CCT 355: E-Business Technologies

Class 7: Intro to Business Model Generation

Administration• Case study – so far pretty good – still a couple of people who

missed simple e-commerce/marketing warning though!!!• We start with presentations first – why?• This week: Intro to BMG• Next week: Change Management Simulation Day (anyone not

have account yet?)• Groups for final project – start forming on wiki • Proposal to keep you on track due Nov 1 (more of a

brainstorming/notes document than anything formal – ungraded, but a good idea, since it helps avoid problems as above.)

Why Business Model (Re)Generation• Pink – in an age of abundance, automation and Asia

(alliteration!) designing for want, not need, is key • Florida – creative class careers essential for a vibrant economy

– creative class as global, interconnected, mobile, diverse• Creative class clusters in welcoming places (e.g., Florida’s “gay

hypothesis” – nothing to do with LGBT people per se, just that communities that tolerate difference enable diverse thinking…)

• Martin’s notion of design thinking in business – design as the new value add - MFAs as the new MBA?

Business Model Generation• Core notions of business concepts are still important – but

how they intersect and complement each other key• Nine core components noted in book• All impacted by changes in technology – changes in one iterate

among others – model as systemic vs. isolated units• History of book – crowdsourced model with many

contributors/insights

Customer Segments• For whom are we creating value? Who are our most

important customers?• Mass and niche markets• Segmentation – can target multiple segments, but complicated• “Everyone” is NOT a target market

Value Propositions• What value do we offer? What problems are we trying to

solve?• Range of options – newness, performance, customizability,

usability, status, price, risk reduction, etc.• Whatever the decision, it should focus business decision

making • Value should tie to customer segments, since they determine

value just as much

Channels• Communicating value proposition to customer segments• Facilitating customer segments in purchase decisions• How are channels integrated and which work best? Depends

on above!• Channel phases – awareness, evaluation, purchase, delivery,

after sales support• Outsourced or in-house?

Customer Relationships• Expectations management in customer relationship • At what cost good CRM? • From “high touch” services and communities to

automated/self-service – different demands and expectations

Revenue Streams• How much are customers willing to pay?• Single or multiple streams? How do streams combine into

overall revenue?• Different models exist – sale of tangible goods, usage fee,

subscriptions, licensing, brokerage fees, advertising, etc.• Dependent on existing revenue stream practices – hard to

monetize something that’s free elsewhere!

Key Resources• What resources are required to meet value propositions?

Distribution? Revenue streams? Relationships?• Resources as broadly defined – could be physical, financial,

intellectual, labor • Resource constraints can frustrate delivery of value propisition

Key Activities• What key actions realize value propositions?• Production – design, manufacturing, etc. (e.g., most physical

good production – e.g., SCM)• Problem solving – identification and satisfactory resolution of

customer problems (e.g., consultants, health care, hospitality – e.g., KM/CRM)

• Networked/platform – building “ecosystem” of activity (e.g., Apple’s integration, building/maintaining APIs, etc. – business systems analysis encouraging virtuous cycles)

• Efficiency and effectiveness of activities

Key Partnerships• Who are necessary partners/suppliers? • How does their business model mesh with ours?• Strategic alliances, “cooptition”, joint ventures, established

relationships (and exclusivity)• Concerns about scale and risk

Cost Structure• What are the most important costs involved? • Cost or value-driven model? Transactional and resource-based

models of business• Fixed/variable costs • Economies of scale and scope (horizontal and vertical

integration)

Patterns, Design, Strategy, Process• Different patterns are evident in mix of core nine

components• These patterns are not accidental, but rather

designed – many core components of design thinking come into play • Business model (re)generation – very similar in

kind to change management process – change causes concern in many domains that needs to be addressed• Not necessarily right/wrong answers – just

more/less defensible ones