for right answers is a 101Search for right answers is a
waste of time – action required immediate to establish order
• Cause and effect l ti hi i ibl trelationships impossible to
discern• Leader – act sense respondChaos Leader act, sense respond
• Act to establish order• Sense where there is
bili d h b fstability and the absence of stability
• pond to transform situation pfrom chaotic to complex
• Unknowables
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Development 101Complex 101p
UnorderUnorderComplicated
ChaosOrder
SimpleSimple
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Development 101Complex 101p
ComplicatedProblemProblemProblemProblem
Chaos
SimpleSimple
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Development 101Complex 101p
ComplicatedDisorder
Chaos
SimpleSimple
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Development 101101
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Development 101101
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Development 101101
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Development 101
• Situations may be oversimplified to fit 101oversimplified to fit rules and procedures of theprocedures of the organizations
• Context can shift from simple to chaotic with
i hi idiChaos astonishing rapidity
SimpleSimple
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Development 101101
• Risk of entrained thinkingC ti l• Conventional schools (business schools) train to
Complicatedschools) train to believe that problems can be solved through analysis and decision
kmaking
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Development 101Complex 101p
• High number of interactive elements• Nonlinear interactions ‐minor changes g
produce disproportionate consequences• Dynamic system – whole is greater than the
sum of the parts• Hindsight does not lead to foresight• The realm of designers and design schools• The realm of designers and design schools
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Development 101101
• Realm of the Dictator• Creation of chaos in
order to impose a new order without
i tresistance• People will sacrifice
rights freedomsChaos rights, freedoms, tolerance, and civil behaviour to create and sustain order
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Development 101101
• Innovation Rules• Understand the Leverage Human
• Integrate Big Ideas• Blur the Boundaries
Capital• Define Boundaries of Effectiveness and Efficiency
• Relentlessly Gain Alignment with All
• Enable Innovation• Platform Design• Design for Change• Speed at Every Juncture
http://www.di.net/articles/business‐can‐use‐designer‐discipline‐for‐more‐than‐buildings‐alone/
Relentlessly Gain Alignment with All Stakeholders
Speed at Every Juncture
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Development 101Complex 101p
“Leaders who don’t recognize that a complex domain requires a more experimental mode of management may become impatient when they don’t seem to achieve the results they were i i f Th l fi d it diffi lt taiming for. They may also find it difficult to
tolerate failure … an essential part of experimentationexperimentation …
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Development 101Complex 101p
… Leaders who try to impose order in a complex context will fail … those who step back a bit, allow patterns to emerge, and determine which ones are desirable will succeed. .. They will discern
t iti f i ti ti itmany opportunities for innovation, creativity and new business models.”
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Development 101What is a Business Model? 101What is a Business Model?
“The rationale of ho“The rationale of how an organizationan organization
creates, delivers, and captures value.”
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Development 101101
“Business people don’t just need to understand designers better; they need to
be designers.”Roger Martin, Dean,
Rotman School of Management
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Development 101The Business Model Canvas 101The Business Model Canvas
Key
Key Activities
Value
ClientRelationships
ClientKey Partnerships
Value Proposition
Client Segment
Key Resources ChannelsKey Resources Channels
Cost Structure Revenue Streams
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Development 101101
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Development 101101
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Changing business models for h l
101
Architectural Practices• P3, Design/Build/Finance/MaintainP3, Design/Build/Finance/Maintain• Off shore production• Joint Ventures• Joint Ventures• Boutique design partnering with production firmsproduction firms
• BIM integrated designI t t d D i• Integrated Design process– Many, many more participants in the design processprocess
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Development 101101
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Development 101101
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Development 101Efficiency vs. Value 101Efficiency vs. Value
Left RightCanvas Canvas
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Development 101The 9 Building Blocks 101The 9 Building Blocks
Key Value Client
Client Relationship
Key Activities
Key Partnerships
Value Proposition
Client Segments
ChannelsKey Resources
Cost Structures Revenue StreamsCost Structures Revenue Streams
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Development 101Read the Case Study 101Read the Case Study
• “Do I have to train everyone myself?”Do I have to train everyone myself?• “We are first and foremost problem‐solvers ”solvers.
• Take notes on the key issues.• Discuss the problems and the popportunities with your team.
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Development 101Client Segments 101Client Segments
• How do you differentiate the types ofHow do you differentiate the types of clients that we serve?– Does the client segment require and justify a– Does the client segment require and justify a unique approach and a distinct offer?
– Is the client segments reached throughIs the client segments reached through different channels?
– Is a different type of relationship required?Is a different type of relationship required?– Are they willing to pay for different aspects of the offer?
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Development 101Value Proposition 101Value Proposition
• What value are we delivering to theWhat value are we delivering to the client?
