1. Master Class:
Business Modeling
Prof.Alon Rozen
ENPC MBA Paris
29 May 2013

2. Prof.Alon Rozen © 2013
Biz model:the Heart of Any Business

3. Prof.Alon Rozen © 2013
Business modeling
Representing how a company
orchestrates diverse activities to:
(1) deliver value
(2) to customers
(3) in a sustainable manner.

4. Prof.Alon Rozen © 2013
Business model vs Strategy
 There is a general confusion between the
notions of business models and strategy.
Business Model
• Focus = value
“orchestration”
Strategy
• Focus = outdo
competitors

5. Prof.Alon Rozen © 2013
Business Modeling (made simple)
1/ Create a model 2/ Test it 3/ Revise
Narrative Test
• Does the story
make sense?
Numbers Test
• Does the story
make cents?

6. Prof.Alon Rozen © 2013
Why is the biz model so important?
 If done right
 Creates a virtuous cycle that is difficult to copy
 Generates super-profits and a competitive moat
 Ex.Apr 23:“Apple sees profits fall for first time in a
decade but cash pile rises to $145bn”
 If done wrong:
 It doesn’t make sense,cents or profits…
 It is not sustainable…
 Ex: May 9:“Sony makes 1st net profit in 5 years”

7. Prof.Alon Rozen © 2013
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8. Prof.Alon Rozen © 2013
Business Model - examples
 Subscriptions (gym, magazine, public transport,cinema)
 Razor & blades (razors,printers,cell phones)
 Bricks & Clicks (retail + online) (Gap,FNAC,Apple)
 Loyalty (frequent flyer miles)
 Industrialization of services (restaurant tickets, vouchers)
 Low-cost (EasyJet, LIDL,IKEA)
 Crowdsourcing - (mymajorcompany, Kickstarter)
 Freemium (free+paid services) (online newspapers)

9. Prof.Alon Rozen © 2013
Modern business model = Freemium
 Freemium = free + premium
 End-user is given a free“hook”and then sold
(“upsold”) to paid extras (e.g.apps)
 The Global Guru (financial newsletter)
 Free newsletter (200,000 subscribers)
 Paid newsletter $100/year (15,000)
 Premium newsletter $1000/year (1,000)

10. Prof.Alon Rozen © 2013
One term,many approaches
Geoffrey Moore
• Volume- or complexity-based models
Alexander Osterwalder
• Business model canvas
Ash Maurya
• Lean business model canvas
Alon Rozen
• Business model worksheet

11. Prof.Alon Rozen © 2013
Meta Business Model Worksheet (A.Rozen)

12. Business Model
 Volume-based  Complexity-based  Mixed
General description of the business
model including the 6 W’s (what,
who, where, how, when, and why
© Alon Rozen 2012
Customer model
Who are the
customers? Who are
the end-users? Early
adopters?
Cost model
What are the
main costs? Are
costs mostly
variable or
fixed? How do
they scale?
Margin model
A high margin or
low margin
business by
nature? Margin
structure?
Operating model
What type of
operations? Logistics?
Outsourcing? HR?
Working K model
Cash positive
business? Cash flow
issues (CAPEX, OPEX? CCC)?
Sales & Marketing
model
Approach to
sales and
marketing? Sales
model?
Distribution?
Marketing
model?
Growth model
How will the
business grow?
Speed?
Scalability?
Organic growth or
M&A? Self-
financed or new
investment
needed?
Revenue model
How is revenue
generated – who
pays what, when?
Business Modeling: your turn! Cacau Show

13. Prof.Alon Rozen © 2013
Business modeling:old and new
Deconstruct an
existing business
Model a business
from scratch:
start-ups

14. Prof.Alon Rozen © 2013
Biz model description:Cacau Show
Cacau Show operates a volume-based business model by which
it sells branded chocolate to its franchisees,to department stores
and,recently,to supermarkets (what)
indirectly to mass-market“class C”and even“B”consumers (who),
using in-store direct sales via franchises (captive market) and
intermediated distribution via supermarkets and department
stores (how & where).
This allows Cacau Show to optimize inventory (a base of
guaranteed sales) all year long and maximize sales during peak
seasons (Easter) (when),
thus allowing Cacau Show to practice low margins while
maintaining healthy cash flow,strengthening the brand,
attracting new franchises (+franchise management fees) and
easily fund future growth (why).

15. Biz model:a truly key success factor!
 Biz model optimization is a KSF!
 Two types of successful biz model:
 Simple and efficient
 Innovative
 The true heart of any business
 A weak heart means a weak business
 Even if it looks healthy!
 But – no magic business models
 They have to evolve over time!

16. Thank you!