Hybrid business model development

• A hybrid business model has a social component and a business component; both create value.

• Social value is value that impacts an excluded community and generates outcome.

• Business value is value that impacts a community of clients (market) and generates revenue.

• Hybrid businesses create shared value, by using some outcomes of the social component as resources for the business component and vice versa.

Impact/ Market

size

Vision Features

Customer/Beneficiary segments

Market Type Outcome mapping

Channels

Relationships Partners Resources

Revenue & impact monitoring

1 2 3 4 5

6

Hybrid Business Model Development

Impact/Market size Impact/market opportunities are fueled by

a large number of potential customers/beneficiaries clear future-user growth in a market with rapid and predictable growth the opportunity to attract active customers/beneficiaries

1

Impact Size Hypotheses

Estimate market size (Total Available, Served Available & Target Markets) Determine appropriate metrics for measuring

units/euros/page views product/services evaluation ROI

Consider adjacent markets

Market Size Hypotheses

Estimate community size (Total Available, Served Available & Target Community) Determine appropriate metrics for measuring

level of unmet needs of the community activities: ‘what we do’ output: products & services provided outcomes: result of usage of products & services

Consider adjacent communities & projects

Value propositions 1.0Vision Features & Benefits Minimum Viable Product (MVP)

2

Social Product Vision

Vision How does the Business Value fit in the long-term mission & values of the company? What outcome from the Social Value do you use as a resource? Put together a short narrative in bullets about your strategy

18-month product vision and delivery dates Long Term Product Strategy

Network effects Price model High gross margins Organic demand vs. marketing spend

Business Product Vision

Vision How does the Social Value fit in the long-term mission & values of the company? What will the world look like 3 years after you arrive on the scene? Put together a short narrative in bullets about your strategy

18-month impact vision and delivery dates Long Term Impact Strategy

Network effects Accessibility opportunities Desired outcomes Organic demand vs. marketing spend

Social Product Features and Benefits

Business Product Features and Benefits

What problem or need are you solving? What are the exclusion mechanisms for your target community? What do people do today to solve their problems? Explain the general goal of the product 10 one- or two-sentence descriptions of product features List the benefits trough the communities eyes Describe the Minimum Viable Product

What do you want to learn from who? What is the smallest feature set?

What problem or need are you solving? What do people do today to solve their problems? What do businesses expect from you in order to pay for a solution? Explain the general goal of the product 10 one- or two-sentence descriptions of product features List the benefits trough the business eyes Describe the Minimum Viable Product

What do you want to learn from who? What is the smallest feature set?

Beneficiary Segments

Customer Segments

Does the beneficiary have a latent, passive, active or vision problem/need? Define the distinctly different types of beneficiaries Who are the ‘out-reachers’ and trustees? Who are the decision makers? Draw the day in the life of a beneficiary - before and after your intervention

Does the customer have a latent, passive, active or vision problem/need? Define the distinctly different types of customers Who are the influencers and recommenders? Who is the economic buyer? Who are the decision makers? Is the need mission-critical or must-have?

Value propositions 2.0Market Type & Competitive Hypothesis

Channels

3

Outcome Mapping

Market Types

Identify the boundary partners For each boundary partner identify an outcome challenge Develop graduated progress markers (expect to see, like to see, love to see) Draw a strategy map (causal, persuasive and supportive actions)

aimed at a specific community aimed at a community’s environment

Articulate organizational practices obtaining support of the next highest power check up on those already served sharing your wisdom with the world

Do you have a new product in an existing market? Define the basis of competition Who is driving the existing market?

Do you want to re-segment an existing market? Define how you want to change the market Who is driving the existing market?

Do you want to create an entirely new market? How will you create the market Estimate of market creation costs

Outreach Channels

Business Channels

With which boundary partners do your beneficiaries interact now? Who do they trust? Will you reach out through these partner projects or directly to your beneficiaries? What do partner projects need to adopt the product? How will you distribute to the partner projects? How will you distribute directly to your beneficiaries? What do beneficiaries need to adopt the product?

How much will the channel cost (direct expenses or channel discounts)? Are there indirect channel costs? What is the net revenue after channel costs?

RelationshipsHow you will get, keep and grow beneficiaries/customers

4

Outreach Relationships

Business Relationships Draw the Get/Keep/Grow funnel Describe your ‘Get Customers’ strategy & tactics

Awareness Interest Consideration Purchase

Describe your ‘Keep Customers’ strategy & tactics Interact Retain

Describe your ‘Grow Customers’ strategy & tactics New revenue from existing customers Customer referrals

Key resourcesResources critical to the hybrid model’s succes,

and how you will harvest and secure them

5

Social Resources

Business Resources

Describe the key business resource you’ll harvest from the business component Describe the other resources and how they will be acquired

physical resources financial resources human resources intellectual property dependency analysis

Describe the key social resource you’ll harvest from the social component Describe the other resources and how they will be acquired

physical resources financial resources human resources intellectual property dependency analysis

Social Partners

Business PartnersUnderstand potential partner types

Strategic Alliances Joint new business efforts Coopetition Key suppliers

List target partners, their contributions and what the company will offer in return

Bottom LineSocial Impact and Business Revenue

6

Social Impact

Business Revenue

Make an outcome monitoring plan Outcome journal Strategy journal Performance journal

Decide how you will translate the key outcomes to business value Does it Add up to a Cause Worth Pursuing?

Decide on the revenue model (sales, subscriptions, pay-per-use, referral, affiliate,…) Decide on the pricing tactics Does it Add up to a Business Worth Doing?

Further ReadingBlank, S. & Dorf, B. 2012. The Startup Owner’s Manual. K&S Ranch Press. Porter M.E. & Kramer, M.R. 2011. Creating Shared Value. Harvard Business Review. Jan.-Feb. 2011. Earl, S., Carden, F & Smutylo, T. Outcome Mapping. Building Learning & Reflection into Development Programs. International Development Research Centre.

Contact meThomas Geusens thomasgeusens@gmail.com www.congaz.be