3. Business model definitions (selected)
• Stories that explain how enterprises work in addressing who the customers
are and what they value (Magretta, 2002)
• A framework or recipe for making money by creating and capturing values
(Afuah, 2014)
• The rationale how an organisation creates, delivers, and capture values
(Osterwalder & Pigneur, 2013)
“An abstraction of strategy of how a firm does business and in particular
how a firm creates, delivers and captures values through its activity and
transactional systems”
7. 1. CUSTOMER SEGMENTS
Definition of the different groups or organizations a
company/enterprise aims to reach and serve
•Questions to ask:
⮚ For whom are we creating value?
⮚ Who are our most important
customers? B2B vs B2C
⮚ Where do they live?
⮚ How old are they?
⮚ How much do they earn?
⮚ Where do they “hang” out?
⮚ How will they interact with the
products?
•Types of CUST. SEGMENTS:
❑ Mass market (e.g. Consumer
products)
❑ Niche market (e.g. Luxury items)
❑ Diversified market (e.g. Amazon)
❑ Multi-sided markets (e.g. Credit
cards)
8. What do we offer them? Which »problem« do we really
solve? What value do we really provide?
A collection of products/services that create VALUE to a
particular segment of customers
9. 2. VALUE PROPOSITIONS
Describing the bundle of products/services that create value for
a specific customer segment
•Questions to ask:
⮚ What value do we deliver to
customers?
⮚ Which one of our customer’s
problems are we solving?
⮚ What is your company’s competitive
advantage?
⮚ Which customer needs are we
satisfying?
⮚ What bundles of products and
services are we offering to each
customer segment?
•Types of VALUE PROPOSITIONS:
❑ Newness
❑ Performance
❑ Customization
❑ “Getting the job done”
❑ Price
❑ Risk/cost reduction
❑ Design
❑ Convenience/usability
❑ Accessibility
10. How can we best reach/serve each customer segment?
What are the best interaction/touch points?
11. 3. CHANNELS
Describing how a company communicates with and reaches its
customer segments to deliver its value propositions
•Questions to ask:
⮚ Through which channels do our
customers want to be reached?
⮚ How are we reaching them now?
⮚ How are these channels integrated?
⮚ Which channels works best?
⮚ Which ones are the most cost-
efficient?
⮚ How are we integrating them with
customer routines
•Types of CHANNELS:
❑ Sales force
❑ Web sales
❑ Own stores
❑ Partner stores
❑ Wholesaler
13. 4. CUSTOMER RELATIONSHIPS
Describing the types of relationships a company establishes
with specific customers
•Questions to ask:
⮚ What type of relationship does each
of our customer expect us to
establish and maintain with them?
⮚ Which ones have we established?
⮚ How costly are they?
⮚ How are they integrated with the
rest of our business model?
•Types of CUST. RELATIONSHIPS:
❑ Personal assistance
❑ Dedicated personal assistance
❑ Self-service
❑ Automated service
❑ Customer communities
❑ Co-Creation
14. What are our customers really
willing to pay for? How?
Transactional or recurring
revenues?
15. 5. REVENUE STREAMS
Describing the cash a company generates from each customer
segment. (Revenue – costs = earnings/profits)
•Questions to ask:
⮚ For what value are our customers
really willing to pay?
⮚ For what do they currently pay?
⮚ How are they currently paying?
⮚ How would they prefer to pay?
⮚ How much does each revenue
stream contribute to overall
revenues?
•Types of REVENUE STREAMS:
❑ Asset sale
❑ Usage fee
❑ Subscription fees
❑ Lending/renting/leasing
❑ Licensing
❑ Brokerage fees
❑ Advertising
17. 6. KEY RESOURCES
Describing the most important assets required to make a
business model work
•Questions to ask:
⮚ What key resources do our value
propositions require?
⮚ What resources do our distribution
channels require?
⮚ What resources do our customer
relationships require?
⮚ What resources do our revenue
streams require?
•Types of KEY RESOURCES:
❑ Physical assets (e.g. facilities,
machines, etc.)
❑ Intellectual resources (e.g.
brands, copyrights, patents,
etc.)
❑ Human resources
❑ Financial resources and/or
guarantees
18. 6. KEY RESOURCES
Describing the most important assets required to make a
business model work
•Questions to ask:
⮚ What key resources do our value
propositions require?
⮚ What resources do our distribution
channels require?
⮚ What resources do our customer
relationships require?
⮚ What resources do our revenue
streams require?
•Types of KEY RESOURCES:
❑ Physical assets (e.g. facilities,
machines, etc.)
❑ Intellectual resources (e.g.
brands, copyrights, patents,
etc.)
❑ Human resources
❑ Financial resources and/or
guarantees
19. What essential key activities do we have to perform to
deliver our value proposition?
20. 7. KEY ACTIVITIES
Describing the most important things a company must do to
make its business model work
•Questions to ask:
⮚ What key activities do our value
propositions require?
