Building a Business Model for Compétitive avantages

1

Operating Margin Growth in Excess of Competitive Peers

compound annual growth rate over five years

[Source: IBM, CEOs are expanding the innovation horizon: important implications for CIOs] 2

Benefits Cited by Business Model Innovators

percent of respondents

[Source: IBM, Global CEO Study 2006] 3

Business Model Design Block

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VALUE PROPOSITION

COST STRUCTURE

CUSTOMER RELATIONSHIPS

CUSTOMER SEGMENTS

ACTIVITY CONFIGURATION

CORE CAPABILITIES

PARTNER NETWORK

REVENUE STREAMS

INFRASTRUCTURE CUSTOMER OFFER

FINANCE

a business model describes the value an organization offers to various customers and portrays the capabilities and partners required for

creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and sustainable revenue streams

DISTRIBUTION CHANNELS

[Osterwalder (2004) The Business Model Ontology]

business model framework

5

Modelling: The Business Model Ontology

Channel Value Configuration Value Proposition Capability Customer

Link Activity Offering Resource Criterion

Relationship Partnership Actor

Mechanism Agreement

Revenue Cost Profit

Pricing Account

INFRASTRUCTURE MANAGEMENT

CUSTOMER INTERFACE PRODUCT

FINANCIAL ASPECTS

[Osterwalder and Pigneur, 2002, An e-Business Model Ontology for Modeling e-Business, Bled Electronic Commerce Conference]

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iPod

cost structure

lifestyle brand

“high-end” consumer

prod. & softw. design

hardware & softw. dev.

hardware revenues

iTunes multimedia downloads

e-commerce

multimedia rights mgmt

iBook

content producers

Apple stores

dealer network

multimedia revenues

hardware suppliers

brand management

hardware distribution

content distribution

content

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1. Value proposition

• Name • Description • Reasoning (use, risk, effort) • Life cycle (creation, purchase, use, renewal, transfer) • Value level (me-too, innovation/imitation, innovation) • Price level (attractive, market, high-end)

Value Proposition

Offering

setOf isA

Target Customers Capabilities

What we offer?

Target Customers Capabilities Value Proposition Capabilities Bird’s Eye View

Offering 1

Target Customers Capabilities Value Proposition Capabilities

Offering 2 Offering 3 Offering 4

Detailed View

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Comparing Value Propositions

Free VoIP Broadband Internet Users targets

SkypeOut

SkypeIn & voicemail

Value Proposition Target Customer Core Capacity

Large user base requires

Interconnectivity

Create VAS

Handle Prepayment (CC)

Listen & adapt

Handle Rapid Growth

9

Comparing Value Propositions

Voice Calls (in/out) Private Customer Connecting Users

Data Services

Value Added Services

Interconnectivity

Create VAS

Business Customer

Telco Carriers

Network Traffic Wholesale

Business Services

Free Network Capacity

SCM

requires targets

Value Proposition Target Customer Core Capacity

Telco

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Customer segment 2

Core capability

Value configuration

Partnership

CUSTOMER SEGMENT

Relationship

Distribution channel

Value proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?

How do we operate and deliver?

How do we collaborate?

What are our key competencies? What are our revenues? Our pricing?

What are our costs?

WHO?

What do we offer to our customers?

Who are our customers?

How do we reach them?

How do we get and keep them?

11

Comparing Customer Groups

Free VoIP Broadband Internet Users targets

SkypeOut

SkypeIn & voicemail

Voice Calls (in/out) Private Customer targets

Data Services

Value Added Services

Business Customer

Telco Carriers

Network Traffic Wholesale

Business Services

Value Proposition Target Customer

SKY

PE

TELC

O

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VALUE

PROPOSITION

CUSTOMER

SEGMENTS

value proposition 1

value proposition 2

…

target customer 1

target customer 2

…

CUSTOMER OFFER

what value proposition do you offer, to which customer segments? (model)

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Segments

• Categorizations of the population into social class or psychologically defined groups

• Area where a firm can specialize and gain competitive advantage

– By having lower costs or customer-satisfying differentiation

– Clear distinction

– Limited set of competitors

– Distinctive supply

– Different purchase criteria

– Barriers to deter new entrants

MJF concerts Festival visitors Attractive MJF venue

MJF off

MJF frequentation

MJF recordings

Sponsors

Record, TV, artists

Shops

Value Proposition Target Customer Capability

Contract stars

Attract people

Atmosphere & Experience

MJF sponsorship

Mobilize Volunteer Staff

MJF Brand & Franchise Franchisees

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Distribution channel 3

Core capability

Value configuration

Partnership

Relationship

DISTRIBUTION CHANNEL

Value proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?