• Have we identified and differentiatedHave we identified and differentiated each aspect of value of the service?
• Which of the client’s problems are weWhich of the client s problems are we trying to solve?
• Can/should we bundle/unbundle servicesCan/should we bundle/unbundle services to the client?
• Are we satisfying the client’s needs?Are we satisfying the client s needs?
Business Model
Development 101• Take 10 minutes and brainstorm the 101
client segments that can/could be served and the value propositions that will solves the clients’ problems
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Development 101Channels 101Channels
• The means through which we reach our clients and deliver our services.
• 5 Channel Phases:1. Awareness
How do we raise awareness of our services?2. Evaluation
How do we support the client’s evaluation of our services?3. Purchase
How do clients purchase our services?4. Delivery
How do we deliver the value proposition?5. Client Support
How do we support the client after the initial commission?
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Development 101Client Relationships 101Client Relationships
• What type of relationship does eachWhat type of relationship does each client segment require to satisfy their expectations and needs?expectations and needs?
• Which types of client relationships have we already established?we already established?
• How costly is it to maintain the client l i hi ( )?relationship(s)?
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Development 101Revenue Streams 101Revenue Streams
• What value is the client prepared to payWhat value is the client prepared to pay for?
• For what do they currently pay how are• For what do they currently pay, how are they paying, and how do they prefer to pay?pay?
• How much does this client segment ib h ll ?contribute to the overall revenue stream?
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Development 101• Take 10 minutes. 101
• Identify the channels through which customer relations will be built andcustomer relations will be built and services will be delivered.
• Identify how client relationship will be• Identify how client relationship will be built.H t b t d?• How can revenue streams be generated? Can more than one revenue stream be
t d?generated?
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Development 101Key Resources 101Key Resources
• What key resources are required to:What key resources are required to:– attract clients?manage our channels?– manage our channels?
– create the value proposition?d li th t l t li t ?– deliver that value to clients?
– maintain revenue streams?
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Development 101Key Activities 101Key Activities
• How do we create value for the client?How do we create value for the client?• How do we sustain the value proposition?proposition?
• How do we sustain client relationships?• How do we sustain revenue streams?• How do we build partnerships?p p
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Development 101Key Partnerships 101Key Partnerships
• Who are our key partners?Who are our key partners?• Which key activities can be performed by partners?partners?
• Which key resources can be obtaining f ?from partners?
•
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Development 101Cost Structures 101Cost Structures
• What are the most important costsWhat are the most important costs inherent in our business model?
• Which key resources are the most• Which key resources are the most expensive?Whi h k i i i h• Which key activities are the most expensive?
• Is our business model cost driven or value driven?
Business Model
Development 101• Take 10 minutes. 101
• What are the key resources?• What are the key activities?• What are the key activities?• With whom do you need to develop key
t hi ?partnerships?• Develop your approach to the cost structures.
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Development 101Patterns in Business Models 101Patterns in Business Models
“Pattern in architecture is the idea of capturing architectural design ideas as archetypes and reusable descriptions.”
Christopher Alexander, Architect
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Development 101Patterns in Business Models 101Patterns in Business Models
• UnbundlingAnalyzing services to identify undesirable trade offs– Analyzing services to identify undesirable trade‐offs
• Innovations, client relations, infrastructure management
• The Long TailP idi l f f i l b f i h– Providing less of more; focussing on a large number of niche markets
• Multi‐sided PlatformsB i i h 2 di i f li h l h– Bringing together 2 distinct groups of clients who rely on each other for value
• Free as a Business Model– Provide an initial free service to generate client relationships
• Open Business Model– Sharing intellectual property or key resources/activites to
generate value and revenue streams
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Development 101The Business Model Canvas 101The Business Model Canvas
Key
Key Activities
Value
ClientRelationships
ClientKey Partnerships
Value Proposition
Client Segment
Key Resources ChannelsKey Resources Channels
Cost Structure Revenue Streams
Business Model
Development 101101
“Some say that the profession is being hollowed out.” (paraphrased)
Bill Birdsell, President, OAA
Other interests in the design/construction sector are demanding and imposing newsector are demanding and imposing new business models on the profession. We can be reactive or proactiveWe can be reactive or proactive.
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Development 101Resources 101Resources
• http://www.businessmodelgenerator.comhttp://www.businessmodelgenerator.com• http://www.youtube.com/watch?v=QoAOzMTLP5s
• http://www.entrepreneur.com/formnet/businessplantemplates.htmlp p
• http://www.mindtools.com/index.html• http://aacu‐p //secure.nisgroup.com/meetings/ild/documents/Symonette.MakeAssessmentWork.ALeadersFramework.pdf