⮚ What key activities do our
distribution channels require?
⮚ What key activities do our customer
relationships require?
⮚ What key activities do our revenue
streams require?
•Types of KEY ACTIVITIES:
❑ Production (e.g. Designing,
making and delivering a
product)
❑ Problem solving (e.g. Coming
up with new solutions)
❑ Platform/Network (e.g.
Service provision, interface
management, platform
promotion)
21. Who are critical partners and suppliers leveraging our
business model? With whom do we co-create value?
Infrastructure
22. 8. KEY PARTNERSHIPS
Describing the network of suppliers and partners that make a
business model work
•Questions to ask:
⮚ Who are our key partners?
⮚ Who are our key suppliers?
⮚ Which key resources are we
acquiring from partners?
⮚ Which key activities do partners
perform?
•Types of KEY PARTNERSHIPS:
❑ Optimization and economy of
scale
❑ Reduction of risk and
uncertainty
❑ Acquisition of particular
resources and activities
23. What is our resulting cost structure? Which key
elements drive costs?
Finance
24. 9. COST STRUCTURE
Describing all the costs incurred to operate a business model
•Questions to ask:
⮚ What are the most important costs
inherent in our business model?
⮚ Which key resources are the most
expensive?
⮚ Which key activities are the most
expensive?
•Types of COST STRUCTURE:
❑ Cost-driven (= minimizing
costs)
❑ Value-driven (= focus on value
creation)
•Characteristics:
❑ Fixed costs
❑ Variable costs
❑ Economies of scale
❑ Economies of scope
30. Self-Reflection Questions
• What is your purpose?
• How can it be measured? How do you measure if you
have achieved your purpose?
31. Social Impacts
• Conventional profit-driven businesses are measured by
the “financial bottom-line” – financial returns to
shareholders
• A purpose-driven business is seeking to make certain
desired social impacts as its primary goal – a “social
bottom-line” or social returns to stakeholders
• The key to achieving those desired impacts is to have
clear metrics to measure the social outcome
generated
32. What is a Social Enterprise?
• Social Purpose-Driven vs. Profit-Driven
• Delivering Social Impacts on an on-going, sustainable,
and scalable basis
33. 1. Serving the Needs of the Underserved
– Those who cannot afford what the market currently provides
– Those whose needs are ignored
1. Empowering the Disadvantaged with the means to help
themselves
– Creating opportunities for the productive use of their existing
capability
– Developing their Capability
2. Reducing a Social Bad
– Prevention, Treatment and Circular Economy (Re-use, Up-cycle)
3. Engaging the participation and cooperation of a
Community of actors in a Social Ecosystem
4 Generic Purposes of Social Enterprise
34. Social Cost Social Benefits
Incorporating Social Purposes into
Business Model
Community
Engagement
Capability Use
& Development
Target
beneficiaries
as
customers
Social
Purpose
Social Bottom-line
Prevention
,
Treatment,
Re-use
35. Social Cost Social Benefits
Social
Purpose
Community
Engagement
Capability
Development
Target
beneficiaries
Social
Purpose
Social Bottom-line
… and Metrics to Measure Social
Bottom-line
Prevention
,
Treatment,
Re-use
+ +
+
-
36. • Target Beneficiary as Customers
– The Target Beneficiary is the Paying Customer that
provides revenue sufficient to cover at least the cost
– Key Challenge is to Reduce Cost to make the
product/service affordable to the underserved group
• “Cross-Subsidy” Models
– The Target Beneficiary could not pay, or pay enough to
cover cost, hence need to create value for another
customer to generate the income to cover the deficit, or
find financing models that meet the financial gap
(cont…)
Generic Social Impact Models
37. • The Target Beneficiary as Producers
• The Target Community as Partners, Producers and
Consumers
• Hybrid Models
– Combining more than one generic way to make impacts
Generic Social Impact Models (cont.)
38. Photos: Grameen Shakti
• How do you provide access to affordable electricity to
the rural poor?
– 70% of Bangladesh population were not served by the
electricity grid
• How do you create jobs for the local community at
the same time?
Case Example: Grameen Shakti
39. Reduction of health problems
from kerosene lamps
No. of empowered women
entrepreneurs
No. of rural households w. electricity
Local
Women
Affordable
electricity
Empowering
Local
Women
Direct Sales &
Installation by
Local
Entrepreneurs
Off-Grid
Rural
Communities
Social Business Model of Grameen Shakti (I)
Improved learning by school children
Home
Solar
System
Microcredit +
Installments
40. Reduction of health problems
from kerosene lamps
No. of empowered women
entrepreneurs
No. of rural households w. electricity
Local
Women
Affordable
electricity
Empowering
Local
Women
Direct Sales &
Installation by
Local
Entrepreneurs
Off-Grid
Rural
Communities
Social Business Model of Grameen Shakti (I)
Improved learning by school children
Home
Solar
System
Microcredit +
Installments
