Business Model Canvas- A one sheet summary of your venture -

Krishnan + Nag, IIMA CIIE, Sep ‘12

Story of the $5billion start-up

Cautionary tale

Iridium founded

Spun out of

Motorola

Launch Bankrupt$5.2b investment15 rockets

72 satellites

19901987 19981997

Iridium founded

Spun out of

Motorola

Launch Bankrupt$5.2b investment15 rockets

72 satellites

19901987 19981997

Target price: $7/minTarget users: 42million

Viable price: $0.5/minActual users: 30,000

Traditional start-up model

Develop conceptGet funding

Build product Alpha / beta test

Customer Shipment

Write business plan

Build the product Test / fix Ship / fix

Planning / collateral PR / plan launch Launch / Demand gen.

Initial sales rep Build sales team / selling

Build product and offering

Alpha testMarket test

Big-BangLaunch after

3 years

Develop conceptGet funding

Build product Alpha / beta test

Customer Shipment

Build product and offering

Alpha testMarket test

Big-BangLaunch

Unbridled enthusiasm

Rude awakening

False sense of security

Resettingexpectations

Predictable disaster

“Big Up Front Design”

90-95% of new ventures fail to meet projections

(assumptions up front, market contact at the end)

The traditional methods of start-ups aren’t working

Story of the Rs. 500 start-up

Who is this legendary entrepreneur?

Karsanbhai PatelNirma

How do you compete with a Rs. 200cr brand?

Answer: Start on a bicycle!

Lessons from Karsanbhai and Nirma

Start with a strong vision, but start small

Clear value-prop for untapped segment

Constantly validate all assumptions in the market

Iterate and learn

2 stages of start-ups

Search Scale

Source: Steve Blank

Focus on Experimentation

Focus on Execution

Finding your business model

Limited planning, more experimentation and exploration

Search Principle # 1: Business Model Canvas

VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES

Source: “Business Model Generation”, Osterwalder & Pigneur

Minimum

Viable

Too-basic products no one wants

Incumbentproducts

Minimum + ViableFertile area for new

products

Search Principle #2: Minimum Viable Product

Excel competitor: Minimum Viable ?

Minimum Viable ?

Minimum Viable Product for Google Docs

Value prop

Learn

Ideas(BMC)

Build

OfferingMeasure

Data

Minimise the total time through the

loop

Search Principle #3: Focus on exploration

How it all fits together

Agile software development

BMC examples…

What are the children carrying?

Godrej ChotuKool

VALUE

PROPOSITION

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY RESOURCES

KEY

ACTIVITIES

Vision: “Refrigeration for rural India”

Economical, effective, portable cooling solution

(constraints of electricity, space, cost solved)

Indian households with income of Rs.10,000/mo whom traditional refrigerators don’t serve

Unit sales

Microfinance institutions

Sarpanchs

Frugal engineering experts

Through retailers

Rural retailersVillage ambassadors

R&DPRAdvertising

Factory, raw material, SG&A

Competitive BMCs

vs.

Flipkart

VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES

VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES

Flipkart: “Online shopping for all Indians”

• Convenience• Wide selection• Cheaper• Trust (CoD)

• Urban Indian book lovers

• Internet-connected people with no credit cards

• First-time online shoppers

Book sales

Publishers

• Delivery staff• Technology

capability

Through email, online chat and database marketing

Web

• Supply chain optimisation

• Delivery optimisation• SEO• Auto

recommendations

Technology, warehouses, deep discounts

Crossword

VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES

VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES

Crossword: “The best browsing experience”

• Urban Indian book lovers

• Companies

• Stationery buyers

• Casual mall visitors

• Book sales

• Advertising

• Publishers• Franchisees• Shopper’s

Stop (parent co)

• Real estate

In store, Crossword club

• Store• Phone• Web• Institutional

• Sourcing• Visual merchandising• Book reading sessions• Crossword Literary

Award

Real estate, cost of inventory• Coffee• Trinkets

• Browsing experience

• Instant gratification

VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES

Amul: “High-quality butter when you desire it”

• Mass market (customer: housewife)

• Restaurants and institutions

• Product sales

• Anand milk union

• Gujarat milk federation

• Anand milk union

• Transactional• Through mass

media

• Retail trade• Direct (for

institutional sales)

• Brand building• R&D into preservation

Factory, equipment, inventory

• Guarantee of high quality (brand)

• Access and availability

• Convenience• Emotional value

VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES

Mid Day: “Evening gossip companion”

• Mumbai English-speaking mass market

• Office-goers• Commuters

Advertisers + Agencies:• Mass market• Mumbai• Classified• Discount

• Retail offtake (5%)• Advertising (95%)

• PTI, AP etc.

• Journalists

• Salespeople with media-planning knowhow

• Transactional• Deep multi-year

high-touch relationships

• Railway platforms• Kirana shops

• Direct

• Brand building• Distribution• Newsgathering

• Improving ABC numbers in key demographics

Newsroom, newsprint

• Light entertainment after/during a busy day

• “2nd newspaper”

• Mumbai-wide reach of readers in a relaxed context in a unique time window

VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS* COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES

Khan Academy: “Education for everyone”

• School/college age students with inadequate access to school/college

• Working people with specialised learning needs

• School/college students seeking reinforcement

• Certifications?

• Advertising

• Gates Foundation

• Hardware makers?

• Governments?

• Volunteer translators

• Content creators• Recommendatio

n engines etc.• Salman Khan –

personal brand

Deep personalisation (automated)

• PC/tablet• Smartphone• Featurephone

• Pedagogy research• Content creation• Content delivery• Business model

discovery

Hardware, bandwidth, content creation

• Placements?

• Comprehensive world-class lessons for free

• Personalised, self-directed learning

*this could be a multi-sided market: students, advertisers, recruiters

Pivot / Course correction

Acknowledgements

www.businessmodelgeneration.com

www.steveblank.com

Summary: why BMCs are important

Elevator pitch

Maximise time from mentors

Make minimum viable offering, learn, pivot, iterate

The foundation for your business plans

Continue the conversation…

knataraj@thoughtworks.com, nag@thoughtworks.com

LinkedIn: krishnan-natarajan, knagarjun