BusinessModelGeneration.com@business_design

Business Models

Reloadeddesigning tomorrowʼs

enterprise

letʼs start with a story...

BusinessModelGeneration.com

1,000,000new book titles were

published in the U.S. in ʼ10

11,000new business books

appear every year

12%decline of sales in major

bookstore chains (ʻ07-ʼ09)

?so what did we do?

we changed the product...

?would a big publishing house have taken us on

with this book?

No!

we changed the business model...

you canʼt write about business model innovation without an innovative business model

“”

$24.-

$36.-

$54.-

$81.-

$250.-

Results

in the top 10 of softcover business books in the US#

150ʼ000+ #bmgen copies in print (May 2011)#

18 #bmgen translations upcoming in 2011#

more importantly...

letʼs go back in time to understand business models...

Time Machine

1958

[sources: Henry Chesbrough, photo: life.com]

[sources: Henry Chesbrough, photo: xerox.com]

revenue growth of 41% compounded for the next 20 years

Time Machine

1997

ʼ10 revenue of $29.32 billion ($8.5 billion net income)

?what do both examples have in common?

Product innovation alone was not

sufficient They enabled the

new product through the business model1

They didnʼt nor could they copy

from competitorsThey invented new business

models2

They couldnʼt prove in advance that the models would work

They had to take some risk and

experiment3

1 2 3beyondcopying

competitors

beyondproduct

innovation

beyondasking

for proof

testingbefore

building

designthinkingattitude

businessmodel

language

business model language 1

buzzgroup

how much did the cost of home coffee consumption

change for Swiss households over the last couple of years?

6-8 x more

Nespresso changed the

business model for espresso

RESULTS

own recycling

containers

one of the fastest-growing businesses in

the Nestlé group

average growth of 30% p.a. since 2000

over 3 billion CHF annual revenue with 1 product line

(2.4 bio EUR)

buzzgroup

?Discuss and describe what you think Nespressoʼs

business model is

buzzgroup

?discuss with your seat neighbor what a business model is and

write down your definition

?what elements did you mention in your definition?

? ?

Business Model Canvas

to describe, challenge, design, and invent business models more systematically

building blocks 9

CUSTOMER SEGMENTS

images by JAM

VALUE PROPOSITIONS

images by JAM

CHANNELS

images by JAM

CUSTOMER RELATIONSHIPS

images by JAM

REVENUE STREAMS

images by JAM

KEY RESOURCES

images by JAM

KEY ACTIVITIES

images by JAM

KEY PARTNERS

images by JAM

COST STRUCTURE

images by JAM

images by JAM

customer segments

key partners

cost structure

revenue streams

channels

customer relationships

key activities

key resources

value proposition

images by JAM

customer segments

key partners

cost structure

revenue streams

channels

customer relationships

key activities

key resources

value proposition

images by JAM

CANVAS OVERLAY

images by JAM

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

images by JAM

CANVAS OVERLAYOFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

KEYPARTNERS

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYRESOURCES

buildingblock

buildingblock

buildingblock

buildingblockbuilding

block

building

block

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

The Business Model Canvas

illustra-on

Nespresso changed the

business model for espresso

KEYPARTNERS

ValueProposition

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYRESOURCES

Nespresso’s business Model

households (espresso fans)

**** retail

outlets

sales of Nespresso pods

mailorder

Nespresso stores

NespressoClub

coffee machine

manufacturersbusinesses

sales of Nespresso machines

Nespressopods

patents

marketing

production

B2Cdistribution

production

callcenter

Nespresso.com

*** Nespresso machines

marketing

B2Cdistribution

distribution channelscoffee

coffeegrowers

production facilities

but Nespresso almost failed in 1987 due to a nonperforming

business model

KEYPARTNERS

ValueProposition

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYRESOURCES

Nespresso’s 1987 Model

officesNespressosystem

joint venture with machine manufacturer

machine manufacturer

buzz  group

BusinessModelGeneration.com/canvas

UNDERSTANDER (interviewer) asks questions and sketches out interlocutors business model with post-it notes

EXPLAINER (interviewee) answers business model questions to help interviewer understand his/her core model

the business model generation

is changing the way we are

creating value

resource driven innovation

value proposition/tech driven innovation

job-to-get-done driven innovation

financedriven innovation

multiple-epicenter driven

design thinkingattitude 2

design≠

only form

[source: Sony Pictures]

Frank Gehry

[source: Sony Pictures]

[source: Sony Pictures]

[source: Wikimedia Commons]

?what does that have to do with business models and

my organization?