How do we operate and deliver?

How do we collaborate?

What are our key competencies? What are our revenues? Our pricing?

What are our costs?

WHO?

What do we offer to our customers?

Who are our customers?

How do we reach them?

How do we get and keep them?

Customer segment

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3. Distribution channel

How do we reach our customers? Feel and serve them?

Channel

Link

setOf isA

Customer Value proposition

Offering

isA

Internet

Network isA

Call center

Actor by

Delivered through Delivered to

• Description • Reasoning • Customer Buying Cycle • Value Level • Price Level

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VALUE

PROPOSITION

COMMUNICATION

& DISTRIBUTION

CHANNELS

value proposition 1

value proposition 2

…

channel 1

channel 2

…

OFFER

how do you reach your customers? (model)

CUSTOMER

SEGMENTS

target customer 1

target customer 2

…

CUSTOMER

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Comparing Distribution & Communication Channels

Skype Website Broadband Internet Users Free VoIP delivers serves

Viral Marketing

Accessory Vendors

SkypeOut

SkypeIn & Voicemail

Distribution Channel Target Customer Value Proposition

Software

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Comparing Distribution & Communication Channels (continued)

Phone Private Customer Voice Calls (in/out) delivers serves

Retail Shops

Sales Force

Data Services

Value Added Services

Business Customer

Telco Carriers

Traditional Marketing

Website

Network Traffic Wholesale

Business Services

Distribution Channel Target Customer Value Proposition

Telco

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Customer relationship 4

Core capability

Value configuration

Partnership

CUSTOMER RELATIONSHIP

Distribution channel

Value proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?

How do we operate and deliver?

How do we collaborate?

What are our key competencies? What are our revenues? Our pricing?

What are our costs?

WHO?

Who are our customers?

How do we reach them?

How do we get and keep them?

Customer segment

What do we offer to our customers?

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Core capabilities (resources) 5

CAPABILITY

Value configuration

Partnership

Customer relationship

Distribution channel

Value proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?

How do we operate and deliver?

How do we collaborate?

What are our key competencies? What are our revenues? Our pricing?

What are our costs?

WHO?

Who are our customers?

How do we reach them?

How do we get and keep them?

Customer segment

What do we offer to our customers?

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5. Capabilities and resources

Capability

Resource

setOf isA

Value proposition

What are our key competencies?

Actor by

• Description • Reasoning

Business capability

Mgmt capability isA

Infrastructure operation

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Comparing Core capabilities and Resources

Free VoIP Large user base requires

SkypeOut

SkypeIn & voicemail

Interconnectivity

Create VAS

Voice Calls (in/out) Connecting Users requires

Data Services

Value Added Services

Interconnectivity

Create VAS

Network Traffic Wholesale

Business Services

Free Network Capacity

SCM

Value Proposition Core Capacity Value Proposition Core Capacity

Handle Prepayment (CC)

Listen & adapt

Handle Rapid Growth

Telco

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6. Activities and value configurations

• Description • Reasoning

Configuration

Activity

setOf isA

Value proposition Capability

Resource

Fit Flow Sharing

Value shop

Value chain isA

Value network

How do we operate and deliver?

Actor by

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Value chain

Upload

image data

Image network

Data transfer

to ColorMailer

Data transfer

to other

customers

Print infrastructure

Buy, receive & stock material to print on

Print Packaging staff

Pack goods

Delivery network

General

delivery

Deliver

ColorMailer packages

Receive complaints

ColorMailer Staff

Answer

complaints

Call center

fit

flow

share

fit

flow

share

share

share

Ch

an

nel

No

kia

Ch

an

nel

So

ny

flow

Web

site

Custome

r

share

Market

ColorMailer Services

Activity Resource By ACTOR Legend:

INBOUNT LOGISTICS OUTBOUND LOGISTICS OPERATIONS MARKETING SERVICES

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Partnership agreement 7

capability

Value chain

PARTNERSHIP

Customer relationship

Distribution channel

Value proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?

How do we operate and deliver?

How do we collaborate?

What are our key competencies? What are our revenues? Our pricing?

