Presented at the Trajection Conference in Kentucky.

1. What Business Are You Really
In?
Or How Does Your Business
Model Stack Up
Jeryl Schreiner, D.Sc.
Co-founder, Idea Foundry
President, WillowRock

2. O ect i ves
bj
Describe How What’s Old is New
Again
Show that innovation is not exclusive
to technologists
Give you a Model to Innovate Your
Business Model
Help You See How Your Business
Stacks up Against Investor
Expectations

3. W ’s Your B ness M
hat usi odel ?

4. Maybe Thi s I s Your B ness
usi
Model ?

5. A B ness M
usi odel I nnovat i on?

6. M , Too?
e

7. A M?
nd e

8. Even M ?
e

9. What About Me?

10. O M e…
ne or

11. Strange but True Business
Models …

12. Even Stranger Business Models
…

13. B Fi r st ,
ut
What i f
W DI
hy o
Ther e I S
C e So
ar
N Business
o
Much about
Model …
Business
Models …

14. 50+ companies in our portfolio
42 new products
$30 Million raised
launched in a variety
by our companies
of markets
in 2007 alone
Variety of Projects
Beyond Pittsburgh

15. W ’s D f f er ent N ?
hat i ow
Investors are paying more attention than ever
to startups' business models.
“The current economic crisis
marked the end of the Web
2.0 era and the comeback of
the “Business Model”.
“The poor economic
environment means even
more emphasis will be placed
on your business model.”
“Things will get worse for
companies with no real
business model…”

16. W ’s D f f er ent N ?
hat i ow
Investors are paying more attention than ever to
startups' business models.
“… it will clean up a lot of the
poor start-ups and deals that
have taken place over the
past few years.”
“No longer will every web 2.0
and general tech start-up be
relevant…”
“investors … looking for
companies that they will
really commit to for an
extended period of time...”

17. W ’s t he D i ni t i on of a B ness
hat ef usi
Model ?
In the most basic sense, a business model is
the method of doing business by which a
company can sustain itself -- that is, generate
revenue.
The business model spells-
out how a company makes
money by specifying where it
is positioned in the value
chain.
Who has your money in their
pockets? And How are you
going to get it into your
pocket

18. M Favor i t e B ness M
y usi odel
D i ni t i ons
ef
A business model continually
asks the question, “Does this
business make sense?”
A business model articulates
a company’s core logic to all
stakeholders.

19. B ness M
usi odel Model
Operations Value Customer
Framework Framework Framework
Financial Framework

20. Operations Framework Value Framework Customer Framework
Core
Connection
Capabilities
Product
Industry Targeted
Core Pricing
Depen- Customers
Functions
dencies
Service
Sales
Suppliers
Channel
Revenues
Costs
Financial Framework

21. Vi deo D st r i but i on I ndust r y M
i odel (2000)
Operations Framework Value Framework Customer Framework
Connection
Core Capabilities
• Marketing
• Inventory
• Franchise
Product
Management
• Penalties
• Forecasting
Video
Titles
Dependencies Target
Core Functions Pricing
• Title Bank • Per Rental Demo-
• Change to • Inventory • Subscriber graphics
Digital Control Programs
Service By Locale
Format
Timed
Suppliers Sales Channel
Rentals
• Video
• Studios Stores
• In Store
Costs Revenues
• New/Multi • Rentals
• Sales
Titles
• Penalties
• Inventory
Financial Framework

22. N fl i x C
et ase St udy
N f l i x B ness M
et usi odel
O her Vi deo D st r i but or s
t i
Value Framework Value Framework
Product
Product
Video Video
Titles Titles
Servoce
Service
• No Late Fees
Timed • Home
Rentals Delivery

23. N fl i x C
et ase St udy
N f l i x B ness M
et usi odel
O her Vi deo D st r i but or s
t i
Customer Framework Customer Framework
Connection
Connection
• Plans
• Marketing
• Personal
• Franchise
• Penalties Favorites
Target
Target Pricing
Pricing
• Per Rental • Subscrip
Demo-
• Subscriber Global
-tion
graphics
Programs
Plans
By Locale
Sales Channel
Sales Channel
• Video
• Internet
Stores
• In Store

24. N fl i x C
et ase St udy
N f l i x B ness M
et usi odel
O her Vi deo D st r i but or s
t i
Operations Framework Operations Framework
Core Capabilities
Core Capabilities
• Order
• Inventory Processing
Management • Shipping
• Forecasting • Software Dev
Dependencies Dependencies Core Functions
Core Functions
• Database
• Title Bank
• Leveraged
• Change to • Distribution
• Inventory
DVD Format Mgmt
Digital Control
• Online Sales
Format
Suppliers
Suppliers
• Studios
• Studios • USPS

25. N fl i x C
et ase St udy
O her Vi deo D st r i but or s
t i
Costs Revenues
• New/Multi
• Rentals
Titles • Sales
• Inventory • Penalties
Mgmt Financial Framework
N f l i x B ness M
et usi odel
Costs Revenues
• New
• Subscrip
Titles
• Distribut -tions
ion Financial Framework

