A business model describes the rationale of how an organization creates, delivers, and captures value Def_Business Model

Customer Segments An organization serves one or several Customer Segments. 1: The 9 Building Blocks

Customer Segments An organization serves one or several Customer Segments. 1: Value Propositions It seeks to solve customer problems and satisfy customer needs with value propositions. 2: The 9 Building Blocks

Customer Segments An organization serves one or several Customer Segments. 1: Value Propositions It seeks to solve customer problems and satisfy customer needs with value propositions. 2: Channels Value propositions are delivered to customers through communication, distribution, and sales Channels. 3: The 9 Building Blocks

Customer Segments An organization serves one or several Customer Segments. 1: Value Propositions It seeks to solve customer problems and satisfy customer needs with value propositions. 2: Channels Value propositions are delivered to customers through communication, distribution, and sales Channels. 3: Customer Relationships Customer relationships are established and maintained with each Customer Segment. 4: The 9 Building Blocks

Revenue Streams Revenue streams result from value propositions successfully offered to customers. 5: The 9 Building Blocks

Revenue Streams Revenue streams result from value propositions successfully offered to customers. 5: Key Resources Key resources are the assets required to offer and deliver the previously described elements… 6: The 9 Building Blocks

Revenue Streams Revenue streams result from value propositions successfully offered to customers. 5: Key Resources Key resources are the assets required to offer and deliver the previously described elements… 6: Key Activities …by performing a number of Key Activities. 7: The 9 Building Blocks

Revenue Streams Revenue streams result from value propositions successfully offered to customers. 5: Key Resources Key resources are the assets required to offer and deliver the previously described elements… 6: Key Activities …by performing a number of Key Activities. 7: Key Partnerships Some activities are outsourced and some resources are acquired outside the enterprise. 8: The 9 Building Blocks

Revenue Streams Revenue streams result from value propositions successfully offered to customers. 5: Key Resources Key resources are the assets required to offer and deliver the previously described elements… 6: Key Activities …by performing a number of Key Activities. 7: Key Partnerships Some activities are outsourced and some resources are acquired outside the enterprise. 8: Cost Structure The business model elements result in the cost structure. 9: The 9 Building Blocks

1: Customer Segments The Customer Segments Building Block defines the different groups of people or organizations an enterprise aims to reach and serve.

1: Customer Segments For whom are we creating value? Who are our most important customers?

1: Customer 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)

2: 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? What bundles of products and services are we offering to each Customer Segment? 2: Value Propositions

Newness Performances Customization ‘Getting the job done’ Design Brand/status 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? 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.

3: 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 can we reaching them? How can our Channels integrate? Which ones will work best? Which ones are most cost-efficient? How are we integrating them with customer routines? 3: Channels

Awareness Evaluation Purchase Delivery After sales Channels have five distinct phases. Each channel can cover some or all of these phases. Through which Channels do our Customer Segments want to be reached? How can we reaching them? How can our Channels integrate? Which ones will work best? Which ones are most cost-efficient? How are we integrating them with customer routines? 3: Channels

4: 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? Which ones have we established? How costly are they? How can they integrate with our business model? 4: Customer Relationships

Personal assistance Dedicated personal assistance Self-service Automated services Communities Co-creation 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 can they integrate with our business model? 4: Customer Relationships

5: Revenue Streams The Revenue Streams Building Block represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings)

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? 5: Revenue Streams

Asset sale Usage fee Subscription fees Lending/Renting/Leasing Licensing Brokerage fees Advertising There are several ways to generate Revenue Streams: 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? 5: Revenue Streams

6: 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 Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? 6: Key Resources

Physical Intellectual Human Financial Key Resources can be categorized as follows: What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? 6: Key Resources

7: Key Activities The Key Activities Building Block describes the most important things a company must do to make its business model work

What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? 7: Key Activities

Production Problem solving Platform/network Key Activities can be categorized as follows: What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? 7: Key Activities

8: 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? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? 8: Key Partnerships

Optimization and economy of scale Reduction of risk and uncertainty Acquisition of particular resources and activities It can be useful to distinguish between three motivations for creating partnerships: Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? 8: Key Partnerships

9: Cost Structure The Cost Structure describes all costs incurred to operate a business model

Cost-driven Value-driven 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 What are the most important costs inherent in your business model? Which Key Resources are most expensive? Which Key Activities are most expensive? 9: Cost Structure

The nine business model Building Blocks form the basis for a handy tool, which we call the Business Model Canvas.

The Business Model Canvas, is a strategic management and entrepreneurial tool. It allows you to describe, design, challenge, invent, and pivot your business model.

Example: Apple iPod/iTunes Business Model

Tips 1: Use Sticky Notes Use a sticky note for each and every one of the building blocks of your business model. Ideas need to be mobile.

Tips 2: Draw Use words AND images to describe your business model building blocks to enhance big picture understanding.

Tips 3: Use colours Increase the clarity of your business model by color-coding all elements related to a specific client segment.

Tips 4: Sketch Alternatives Don't fall in love with your first idea. Sketch out alternative business models for the same product, service, or technology.

Tips 5: Tell a story Start from a blank Canvas when you explain your business model. Tell your business model story one sticky note at a time.

Tips 6: Learn from the best Map out every new and innovative business model you come across. Understand, learn and try to apply to your model.

Disruptive new business models are emblematic of our generation. Yet they remain poorly understood, even as they transform competitive landscapes across industries. Business Model Generation offers you powerful, simple, tested tools for understanding, designing, re-working, and implementing your business model.