Guide for Entrepreneurs on Business Model Improvement

Guide for entrepreneurs on business model improvement

Adapting in the 21st century

Business Model Innovation

THE GRANDPARENT OF ALL INNOVATIONS

DEFINITION OF BUSINESS MODEL

How a company does business Covers the following: . target customer . Revenue/ cost .main value proposition > It also tells: How mvp is communicated How mvp is delivered

New trend among businesses

According to Harvard Business Review:

> 7 out of l0 businesses will change their business models

>98% changed their business models > for three decades, strategy was the

“in” thing; now its BM (business model)

Analogy

Driving your old car up to 200 kmh?

But aren’t we doing that with ourbusiness using old tired models?

Focus of the 20th century:

Strategy Process/manufacturing innovation Marketing brand Legal means/lobbying!!!

The new millenium requires better faster models!!!

A better model

The business model

Business model vs strategy vs tactics

Business model – the carStrategy – the accessories added to the carTactics – how the car is driven

BM I

Compelling reasons for BMI

Benefits:l. Cost reduction – in 55 cases2. Strategic flexibility – in 55 cases3. Focus and specialization - 45 cases4. Fully exploiting opportunities- 45 cases5. Reduce risks -21 cases6. Conversion of fixed cost to variable cost

Business Model Innovation Matters

In the case of Apple, its stock prices went up fourfold even surpassing that

of Google. And just to think that the drivers were iPod and iTunes!

Business model overview

Business model – another view

Another bm canvass

BM analysis using sticky notes

What,who, how, how much?

BM using the whiteboard

Social Entreprise BM

Four main areas of business model

Customers Customer offering Infrastructures Financial viability

Alex Osterwalder definition of BMI

“Creating value for customers and so ciety by replacing outmoded business

model due to processing competitive and environmental pressures.”

Building Blocks of Business Model CUSTOMERS:

Customer segments Channels Relationships

INFRASTRUCTURES: Key processes Key partners Key resources

FINANCIAL VIABILITY- Revenue- Cost

CUSTOMER VALUE PROPOSITION

BMI “Seizing White Space” by Mark Johnson

Range of potential activities not currently addressed by the present BM.

Four areas must be clearly defined: Customer value proposition Profit formula Key resources Key processes

BMI Boston Consulting Group

OPERATING MODEL Value chain Organization Cost model

VALUE PROPOSITION Target segments Product offering Revenue model

Harvard Business School on BMI

Authors: Clayton Christensen, MarkJohnson of Innosight, 2008 and 20ll

FOUR MAJOR BM BLOCKS1. Customer value proposition2. Profit formula3. Key resources4. Key processes

Clayton Christensen - HBS

Steps in BMI

1. Visualize2. Assess3. Renew 4. Plan5. Implement

BMI Exercise

1. Have a business model in front of you.2. Have your team and officers discuss and clarify your present MVP, PTM, Channels,

Customer bonding etc.3. Using sticky paper, post the same at the at the BM canvass; use green for your strength (or mark with+) and pink/yellow for weakness.4. Using ERRC method, innovate your BM

BMI Vs Other Management Tools

Brand management- cosmetic changes in the 4 ps o marketing may not be enough to sustain the sales/business. The BM is the platform

Business Plan- is merely a promise and may not address mismatch between co and customer value perception and/or lack of accomplishment of the job (MVP)

Criticism vs. Ideo

Design and creativity- Ideo produced the design for I tunes and Kindle. But its other novelty products such as its work shopping cart did not add value nor changed the industry.

Technology- Google grew on existing technology. It did not reinvent the technology

Contrarian view vs BPO

American Apparel decided not to outsource its clothing at China @ $4.00/hr but instead used expensive $40.00/hr US labor. Why?

Business Model Innovation covers more

The backbone of strategy has been marketing: development, penetration, product development and manufacturing process.

Strategy also covers divestment and business liquidation!

Liquidation as a Strategy

Mostly Marketing/Brand Strategies

10 New Business Models

1. Localized low cost producer2. One-of-experience3. Beyond advertising model4. Markets are conversation5. Low budget innovation6. Community funded7. Sustainability focused8. Twisted freemium9. Unlimited niches10. In crowd business modelGo to: http//www.slideshare.net/ockearts/10 new-business-

models-for-the-decade

Total Innovation from BMI

New PTM- new customers? Who are the non customers that may be reached by your exististing channels?

Can you offer new value to existing customers? What can be done to your existing infrastructures to serve your existing customers? New ones?

Examples:

Cloud computing from Amazon Use of UPS tracking system to assist Ford track cars in transit Bounty Fresh putting up Chooks to Go

Innovation in channels

The old channels – in house or BPO Direct to the customers, or retail

outlets Media platforms: above the line

below the line or social media? SEO?

Other innovation areas in BM

Key partners Key resources Value chain configuration New costs New profits

Can you now innovate your current business model?

Can you now create a new model from ground up?

THANK YOU!

profjorge.entrep@gmail.com

acknowledgement

The pictures and photographs are from google images

The primary sources of ideas on business model have been cited in the slides