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HOW TO DESIGN MY BUSINESS MODEL?
SESSION 4 (out of 10)
BUSINESS
MODEL
GENERATION
This session is part of a 10-weeks course
given to master students of the SOLVAY
BRUSSELS SCHOOL OF ECONOMICS
AND MANAGEMENT by professor Olivier
WITMEUR.
2. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR 2
• How to capture value?
• How to generate value?
QUESTIONS AGENDA RESOURCES
• Back to the previous session
• Introduction to Business
Model Generation
+ Exercises
• Your road to the final
assignment (intro)
• The business model canvas
Desired Outcomes of the Session
4. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Previous session was about Problem-Solution fit
How do people
feel?
What are their
problems/needs
(pains and gains)
Features of the
solution
Design of the
product or service
DESIGN CHALLENGE
EMPATHY MAP
BRAINSTORMING
PROTOTYPING & TESTS
5. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Another view on the design thinking process
5
* Adapted from Tim Brown
6. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
An alternative to empathy map: AEIOU Framework
Activities
– What are people doing?
Environment
– How are people using the environment
– What is the role of the environment
Interactions
– Do you see any routines?
– Do you observe special interactions between people? Between people & objects?
Objects
– What’s there and being used or not used?
– Describe engagement with objects
Users
– Who are the users? What are their roles?
– Look for extreme users
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Source: Doblin, Inc. by Rick Robinson and Stef Norvaisis
9. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Definition
A business model is a conceptual tool that contains a set of elements and their relationships and allows
expressing a company's logic of earning money.
It is a description of
– the value a company offers
– to one or several segments of customers and
– the architecture of the firm and its network of partners for creating, marketing and delivering this
value and relationship capital,
– in order to generate profitable and sustainable revenue streams.
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11. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
4 Main questions = 4 Areas of the framework
11
How?
How much?
Who?What?
The bundle of products &
services that create value
The different groups of people
or organizations an enterprise
aims to reach and serve, + the
tactic to reach them & to
develop relationships with them
The configuration of
resources, competences,
activities and partnerships to
create & deliver the value
The cash a company generates
from each Customer Segment
All costs incurred to operate a business model
14. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Defining a Segment, often a Niche
Type of segments
• Mass Market
• Niche Market
• Segmented
• Diversified
• Multi-sided platform
• …
14
16. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Value Proposition
VP creates value for a Customer Segment through a distinct mix of elements catering to that segment’s
needs. Values may be quantitative or qualitative
Examples:
– Newness ... ?
– Performance … ?
– Customization … ?
– Design, Brand / Status … ?
– Price, Cost Reduction …
– Risk Reduction … ?
– Accessibility, Convenience, stability … ?
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17. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Typical Value Propositions / Positionning
17
* Treacy & Wiesema (1994) The Discipline of Market leaders
19. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Channels
• Own vs Partners
• Direct vs Indirect
Examples
– Sales team
– Point of Sales, Shops…
– Two-tier retail
– Integrators, VAR’s (Value Added Resselers)
– Websites: dedicated or extisting market places
– OEM (Original Equipment Manufacturers)
– Franchise
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21. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Customers Relationship
• Personal assistance; human interaction, real customer representative, on- site at the point of sale, call
centers, e-mail, …
• Dedicated personal assistance: dedicating a customer representative specifically to an individual client.
• Self-service: no direct relationship with customers. It provides all the necessary means for customers to
help themselves.
• Automated services: customer self-service with automated processes.
• Communities: Increasingly, companies are utilizing user communities to become more involved with
customers/prospects and to facilitate connections between community members.
• Co-creation: More companies are going beyond the traditional customer-vendor relationship to co-
create value with customers.
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22. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Get, Keep, Grow framework
22
Channels + Customer Relations
=
Get-Keep-Grow
(see sessions on start and growth strategies)
24. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Mixing Revenues
• Product sales
• Usage fees (e.g. Saas)
• Service fees
• Long term subscription / Renting
• Flat vs variable prices
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26. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Linking Value Proposition and Core Activities
26
* Treacy & Wiesema (1994) The Discipline of Market leaders
28. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
VRIN Resources
Valuable (value generating)
Rare
Inimitable (isolating mechanism)
Non substituable (no subtitutes)
Example
– Know How, Patent…
– Brand
– Location
– Agreement
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30. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Typical partners
Specialized suppliers
Technology / IP owner
Franchiser
Financial partners
Key people
…
(can be a customer, a channel …)
30
32. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Cost Dynamics
Opex vs Capex
Fix vs Variable costs
Direct vs Indirect Costs
Economy of scale?
32
33. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
9 blocks to represent a business model
33
* A. Osterwalder & Y. Pigneur, 2010
35. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Back to the strategy course!
35
Value Chain theory Blue Ocean Strategy
Strategic and
marketing
segmentation
Resources-based view
Strategic Alliances
Sourcing
36. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Typical (difficult) questions
Transactional vs Recurring revenues
Product vs Service
Niche vs Mass market
Capex vs Partnerships
Pick the right customer segment
Open vs Closed
Personal vs Automated
Physical vs Virtual
Direct vs Indirect sales
Fixed vs Variable costs
Tailor-made vs Mass production
…
36
37. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Different ways to start new venture
37
Starting from one idea
… but looking for a problem to solve
Starting from the customer
You know his/her problem
Starting from a unique resource
IP, Know-how, location…
Knowing of to optimize P&L
38. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
DESIGN your business Model
Generate multiple options and test scenario.
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39. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Make it also as creative as possible.
• Use brainstorming method
• What if …
– No internet
– Only mobile
– No frontiers
– …
• Post it are very flexible
• Drawing > Writing
• Diverge – Converge logic
39
40. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Example: Apple iPod/iTunes Business Model
Nespresso Business Model
40
41. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Additional comments
There are multiple other templates for designing business models / strategy.
The BMG tool has limitations, incl.
– Block definition is debatable.
• You sometimes have to merge or spilt some of them à Feel free to adapt
– Nothing about the environment
– Very little about the organization of the company
– Static tool? Use colors to explain development stages
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43. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
The main steps towards your final project.
43
VALUE
PROPOSITION
BUSINESS
MODEL
ROADMAP
Key activities,
resources & partners
Revenues model &
costs structure
Problem-Solution fit
Product-Market fit
Market sizing
Competition
Stages & milestones
Get-Keep-Grow
Risks & scenario
FINANCE
P&L, cash and
balance sheet
Financing
CREATE
TEST
LEARN
YOU
45. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
A real passion for entrepreneurship education and entrepreneurs.
• Student entrepreneurs: 2x
• Full time entrepreneur: once, in a team of 5
• Coach: 500+ projects over the last 20 years
• (Advisory) Board member in multiple new ventures
• Policy making: 2x
• Director of Solvay Entrepreneurs
• PhD in entrepreneurship in 2008
• … never as an investor
My wife (as Colombo), no kids, one dog (Vicky).
45
Olivier Witmeur (Belgian, 46)
46. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Solvay entrepreneurs is the entrepreneurship center of the Université Libre de
Bruxelles. We support entrepreneurs through the development of their venture, from
an idea to a successful and sustainable business.
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Solvay Entrepreneurs
47. Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Let’s keep in touch!
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