What are our costs?

WHO?

Who are our customers?

How do we reach them?

How do we get and keep them?

Customer segment

What do we offer to our customers?

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7. Partnerships

• Description • Reasoning

Partnership

Agreement

setOf isA

Value proposition Capability

Activity

on

Market

Chain isA

Network

How do we collaborate?

Actor by

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Profit and cost account

capability

Value chain

Partnership

Customer relationship

Distribution channel

Value proposition

Revenue

COST

HOW?

WHAT?

HOW MUCH?

How do we operate and deliver?

How do we collaborate?

What are our key competencies? What are our revenues? Our pricing?

What are our costs?

WHO?

Who are our customers?

How do we reach them?

How do we get and keep them?

Customer segment

What do we offer to our customers?

8

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8. Revenue model

Revenue

Pricing

setOf isA

Target Customers Value proposition

Offering

for

What are our revenues? Our pricing?

Link • Description • Reasoning

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Revenue stream > categories

REVENUE

one time

recurrent

sale

registry

subscription

advertisement

use

Income of the subscription fees to become a member

Paid by the buyer and/or the vendor

transaction

commission Income, percentage of a transaction made by the settlement (affiliate program)

Income of online sales paid by the buyer

Income of the ad banners posted on the shopfront

Paid by the vendor

Phone • registry • subscription • Usage

• Time • Services

combination Mobile:

PRE-PAID card

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Comparing Revenue Streams

SkypeOut Prepaid

Other VAS Prepaid

Voice income

SkypeOut

concerns

Wholesale Network Traffic

Business Solutions income

VAS

Website

VAS income

Broadband Internet Users

Revenue Stream

Value Proposition

Revenue Stream

Telco

Distribution Channel

Customer Group

Mail/Billing

Value Proposition

Distribution Channel

Customer Group

Voice Calls (in/out)

Data Services

Value Added Services

Network Traffic Wholesale

Business Services Data Income

Private Customer

Business Customer

Telco Carriers

Internet

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Skype

free VoIP & value added services

software development

website

global (non segmented)

deliver voice & video quality

“eBay”

large scale low margin

internet software

development

free voice-over-IP VoIP telephony &

value-added services 32

Profit and cost account

capability

Value chain

Partnership

Customer relationship

Distribution channel

Value proposition

Revenue

COST

HOW?

WHAT?

HOW MUCH?

How do we operate and deliver?

How do we collaborate?

What are our key competencies? What are our revenues? Our pricing?

What are our costs?

WHO?

Who are our customers?

How do we reach them?

How do we get and keep them?

Customer segment

What do we offer to our customers?

9

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9. Cost structure

• Description • Reasoning

Cost

Account

setOf isA

What are our costs? 34

describing how a wealth management bank acquires its clients

Football Team Club Model……

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spectacular

offensive football

stadium & box office

CUSTOMER OFFER

how do you reach your customers? (example)

club owned TV

channel fans

mobile phone TV

advertising space &

high visibility sales force advertisers

36

spectacular

offensive football

personalized

website (ticketing)

CUSTOMER OFFER

team blog (RSS) fans

…

how do you build relationships with your customers? (example)

37

spectacular

offensive football

ticket sales

FINANCE OFFER

TV channel

subscriber fees fans

mobile phone TV

subscriber fees

advertising space &

high visibility advertising revenues advertisers

how do you earn your money with this business model? (example)

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• team management

• event management

• venue management

• ticketing

• VIP relationship

management

• video crew

• …

• attractive soccer

• 360º event (match,

dining, shopping)

• exclusive VIP lounges

• merchandising

• renting out stadium

• …

• stadium

• POS networks

• club website (+online TV)

• club cable TV channel

• mobile phone TV channel

• …

• play attractive & win

games

• brand management

• video images

• channel management

• fans (families, etc.)

• fan groups

• companies

• event/concert organizers

• advertisers

• …

• team & maintenance

• infrastructure management

• marketing

• video

• Ticket fees & season tickets

• online TV subscription revenues

• revenue sharing cable & mobile phone TV

• renting out stadium for events

• advertising revenues

• merchandising revenues

• food & beverages

• ticketing services

• promoters

• ad placement

• telecom operator

• TV operator

• …

• personalized web profile

• newsletter

• team blog (RSS)

• VIP events with team

• …

Value Proposition Distribution Channel Target Customer

Customer Relationship Partner Network

Activity Configuration Core Capability

Cost Structure Revenue Model

value creates revenues

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• team management

• event management

• venue management

• ticketing

• VIP relationship

management

• video crew

• …

• attractive soccer

• 360º event (match,

dining, shopping)

• exclusive VIP lounges

• merchandising

• renting out stadium

• …

• stadium

• POS networks

• club website (+online TV)

• club cable TV channel

• mobile phone TV channel

• …

• play attractive & win

games

• brand management

• video images

• channel management

• fans (families, etc.)

