SW 1: white spaces & 4 box business models

White Spaces (what is it for & how does it work)

- A model for growth and renewal - y = Nature of the opportunity - x = Nature of customer oben = poor fit with current organization unten = good fit " Elements von oben links imUhrzeigersinn:: nichts - white space - adjacency - core business

Customer Segments (in BMC)

- Defines the groups of people organisations aim to serve - questions: °for whom are we creating value? °who are our most important customers? e.g. mass market, niche market, diversified, multi sided platforms.

Value Proposition Canvas (elements)

- Value Map = describes the values generated by a business model - Customer Profile = describes a special customer segment

The Business Model Canvas Definition

- describes all aspects of a sustainable business model - template for strategic management & lean start-ups for developing new or existing business models including--> product's value proposition, infrastructure, customers, & finances - it helpf firm in aligning their activities by illustrating potential trade-offs.

Customer Value Proposition formula (how to maximize a cvp?)

1. Identify an important job-to-be-done that is poorly satisfied today for a customer 2. Devise and develop an offering that does the job better than alternatives at the lowest appropriate price

Business Model Definition

A business model is the blueprint of how a company does business OR A business model describes the rationale of how an organization creates, delivers and captures value OR A business model answers the basic questions: - who is your customer? - how do you create revenue

Value Proposition

A value proposition describes the benefits customer can expect from a company's products & services Product / Service --> Value Proposition --> Customer

What is the difference between a business model and a business plan?

BM = "What we do to generate profit" -> part of the business plan / BM is a mechanism which is used to generate profit. BM describes how the firm is positioned in the industry's value chain & how it works with supplier, clients, partners to generate profits BP = how we will reach that goal? --> how to set up your business model / BP is about the strategy & expected financial performance for the years to come BP translates this positioning of BM in a series of strategic actions and quantifies their financiel impact.

What connects the elements of the four box business model?

Business rules, behavioral norms and success metrics! they connect the elements and of the bm and keep the system in proper balance. They ensure that the business can repeatedly and predictably deliver the CVP and fulfi ll the profi t formula. Since their function is to perpetuate the existing operations, they tend to form last in the evolution of a business model.

The four box business model elements

CVP = how firm creates value for a given set of customers at a given price profi t formula = defines how the company will capture value for itself and its shareholders in the form of profit (this is based on 4 elements: revenue model, cost structure, target unit margin, and resource velocity) key resources & key processes = means by which a company delivers value --> enable the enterprise to fulfi ll the CVP and profit formula in a repeatable, scalable fashion

Key processes (as part of four box business model)

Key processes, as well as business rules, behavioral norms, and success metrics that make the profitable delivery of the CVP repeatable and scalable. Might include: Processes: design, product development, sourcing, manufacturing, marketing, hiring & training, IT. Business rules & success metrics: margin requirements for investments, credit terms, lead times, supplier terms. Behavioral norms: opportunity size needed for investment, approach to customers and channels.

Key resources (as a part of four box business model)

Key resources needed to deliver the CVP profitably, might include: - people - technology, products - equipment - information - channel - partnerships, alliances - funding - brand

Profit formula (based on 4 elements)

Revenue model: How much money can be made: price / quantity. Quantity can be thought of in terms of market share, purchase frequency, ancillary sales, etc. Cost structure: Includes direct costs, overhead costs, and economies of scale. Target unit margin: how much each transaction shoul net to cover overhead and achieve desired profit levels. Resource velocity: how quickly resources need to be used to support target volume. Includes lead times, throughput, inventory turns, asset utilization, etc.

Customer Value Proposition (CVP Definition) & Relevant metrics

Start with the problem you want to solve and then define the product/Service you want to offer. - Job to be done: to solve an imprtant problem for a customer - Offering: Satisfies the problem or job. Defined not only by what is sold but also by how it is sold. Metrics 1. How important the job-to-be-done is to customers 2. How satisfied customers are with current solutions 3. How well the new offering gets the job done, relative to the other options

Defining the Growth gap

ipod /iTunes impact on Apple's growth

The Value Onion

von innen nach aussen: - economic value - perceived value - relational value - experiential value = value that you can define/ understand if this is something that helps you tor aomething you neglect (experience)

Business Model Canvas: what are the link to marketing & marketing organization?

° marketing must be aligned with the business model in order to support it effectively (e.g. sales-channels) ° value proposition must be identified, otherwise businessmodel will not work as intended ° BM are important so that marketeer knows how to sell bring the good to the consumer ° VP is important, bc clients seeks more than just the product, he wants to know the benefit/value from it

Cost structure (in BMC)

- describes all costs incurred to operate a business model Questions: ° what are the most important costs inherent in the model? ° which key resources are most expensive? ° which key activities are most expensive?

Channels (in BMC)

- describes how a firm communicates to reach customers to deliver a value proposition - questions: ° through which channel do our customer want to be reached °how are we reaching them now? °how are channels integrated ? °which is cost efficient? °which works best?

Value Proposition (in BMC)

- describes the bundle of products and services that create value for a specific customer segment Questions: ° what value do we deliver to the customer? ° which one of our customer's problem are we helping to solve ° what bundles of products and services are we offering to each customer segment? ° Which customers needs are we satisfying

Key resources (in BMC)

- describes the most important assets required to make a business model work Questions: ° what key resources do our value proposition require? ° our distribution channels? Customer relationships? ° revenue streams?

Key partners (in BMC)

- 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 resource are we acquiring from partners? ° which key activites do partners perform?

Customer Relationships (in BMC)

- describes the types of relationships a company establishes with a specific customer segment - questions: #what type of relationship does each of the customer segments expects from us? ° which ones have we established= ° how are they integrated with the rest of our business model? °how costly are they?

The difference between quality, satisfaction and value

- quality is the objective assessment of technical product and service features, whereas value is an overall subjective judgement of a product or service - measuring the satisfaction you get from something is always post hoc. Value, on the other hand, is different and can be assessed before, during and after the use of the solution.

Revenue streams (in BMC)

- represents the cash a company generates from each customer segment (costs must be subtracted from revenues to create earnings) questions: ° for what value are customers willing to pay? ° for what are they currently paying? ° how would they prefer to pay? ° how much does each revenue stream contribute to overall revenues?

What is included in the structure of the basic business model canvas?

- resources/partners = key partners, key activities, key resources - services = value proposition - customer = customer relationships, customer segments, channels - costs = cost structure - revenues = revenue streams