Session #2

Business ModelsADM3313Session 3

Innovators DNA

Opportunity AssessmentBusiness ModelsBusiness ModelsA sketch/summary of what the business will do and how it will make money.Includes strategic components of the business idea and how it operates.Often established based on trial and error.Forms the basis for success or failure.Why are Business Models Important?

Business PlansAssume full knowledge of the market, solution and customersDont require a lot of external interactionAre a useful implementation tool, focusing much on operationalizing strategiesUsually written too soon; often not written at all

Business ModelsAssume evolution: discovery and iterationForce getting out of the building to talk with clientsForms foundation for success or failure

Two Weeks Ago

1234IdeaValidationProduction/deliveryViable Business

Business Plan5Idea to Viable Business

1234IdeaValidation(incl. early sales?)Production/deliveryViable Business6

Business Plan

Business ModelHypotheses5Business Model Canvashttp://ecorner.stanford.edu/authorMaterialInfo.html?mid=2877

Value PropositionWhat Are You Building and For Who?

Customer SegmentsWho Are They?Why Would They Buy?

Multiple Customer SegmentsMight have multiple segments of usersMight have users and payersMight have 5 or 6 different customersMedical devices have doctors, hospitals, patient, insurance company, FDA, etc.For every customer segment you need:Value propositionRevenue modelAnd may have unique channels, cust relationships, etc.

Product/Market FitDoes the Value Proposition MVP match the Customer Segment Archetype?ChannelsHow does your Product Get to Customers?

Customer RelationshipsHow do you Get, Keep and Grow Customers?

Revenue StreamsHow do you Make Money?

Key ResourcesWhat are your most important Assets?

Key PartnersWho are your Partners and Suppliers?

Key ActivitiesWhats Most Important for the Business?

Cost StructureWhat are the Costs and Expenses

BUT

They are all GuessesGuessGuessGuessGuessGuessGuessGuessGuessGuessHow Do We Test?Test the Problem, Then the Solution

What Do Tests Look Like?Customer conversations lots of themValidate the problem not the solution yetIndustry expert conversationsSurveys in person and/or onlineFocus GroupsTest ads: Facebook, LinkedIn, Google AdwordsTest webpage collecting sign-upsMinimum viable productCrowd Funding campaign: http://www.indiegogo.com/projects/piper-smart-elegant-security-and-home-automation

Example: WipeBook

ExamplesAmazon Business Model Canvashttps://www.youtube.com/watch?v=4Uda1VOrBSI&app=desktop#action=share

Kiva Business Model Examplehttp://www.kiva.org/home

https://m.youtube.com/watch?v=gLi8yIdHYbI

Lemonade Stand in City Park

http://www.slideshare.net/esaife/business-model-canvas-101

FaceBook

Canvas: Multiple Segments

Business ModelsIn groups:You will be assigned a business to consider.Study key components of their business model.Determine is which is most important or unique. Be prepared to present:Which component of the Business Model is most important or unique for this business, and why?NFL (Green Bay Packers).Luxe Box (Loose Button)iPhoneElance

Key ResourcesValidation Board - http://www.youtube.com/watch?v=HhoducyStMw&feature=player_embedded#t=157 Case Study: http://www.youtube.com/watch?v=G8Rk0c3axtI http://learni.st/users/trevor.owens/boards/6470-learn-how-to-use-the-validation-board-test-your-startup-idea-without-wasting-time-or-money?tb=026e8657ead82f28371a1cca25ae13b3 Customer Development http://www.youtube.com/watch?v=6t0t-CXPpyM http://steveblank.com/2013/09/05/why-real-learning-is-outside-the-building-not-demo-day/?goback=%2Egde_5037848_member_271423445#%21