?what does that mean for us?

BusinessModelGeneration.com

business model prototyping

napkin sketch Canvas business case field test

casestudy

3 years ago in Mexico

Pomarfin - a Finnish shoe manufacturer

REVENUE STREAMSCOST STRUCTURE

OFFER

DISTRIBUTION CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

KEYACTIVITIES

PARTNERNETWORK

KEYRESOURCES

shoe manufacturing

retailpartners

sales to retailers

mass shoe market

manufacturing

costs

B2Blogistics

logisticscost

salesforce

retailpartners

?Whatʼs the big challenge for Pomarfin and its shoe manufacturing model?

so Pomarfin invented the “perfect fit” shoe, based on

a technology innovation

REVENUE STREAMSCOST STRUCTURE

OFFER

DISTRIBUTION CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

KEYACTIVITIES

PARTNERNETWORK

KEYRESOURCES

foot scanning

technology

shoe manufacturing

manufacturing

costs

B2Blogistics

logisticscost

retailpartners

sales to retailers

mass shoe market

salesforce

retailpartners

buzzgroup

?How could Pomarfin use foot-scanner technology to

become competitive again?

REVENUE STREAMSCOST STRUCTURE

OFFER

DISTRIBUTION CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

KEYACTIVITIES

PARTNERNETWORK

KEYRESOURCES

foot scanning

technology

shoe manufacturing

manufacturing

costs

B2Blogistics

logisticscost

retailpartners

sales to retailers

mass shoe market

salesforce

retailpartners

Pomar’s  design  decision

REVENUE STREAMSCOST STRUCTURE

OFFER

DISTRIBUTION CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

KEYACTIVITIES

PARTNERNETWORK

KEYRESOURCES

foot scanning

technology

shoe manufacturing

manufacturing

costs

B2Blogistics

logisticscost

retailpartners

sales to retailers

mass shoe market

salesforce

retailpartners

personal onlinefootprint

direct web sales

royalty payments to retailers

own stores and retail partners

ITmanagement

B2Clogistic

s

mass

customizatio

n

factory

onlinestore

high-end men’s market

testing before building 3

-­‐$800m

a business model might look great on paper...

buildingblock buildingblock

buildingblock

building blockbuildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

.. but after all it is only a...

guess guess

guess

guessguess

guess

guess

guess

guess

guess

guess

guess

... a set of hypotheses

StevenBlank.com/books.html

you need to get out of the building and ...

test each hypothesis (e.g. with customers)

buildingblock

buildingblock

buildingblock

building block

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

business model layer

this is you

r best sho

t

at how your

business

model could

work

buildingblock

buildingblock

buildingblock

building block

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

hypothesis hypothesis

hypothesis

hypothesis

hypothesis

hypothesis

hypothesis

hypothesis

hypothesis

hypothesis

hypothesis

hypothesis

hypothesis layer explicitly outline the most

important hypotheses on

which your business model is built

buildingblock

buildingblock

buildingblock

building block

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

building block

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

test test

test

test

test

test

test

test

test

test

test

test

test layer

come up with tests

to verify each

hypothesis

iPadapp

proj

ect:

scre

en:

date

: au

thor

:

iPad stencil, actual scale, template by hortis, le studio. Feb. 2010. http://hortis.lestudio.ch

BusinessModelGeneration.com/toolbox

proj

ect:

scre

en:

date

: au

thor

:

iPad stencil, actual scale, template by hortis, le studio. Feb. 2010. http://hortis.lestudio.ch

BusinessModelGeneration.com/toolbox

FAQ

?so whereʼs the competition in this

model?

FAQ

?is business model innovation only about

disruptive new models?

FAQ

?isnʼt execution the most important

thing?

FAQ

THANK YOU!BusinessModelGeneration.com

AlexOsterwalder.com BusinessModelAlchemist.com

Twitter: business_design