1. Design a Piano Business Model

2. Workout Describe a Piano Like Musical Instrument
Potential customer set
Attributes
Channels
Business model
Define a business model:
That produces revenue by satisfying customer demand
i.e., that meets the ‘Framing’ challenge
That can be argued to have high expected ROI
(where expected revenues significantly exceed expected costs)
i.e., that meets the ‘Venture Capital’ challenge

3. Three Challenges
Framing
Venture Capital
Communication

4. The Framing Challenge What Is the Real Business Problem?
Accurately define your customers and what motives them
Properly framing a problem in terms of
the reality of the situation and
the objectives of the organization
is an important step in the decision-making process.
Mental frames act to channel our thinking and are important tools to help navigate complex decisions

5. The Venture Capital Challenge
What is your business worth, and why?
Your new venture competes in two markets:
Product
Financial
How will you tie this to your business model
tying narrative to numbers
What are the activities, operations and products?
What are the significant environmental influences?
major competitive forces outside management control
How does value flow through your business model?
What is the Net Present Value of future activities

6. The Communication Challenge
Provide a ‘lead in’ which will ‘hook’ your listener (the elevator pitch)
Provide a brief ‘sales pitch’ presenting the major components of your innovation and business
Consider what parts you most want to emphasize about the business model
Describe your business in one paragraph (equivalent to the 25 second pitch)
Numbers
Behavioral model and capabilities required
Strategy model
Investment Risk
A summary financial analysis to show risk and ROI for the project
Answer your investors question:
Why should I give you My money?"

7. Activity #1: Identify your Customer
Commercialization is about creating a customer
‘Quiz’ to identify your customer:
Who?
… is with customers while hey use the product & How much influence do they have
If we could arrange it, who would we want the customer to be with …
What?
… Do our customers experience when the use the product
… needs provoked our offering
What else? … might customers have on their minds
When? … do our customers use this ..
Where? … are our customers when they use this
How? … do customers learn to use the product ..

8. Activity #2: Select a Product or Service
Select a Product or Service that you are interested in marketing via Internet business models
This is mainly about determining your Core Capabilities
Capabilities =Assets + Competences
Money is important
Innovation  Utility  Commercial value
Talk about your opportunity register (OR)
Your repository of alternative ideas that can be pulled up at any time If a particular idea isn’t working

9. Ways of Describing Attributes
Common descriptive attributes are: substance, structure, color, shape, texture, sound, taste, odor, space, and density.
Common process attributes are: marketing, manufacturing, selling, function, and time.
Common social attributes are: responsibilities, politics, and taboos.
Common price attributes are: cost to manufacturer, wholesaler, retailer, and consumer.
Common ecological attributes are: positive or negative impact on the environment.
For example:
The attributes of a pencil might be listed as: used for writing, yellow, lead, eraser, sharp, hexagonal, has printing on it, and is cylindrical

10. Identify the 3 most important features
Specify the particular customer choices you are offering in your product or service (no more than three) as
Identify the discriminators and energizers
What differentiates your product from competitors’ in the customer’s minds?
List the three features that are important to the target customer, and rank them from most to least important.
Basic
Discriminator
Energizer
Positive
Nonnegotiable
Differentiator
Exciter
Negative
Tolerable
Dissatisfier
Enrager
Neutral
So What?
Parallel

11. Activity #3: Make a Profitable Business
Define how you will measure the usefulness or attractiveness of each of these features to the target customer.
This performance metric should be a numerical measure
Draw a value map describing your companies proposed business model, and
provide some indication of the costs and revenues that will flow into and out of the business.
Define your product’s top competitor in each of these 3 features
Are these companies profitable?
How big (approximately) is their business?
Why is your product better?
Think: Low-cost or Differentiated Products?

12. Activity #4: Define Your Channels
Consumption Chain Analysis
Works from the premise that
opportunities for differentiating your product from others
lurk at every step and decision that your customers take
From the time they first become aware of their need for your product or service
To the time thy finally dispose of the remnants of the used up product
Product differentiation is the secret to high revenue

13. Customer Relationship Management (CRM)
Determine the main steps in consumption
Each step on the consumption chain has an attribute map
You should only list the 3 or 4 most important steps
These will determine whether the potential customer proceeds to the next step (good)
Or leaves the consumption process (not good)

14. Activity #5: Describe the Business Model and Entrance Strategy
Start with a compelling story
Part of selling your strategy / investment
Tying Narrative to Financial Numbers
Strategy becomes less philosophy
More performance and outcome
What activities, operations and products are within the ‘scope’ of the valuation analysis? (Bubbles: depends on audience)
What are the significant environmental influences? (Boxes: major competitive forces outside management control)
How does value flow through the relevant scope of the analysis? (Arrows: value metric)

15. Market Entrance Strategy
What are the major competitive forces molding managerial strategy which add to, or take away from ‘Value’?
What ‘levers’ (strategy drivers) can management pull to influence value added?
What is the functional relationship between value and the strategy drivers? (Define the ‘Strategy Model’)
What are the major technologies relevant to managerial strategy which add to, or take away from ‘Value’?

16. Activity #6:
Complements
Make a list of Complementary assets, skills or other attributes
that are not controlled by you,
but are required to make your product salable

17. Required The project will comprise the following:
Work in groups of three to four
25 second ‘elevator pitch’
10 minutes to walk through
the activities that will define your e-business model
Use the whiteboard to emphasize points, draw graphs, etc.
Feel free to present on PPT from your laptops.

18. Required: Meet the Challenges
Framing
What Is the Real Business Problem?
the reality of the situation and
the objectives of the organization
Venture Capital
Your new venture competes in two markets: (1) Product; (2) Financial
What are its activities, environmental influences, operations and products?
How does value flow through your business model? What is the NPV of future activities
Communication
Provide a ‘lead in’ which will ‘hook’ your listener (the elevator pitch)
Provide a brief ‘sales pitch’ presenting the major components of your innovation and business
Consider what parts you most want to emphasize about the business model
Answer your investors question:
Why should I give you My money?"