Business Modeling Tools Part 1 & 2 Alexander Hurtado Henao 07-02-2016

Program The Business Model Canvas (BMC) The 9 building blocks + create a BMC Break (30 minutes) Storytelling Presentation of your BMC Effectuation

Definition of a business model A business model describes the rationale of how an organization creates, delivers and captures value.

The Business Model Canvas

The Business Model Canvas https://www.youtube.com/watch?v=QoAOzMTLP5s

The Business Model Canvas Alexander Osterwalder & Yves Pigneur

The Business Model Canvas It’s a concept that allows you to describe and think through the business model of your organization, your competitors, or any other enterprise. It’s a concept to create a shared language that allows you to easily describe and manipulate business models to create new strategic alternatives. The nine blocks cover the four main areas of a business: customers, offers, infrastructure, and financial viability.

The 9 building blocks

The 9 building blocks

The Business Model Canvas Template

Example: Apple iPod/iTunes Business Model

The cow exercise

Customer Segments The Customer Segments building block defines the different groups of people or organizations an enterprise aims to reach and serve. For whom are we creating value? Who are our most important customers?

Customer Segments Mass market Niche market Segmented Diversified

Customer Segments The Customer Segments building block defines the different groups of people or organizations an enterprise aims to reach and serve. For whom are we creating value? Who are our most important customers?

Value Propositions The Value Propositions building block describes the bundle of products and services that create value for a specific Customer Segment. 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?

Value Propositions Newness Performance Customization Getting the job done Design Brand/status Price Accessibility and Usability

Value Propositions The Value Propositions building block describes the bundle of products and services that create value for a specific Customer Segment. 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?

Channels The Channels building block describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition. Through which Channels do our Customer Segments want to be reached? How are we reaching them now? Which ones work best?

Channels The Channel phases Awareness Evaluation Purchase Delivery After sales

Channels The Channels building block describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition. Through which Channels do our Customer Segments want to be reached? How are we reaching them now? Which ones work best?

Customer Relationships The Customer Relationships building block describes the types of relationships a company establishes with specific Customer Segments. What type of relationship does each of our Customer Segments expect us to establish and maintain with them?

Customer Relationships Personal assistance Dedicated personal assistance Self-service Communities Co creation

Customer Relationships The Customer Relationships building block describes the types of relationships a company establishes with specific Customer Segments. What type of relationship does each of our Customer Segments expect us to establish and maintain with them?

Revenue Streams The Revenue Streams building block represents the cash a company generates from each Customer Segments. For what value are our customers really willing to pay?

Revenue Streams Asset sale Usage fee Subscription fees Lending/Renting/Leasing Brokerage fees Advertising

Revenue Streams The Revenue Streams building block represents the cash a company generates from each Customer Segments. For what value are our customers really willing to pay?

Key Resources The Key Resources building block describes the most important assets required to make a business model work. What Key Resources do our Value Proposition require?

Key Resources Physical Intellectual Human Financial

Key Resources The Key Resources building block describes the most important assets required to make a business model work. What Key Resources do our Value Proposition require?

Key Activities The Key Activities building blocks describes the most important things a company must do to make its business model work. What Key Activities do our Value Propositions require?

Key Activities Production Problem solving

Key Activities The Key Activities building blocks describes the most important things a company must do to make its business model work. What Key Activities do our Value Propositions require?

Break

Key Partnerships The Key Partnerships building block describes the network of suppliers and partners that make the business model work. Who are our Key Partners? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform?

Key Partnerships Optimization and economy of scale Reduction of risk and uncertainty Acquisition of particular resources and activities

Key Partnerships The Key Partnerships building block describes the network of suppliers and partners that make the business model work. Who are our Key Partners? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform?

Cost Structure The Cost Structure building block describes all costs incurred to operate a business model? What are the most important costs inherent in our business? Which Key Resources are most expensive? Which Key Activities are most expensive?

