Business Model Generation
Patterns
Pattern Nº. 1
Pattern Nº.2
Pattern Nº. 3
Unbundled Business Model: there are 3 fundamentally different types of business.
Long Tail Business Model: focus on offering a large number of niche products, each of which sells relatively infrequently
Multi-sided Platforms: Bring together more distinct but independent groups os customers.
Canvas
- Customer Relationship businsses
4. Costumer relationships
The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments
3. Channels
-Newness
-Performance
-Customization
-“Getting the job done”
-Design
-Brand/status
-Price
-Cost reduction
-Risk reduction
-Accessibility
-Convenience/usability
A Value Proposition creates value for a Customer Segment through a distinct mix of elements catering to that segment’s needs. Values may be quantitative (e.g. price, speed of service) or qualitative (e.g. design, customer experience).
2. Value Propositions
The Channels Building Block describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition
The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment.
1. Costumer segments
The type of relationship it wants to establish with each Customer Segment.
From personal to automated.
Motivations:
• Customer acquisition
• Customer retention
• Boosting sales (upselling)
The Customer Segments Building Block defines the different groups of people or organizations an enterprise aims to reach and serve.
- Communication, distribution, and sales Channels
- Channels are customer touch points
- Channels serve several functions:
-Raising awareness among customers about a
company’s products and services
-Helping customers evaluate a company’s Value
Proposition
-Allowing customers to purchase specific products and
services
-Delivering a Value Proposition to customers
-Providing post-purchase customer support
4. Costumer relationships
We can distinguish between several categories of Customer Relationships, which may co-exist in a company’s relationship with a particular Customer Segment
What type of relationship does each of our Customer Segments 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?
Personal assistance
Dedicated personal assistance
Self-service
Automated services
Communities
Co-creation
3. Channels
- The reason why customers turn to one company over another.
- It solves a customer problem or satisfies a customer need.
- Selected bundle of products and/or services that caters to the requirements of a specific Customer Segment.
- An aggregation, or bundle, of benefits that a company offers customers.
- Innovative and represent a new or disruptive offer.
- Added features and attributes.
Design
Channels have five distinct phases. Each channel can cover some or all of these phases.
- Customers comprise the heart of any business model.
- Group them into distinct segments with common needs, common behaviors, or other attributes.
- A business model may define one or several large or small Customer Segments.
- An organization must make a conscious decision about which segments to serve and which segments to ignore.
Through which Channels do our Customer Segments want to be reached?
How are we reaching them now?
How are our Channels integrated?
Which ones work best?
Which ones are most cost-efficient?
How are we integrating them with customer routines?
2. Value Propositions
What value do we deliver to the customer?
Which one of our customer’s problems are we helping
to solve?
Which customer needs are we satisfying?
What bundles of products and services are we offering
to each Customer Segment?
1. Costumer segments
For whom are we creating value?
Who are our most important customers?
There are different types of Customer Segments.
Here are some examples
Mass market
Niche Market
Segmented
Diversified
Multi-sided platforms (or multi-sided markets)
Who are our Key Partners?
Who are our key suppliers?
Which Key Resources are we acquiring from partners?
Which Key Activities do partners perform?
It can be useful to distinguish between three motivations for creating partnerships
Optimization and economy of scale
Reduction of risk and uncertainty
Acquisition of particular resources and activities
8. Key Partnerships
7. Key activities
The Key Partnerships Building Block describes the network of suppliers and partners that make the business model work
6. Key resources
For what value are our customers really willing to pay?
The Key Activities Building Block describes the most important things a company must do to make its business model work
For what do they currently pay?
-Partnerships are becoming a cornerstone many business models.
-Companies create alliances to optimize their business models
How are currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to overall revenues?
5. Revenue streams
These techniques will help you design your business model canvas
The Key Resources Building Block describes the most important assets required to make a business model work
We can distinguish between four different types of partnerships:
-Key Activities are the most important actions a company must take to operate successfully.
- Key Activities differ depending on business model type
-Key Activities include problem solving
The Revenue Streams Building Block represents the cash a company generates from each Costumer Segment (costs must be subtracted from revenues to create earnings).
1. Strategic alliances between non-competitors
2. Competition: strategic partnerships between competitors
3. Joint ventures to develop new businesses
4. Buyer supplier relationships to assure reliable suppliers
-Resources allow an enterprise to create and of a Value Proposition.
-Different Key Resources are needed depending on the type of business model
-Key Resources can be physical, financial, intellectual, or human.
What key activities do our Value Propositions require?
Our distribution Channels?
Customer Relationships?
Revenue streams?
Key Activities can be categorized as follows:
Production
Problem solving
Platform/network
-Revenue streams are the arteries of a business model.
-For what value is each Costumer Segment truly willing to pay?
-Different pricing mechanisms.
Key Resources can be categorized as follows
What Key Resources do our Value Propositions require?
Our Distribution Channels?
Customer Relationships?
Revenue Streams?
Pattern Nº. 4
A business model can involve two different types
of Revenue Streams
1. Transaction revenues resulting from one-time customer payments
2. Recurring revenues resulting from ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support.
Pattern Nº. 5
FREE business model: at least one substantial Customer Segment is able to continuously benefit from a free-of-charge offer
Open Business Models: can be used by companies to create and capture value by systematically collaborating with outside partners
9. Cost structure
The Cost Structure describes all costs incurred to operate a business model
Creating and delivering value, maintaining Customer Relationships, and generating revenue all incur costs
1. Customer insights
2. Ideation
3. Visual Thinking
4. Prototyping
5. Storytelling
6. Scenarios
What are the most important costs inherent in our business model?
Which key Resources are most expensive?
Which Key Activities are mos expensive?
Cost Structure can have e following characteristics
Naturally enough, costs should be minimized in every
business model. But low Cost Structures are more
important to some business models than to others.
Therefore it can be useful to distinguish between two
broad classes of business model Cost Structures:
cost-driven and value-driven (many business models
fall in between these two extremes)
Find costs
Variable costs
Economies of scale
Economies of scope
Strategy
Process
Once you have created your business model canvas, give it a good strategic review:
Specific ways to implement the business model desing initiative
- Environment
- Evaluating Business Models
- Blue Ocean Strategies
- Manage Multiple Business Models
1. Mobilize
2. Understand
3. Design
4. Implement
5. Manage