• fan groups

• companies

• event/concert organizers

• advertisers

• …

• team & maintenance

• infrastructure management

• marketing

• video

• Ticket fees & season tickets

• online TV subscription revenues

• revenue sharing cable & mobile phone TV

• renting out stadium for events

• advertising revenues

• merchandising revenues

• food & beverages

• ticketing services

• promoters

• ad placement

• telecom operator

• TV operator

• …

• personalized web profile

• newsletter

• team blog (RSS)

• VIP events with team

• …

Value Proposition Distribution Channel Target Customer

Customer Relationship Partner Network

Activity Configuration Core Capability

Cost Structure Revenue Model

creating value requires infrastructure

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• team management

• event management

• venue management

• ticketing

• VIP relationship

management

• video crew

• …

• attractive soccer

• 360º event (match,

dining, shopping)

• exclusive VIP lounges

• merchandising

• renting out stadium

• …

• stadium

• POS networks

• club website (+online TV)

• club cable TV channel

• mobile phone TV channel

• …

• play attractive & win

games

• brand management

• video images

• channel management

• fans (families, etc.)

• fan groups

• companies

• event/concert organizers

• advertisers

• …

• team & maintenance

• infrastructure management

• marketing

• video

• Ticket fees & season tickets

• online TV subscription revenues

• revenue sharing cable & mobile phone TV

• renting out stadium for events

• advertising revenues

• merchandising revenues

• food & beverages

• ticketing services

• promoters

• ad placement

• telecom operator

• TV operator

• …

• personalized web profile

• newsletter

• team blog (RSS)

• VIP events with team

• …

Value Proposition Distribution Channel Target Customer

Customer Relationship Partner Network

Activity Configuration Core Capability

Cost Structure Revenue Model

infrastructure generates costs

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• team management

• event management

• venue management

• ticketing

• VIP relationship

management

• video crew

• …

• attractive soccer

• 360º event (match,

dining, shopping)

• exclusive VIP lounges

• merchandising

• renting out stadium

• …

• stadium

• POS networks

• club website (+online TV)

• club cable TV channel

• mobile phone TV channel

• …

• play attractive & win

games

• brand management

• video images

• channel management

• fans (families, etc.)

• fan groups

• companies

• event/concert organizers

• advertisers

• …

• team & maintenance

• infrastructure management

• marketing

• video

• Ticket fees & season tickets

• online TV subscription revenues

• revenue sharing cable & mobile phone TV

• renting out stadium for events

• advertising revenues

• merchandising revenues

• food & beverages

• ticketing services

• promoters

• ad placement

• telecom operator

• TV operator

• …

• personalized web profile

• newsletter

• team blog (RSS)

• VIP events with team

• …

Value Proposition Distribution Channel Target Customer

Customer Relationship Partner Network

Activity Configuration Core Capability

Cost Structure Revenue Model

the profit zone

<

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1291 Cityhomes

low cost accommodation

New York

low cost

CUSTOMER RELATIONSHIPS

the cost sensible

renting out rooms

keep down costs

apartment owners

rents

DISTRIBUTION CHANNELS

find demand

young curious Swiss

low-cost hotel/rental in New York City

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Tecnovate

low-cost multi-lingual call center

outsourcing

low cost

CUSTOMER RELATIONSHIPS

European corporations

ACTIVITY CONFIGURATION

keep down costs

“import” young curious

Europeans to India to work

REVENUE STREAMS

DISTRIBUTION CHANNELS

business process outsourcing “up-side down” in India 44

The e-Business Model Modeling Framework

Channel Customer Proposition Configuration Capability

Link Criterion Offering Activity Resource

Cost

Account

Revenue

Pricing

Partnership

Agreement

Relationship

Mechanism

Actor

isa

isa

flow fit share

Product Innovation

Infrastructure operation

Customer relationship

Financial aspects

45