1. “Skate to where the money will be, not where it is now” - Christiansen
Business model
“Skate to where the money will be, not where it is now” - Christiansen

2. What is a Business Model?
A business model describes the rationale of how an organization creates, delivers, and captures value.
The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems.

3. The four main areas of a business
Whom
What
How
What is the outcome/Returns
Whom - customers
What - offer
How - infrastructure
What is the outcome/Returns - financial viability

4. The building blocks … Customer Segments
An organization needs to understand who is their target
customer. They may serve one or several Customer Segments.
For whom are we creating value?
Customer segment – mass market, niche market, segmented, diversified, customized

5. The building blocks … Value Propositions
It seeks to solve customer problems and satisfy customer
needs with a bundle of benefits.
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?
Innovative
Similar to existing product but with added features
May be customized
Design
Price
Cost Reduction
Risk Reduction
Accessibility
Convenience/Usability
Customized as per the need of customers,
May be distinct in design- as in case of electronic goods
It may have the same features but at reduced price,
It may reduce perceived risk in the form of guarantees,
Made easily accessible to the customers.
Sometimes the value proposition is based on needs of price sensitive customers viz., the Nano, a new car designed and manufactured by Tata.

6. The building blocks … Channels
Value propositions are delivered to customers
through communication, distribution, and sales channels.
Through which Channels are Customer Segments
to be reached?
Can the Channels be integrated?
Which ones work best?
Which ones are the most cost-efficient?

7. The building blocks … Customer Relationships
Customer relationships are established and maintained with
each Customer Segment. They deeply influence the overall
customer experience.
What type of relationship does each of our customers want?
Segments expect us to establish and maintain with them?
Which ones have we established?
How are they integrated with the rest of our business model?
How costly are they?
Dedicated customer service with personal interaction
Automated services –online profiles of customers
Creating communities to exchange knowledge
Co-creation with web 2.0

8. The building blocks … Key Resources
Key resources are the assets required to offer and deliver
the previously described elements.
What key resources are required for the value proposition?
Does it depend on distribution channel, customer relationship
or revenue streams?
Physical
Intellectual (brand patents, copyrights, data)
Human
Financial

9. The building blocks … Key Activities
Key activities are the most important actions a company
must take to operate successfully.
What Key Activities do our Value Propositions require?
Our Distribution Channels?
Customer Relationships?
Revenue streams?
Production
Problem Solving
Platform/Network

10. The building blocks … Key Partnerships
The key partnerships describes the network of suppliers
and partners (to acquire resource or reduce risk) 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?
Strategic alliances between non-competitors
Coopetition: strategic partnerships between competitors
Joint ventures to develop new businesses
Buyer-supplier relationships to assure reliable supplies

11. The building blocks … Cost structure
The Cost Structure describes all costs incurred to operate a
business model- right from creating value proposition to
delivering and maintaining customer relationships.
What are the most important costs inherent in the
business model?
Which Key Resources are most expensive?
Which Key Activities are most expensive?
Are fixed costs high or variable costs?
Value-driven, cost-driven, profit-driven

12. The building blocks … Revenue Streams
Revenue streams result from value propositions successfully
offered to customers.
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?
How much does each Revenue Stream contribute
to overall revenues?
Transaction-based, recurring revenues
Sale of product/ service, Usage fee, Subscription Fees, Lending/Renting/Leasing, Licensing, Brokerage fees, Advertising
Fixed pricing, dynamic pricing

13. The Business Model Canvas
Key
Partners
Activities
Value
Proposition
Customer
Relationships
Segments
Key Resources
Channels
Cost
Structure
Revenue
Streams
Source: Business Model Generation, Alex Osterwalder & Yves Pigneur

15. “There’s not a single business model…
There are really a lot of opportunities and a
lot of options and we just have to discover all
of them.”
Tim O’Reilly
CEO, O’Reilly