Cost Structure Cost-driven Value-driven Fixed costs Variable costs

Cost Structure The Cost Structure building block describes all costs incurred to operate a business model? What are the most important costs inherent in our business? Which Key Resources are most expensive? Which Key Activities are most expensive?

Storytelling

Telling a visual story Business models are complex concepts composed of various building blocks and their interrelationships, it is difficult to truly understand a model without sketching it out.

Telling a visual story Presentation killers & Presentation tips 1. Too much detail  Use words and visuals 2. Cognitive murder  Step by step 3. Orphan elements  Use colour coding

Too much detail  Use words and visuals

Too much detail  Use words and visuals

Cognitive murder  Step by step

Cognitive murder  Step by step

Orphan elements  Use colour coding

Orphan elements  Use colour coding

Telling a visual story Two techniques to tell a visual story: The use of Post-it notes The use of sketches

Telling a visual story Four processes improved by visual thinking & telling: Understanding the essence Enhance dialogue Explore ideas Improve communication

Presentations

Effectuation Effectuation is a way of thinking that serves entrepreneurs in the processes of opportunity identification and new venture creation. Effectuation is a set of (5) decision- making principles introduced by Saras Sarasvathy. https://www.youtube.com/watch?v =TIXVe4nEDEE

Effectuation The most important difference between causal reasoning and effectuation is that an entrepreneur using causation has a given goal and searches for means to reach his goal. If the entrepreneur uses effectuation instead, he will start with the means he has and from this point he looks at possible goals.

1. Bird in hand principle Start with your means (Who are you?) The 3F’s, better known as friends, family and fools. So an entrepreneur does not start with a given goal, but with the tools he or she has.

2. Affordable loss principle Focus on the downside risk. An entrepreneur does not focus on possible profits, but on the possible losses and how they can minimize those losses. Focus on limiting the downside to an affordable level that can be controlled and do not try to predict the upside as this is impossible under true uncertainty.

3. Crazy quilt principle Form partnerships. Entrepreneurs cooperate with parties they can trust. These parties can limit the affordable loss by giving pre-commitment. Don’t pay for means and increase risk, share revenues and limit investments.

4. Lemonade principle Entrepreneurs invite the surprise factor. Surprises are not necessarily seen as something bad, but as opportunities to find new markets.

5. Pilot in the plane principle In this stage, all the previous principles are put together. The future cannot be predicted, but entrepreneurs can control some of the factors which determine the future. By focusing on activities within their control, entrepreneurs know their actions will eventually result in a desired outcome.

Business Modeling Tools Part 3 & 4 Alexander Hurtado Henao 09-02-2016

Program The Empathy Map Simon Sinek (inspirational video) Stakeholders Analysis Ricardo Semler (inspirational video) Break (30 minutes) Create a Business Model Canvas with an additional Empathy Map and Stakeholders analysis Presentation of the products

The Empathy Map This tool helps you go beyond a customer’s demographic characteristics and develop a better understanding of environment, behavior, concerns and aspirations of the customer. It allows you to devise a stronger business model because it helps you to better understand what a customer is truly willing (to pay for it).

The Empathy Map

Exercise: The Empathy Map What does the customer see? What does the customer really think and feel? What does the customer say and do? What is the customer’s pain? What does the customer gain?

Example: The Empathy Map

Inspirational video Simon Sinek https://www.youtube.com/watch?v =u4ZoJKF_VuA

Stakeholders Analysis The definition of a stakeholder: a person, group or organization that has interest or concern in an organization. Not al stakeholders are the same. Some of them are more influential than others, or are more important in your organization than others. By making an analysis of the stakeholders you can choose the right strategy to connect with them.

Stakeholders Analysis

Exercise: Stakeholders Analysis Brainstorm about all possible stakeholders (at least 10) Give them their proper place in the matrix

Inspirational video Ricardo Semler https://www.youtube.com/watch?v= k4vzhweOefs

Break

Program Create a Business Model Canvas Make an Empathy Map of the Customer Segments Make a Stakeholders Analysis of the Key Partners Present your BMC, Empathy Map and Stakeholders Analysis