26. N fl i x C
et ase St udy
Operations Framework Value Framework Customer Framework
Connection
Core Capabilities
• Order • Plans
Processing
• Personal
Product
• Shipping
Favorites
• Software Dev Video
Titles
Core Functions Target
Dependencies Pricing
• Database • Subscrip
• Leveraged
• Distribution Global
-tion
DVD
Mgmt
Plans
Format • Online Sales Service
• No Late Fees
Suppliers Sales Channel
• Online
Ordering
• Studios • Home Delivery • Internet
• USPS
Costs Revenues
• New Titles • Subscrip
• Distribution -tions
Financial Framework

27. DlC
el ase St udy
Operations Framework Value Framework Customer Framework
Core Capabilities Connection
• Marketing
• Supply Chain
Product
• Order
Mgmt
• Assembly • Support
Made to
Spec PC’s
Target
Dependencies Core Functions Pricing
• Assembly
• Bundled
• Supply “Smarter”
• Standards Pricing
Chain Mgmt Global
• Online Sales
Service
Suppliers Sales Channel
PC
• Component
Servicing
Manufacturers
• Internet
• FedEx, UPS, Mi
crosoft
Costs Revenues
• Sales
• Subcom
• Support
ponents
• Mfg
Financial Framework

28. Your Case St udy
Operations Framework Value Framework Customer Framework
Core Capabilities Connection
Product
Target
Dependencies Core Functions Pricing
Service
Suppliers Sales Channel
Costs Revenues
Financial Framework

29. I nnovat i ng Your B ness M
usi odel
Articulate Your
Business Using
the Model
Compare it to
the Norm or
Validate
Competitor
Examine Each
Look for
Area for
innovation
Opportunity

30. Assess Your B ness M
usi odel
1. _____ 6. _____
2. _____ 7. _____
3. _____ 8. _____
4. _____ 9. _____
5. _____ 10. _____

31. Top 10 Business Model Questions …
Do your product and service fill an
1.
unserved or underserved market need?
A. Our product is so innovative that our
customers don’t even know they need it yet!
B. We have some unique features/benefits and
our technology is better
C. We are solving this cumbersome problem in a
new and innovative way …

32. Top 10 Business Model Questions
…
2. Are your customers definable and
identifiable?
A. I wish
B. Our product appeals to a wide and diverse
variety of demographics and that makes our
market expansive
C. We have a clear model of our ideal prospects
and have a unique way to find them

33. Top 10 Business Model Questions
…
3. Does your pricing model maximize your
customer relationship?
A. We don’t charge anyone anything
B. We have a time-of-sale price with a
significant margin
C. Our creative pricing model fits into our
customers way of doing business, and
provides us with cash both up front and on
an annuity basis.

34. Top 10 Business Model Questions …
4. What are the core functions of your
operation?
A. We can do anything!
B. Product Development
C. Our core functions center on innovative ways
of delivering our Product and Services
including…

35. Top 10 Business Model Questions
…
5. How will you connect with your customers?
A. Haven’t you ever seen Field of Dreams?
B. We use Search Engine Optimization, traditional
advertising vehicles and attend trade shows
C. We maximize our customer reach through web
and traditional advertising, and maintain
unique relationships with those customers by …

36. Top 10 Business Model Questions
…
6. What are your sources of
revenue?
A. For the foreseeable
future, Investors!
B. We have incredible profit margins
on each sale.
C. We have multiple sources of
revenue including both direct and
indirect sales and recurring
revenue by …

37. Top 10 Business Model Questions
…
7. What are your major costs?
A. Office space and expense accounts
B. People
C. Research and Development for subsequent product
lines once we are at break even.

38. Top 10 Business Model Questions
…
8. What sales channels can you leverage?
A. Only two people in the country are highly trained
with the technical expertise needed to sell our
product – and they both work for us!
B. We have a direct sales force that can be easily
expanded or contracted based on our sales plan
C. We have innovative third party sales channel
partners who are eager for our product, and we
have talented sales managers who leverage selling
agents relevant to the region and/or area of
expertise

39. Top 10 Business Model Questions
…
What are the core capabilities
9.
required for your company to operate
and grow?
A. Jim, Sue, and Ivan
B. Software development
C. We maintain a unique set of capabilities
that allow us maintain our market
position by …

40. Top 10 Business Model Questions
…
10. What supplier relationships do you
have or need to have?
A. We don’t need anybody or anything!
B. We have one critical supplier and they
are committed for the next year.
C. We have an inventive partnership with one
supplier, and have custom arrangements with three
other short term sources based on demand.

41. Assess Your B ness M
usi odel
1. _____ 6. _____
2. _____ 7. _____
3. _____ 8. _____
4. _____ 9. _____
5. _____ 10. _____
Count the number of C’s & multiply by 2 =
Count the number of B’s & multiply by 1 =
Forget the A’s! Total =

42. I s Your Baby U y?
gl
16 - 17
18 - 20
14 - 15

43. I s Your Baby U y?
gl
13 or less

44. Som O her M
et odel s &
R er ences
ef
WWW.WillowRockInc.com (Coming Soon)
http://business-model-design.blogspot.com/
http://1000ventures.com/ebooks/bec_mc_new_busi
ness_models.html
http://www.boardofinnovation.com/business-model-
examples/
OR Just Google “Innovative Business Models”

45. “This is not the end.
It is not even the beginning of the end.
But it is, perhaps, the end of the beginning.”
- Winston Churchill