describe and improve your business model

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Page 1 © Arvetica How to Describe and Improve your Business Model Openinnovation, Dublin, 24 Oct 2007 © Arvetica, September 2007

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Here the slides for the talk I am giving at an event organized by Enterprise Ireland. I am quite honored to speak together with Prof Henry Chesbrough, author of Open Business Models... He is opening the conference with his talk, while I am concluding.

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Page 1: Describe and Improve your Business Model

Page 1© Arvetica

How to Describe and Improveyour Business ModelOpeninnovation, Dublin, 24 Oct 2007

© Arvetica, September 2007

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photos are from flickr under a « creative commons » license - authors are referenced in the comment section

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“Business model innovation matters” and it is a top priority of CEOs

IBM Global CEO Survey

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How Do We Describe Business Models Today?

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Going to War without a Map…

Karl von Clausewitz (~1800)

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Here

CEOs10°

Managers60°

Here

Staff360°

Ok

Insufficiently Well

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The Result

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Could it Be Different?

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It Exists in Business Process Modeling

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A Management Toolbox for Business Model Design and Innovation

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A Template to Describe Business Models

42’941 downloads

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CLIENTS

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Describe a Business Model: 9 Building Blocks

OFFER

COST STRUCTURE

CLIENTRELATIONSHIPS

CLIENTSEGMENTS

COMPETENCIES, ACTIVITIES,

RESOURCES

PARTNER NETWORK

REVENUEFLOWS

DISTRIBUTION CHANNELS

KEY ISSUES TO SOLVE

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CLIENTSEGMENTS

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Example: Bizner Bank

OFFER

COST STRUCTURE

CLIENTRELATIONSHIPS

CLIENTSEGMENTS

COMPETENCIES, ACTIVITIES,

RESOURCES

PARTNER NETWORK

REVENUEFLOWS

entrepreneurs

automatized relationship

BizBallance (integrated banking

and accounting)

monthly fee

Reeleezee

IT infra mgmt account mgmt,

transactions, etc.

IT infrastructure, marketing,

partnership costs

DISTRIBUTION CHANNELS

Web

KEY ISSUES TO SOLVE

IT, accounting, banking

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Xerox 914 Business Model

OFFER

COST STRUCTURE

CLIENTRELATIONSHIPS

CLIENTSEGMENTS

COMPETENCIES, ACTIVITIES,

RESOURCES

PARTNER NETWORK

REVENUEFLOWS

DISTRIBUTION CHANNELS

KEY ISSUES TO SOLVE

large companies

transactional

sales team

1 time sales fee

photocopiersR&D manufacturing

regular

large companies

lease high-end photocopiers

sales teams

lease & 4ct per copy (2k+)

financing & billing

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REVENUESCOSTS

KEY ISSUES TO SOLVE ACTIVITIES

PARTNERS RELATIONS

OFFER CLIENTSCHANNELS

total remanufacturing solutions of high end IT platforms

manufacturing

long term deep

integration

brand manufacturers

customers base

manufacturing

IT brand manufacturer

s

sales commission

re-marketing

inventory management

systems knowledge

manage secondary

supply chain

reverse logistics

manufacturing

inventory

« sales » team

brand manufacturers of high end IT

platforms

flat fee

Multis Example

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The Process

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find a way to play poker to unlock these modelsProf Henry Chesbrough, Berkeley

“”

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5 Steps to Business Model Design & Renewal

→ describe

existing business model

→ assess

strengths and weaknesses

→ brainstorm on

improvements & opportunities

→ turn new model

into a project roadmap

1 2 43VISUALIZEVISUALIZE ASSESSASSESS RENEWRENEW PLANPLAN 5 IMPLEMENTIMPLEMENT

→ implement

project roadmap

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Visualize

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Visualizing

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Visualizing Amazon.com

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REVENUESCOSTS

KEY ISSUES TO SOLVE ACTIVITIES

PARTNERS RELATIONS

OFFER CLIENTSCHANNELS

selling stuffon the Web

IT infra

automatized relationships

mass customer

data servicesAmazon.com

data grid

partners

selling stuff

Amazon.com

warehousing & distribution

distribution

content management

product selection

product search

marketing

affiliates

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Assess, Design & Renew

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good ideas are widely distributed, nobody has a monopoly on innovation

Prof Henry Chesbrough, Berkeley

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Assessing Amazon.com

• where are some of Amazon.com‘s highest costs located?

• what are some of Amazon.com‘s core competencies?

• how could they leverage these competencies?

• how could they leverage investments?

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REVENUESCOSTS

KEY ISSUES TO SOLVE ACTIVITIES

PARTNERS RELATIONS

OFFER CLIENTSCHANNELS

selling stuffon the Web

IT infra

automatized relationships

mass customer

data servicesAmazon.com

data grid

partners

selling stuff

Amazon.com

warehousing & distribution

distribution

content management

product selection

product search

marketing

affiliates

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Leveraging IT at Amazon.com

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REVENUESCOSTS

KEY ISSUES TO SOLVE ACTIVITIES

PARTNERS RELATIONS

OFFER CLIENTSCHANNELS

selling stuffon the Web

IT infra

automatized relationships

mass customer

data servicesAmazon.com

data grid

partners

selling stuff

Amazon S3

Amazon.com

Internet API

Web2.0 companies

warehousing & distribution

distribution

content management

product selection

A9 product search

data storage fees

product search

search engine revenues

e-commerce sites

Internet

marketing

affiliates

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Changing the Business Model: Examples

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Building on Existing Customer Relationships:Walmart Clinics

OFFER

COST STRUCTURE

CLIENTRELATIONSHIPS

CLIENTSEGMENTS

COMPETENCIES, ACTIVITIES,

RESOURCES

PARTNER NETWORK

REVENUEFLOWS

DISTRIBUTION CHANNELS

KEY ISSUES TO SOLVE shoppers

frequent relationship

WalmartClinics

health services

medical knowledge and staff

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CLIENTS

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Changing the Game:Cirque de Soleil

OFFER

COST STRUCTURE

CLIENTRELATIONSHIPS

CLIENTSEGMENTS

COMPETENCIES, ACTIVITIES,

RESOURCES

PARTNER NETWORK

REVENUEFLOWS

DISTRIBUTION CHANNELS

KEY ISSUES TO SOLVE

theater & opera visiitors

artistic circus without lions

stage & manage spectacle &

logistics

create art & atmosphere

higher ticket prices

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CLIENTS

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Demand-Creating Alliances:Intel Processor Platform

OFFER

COST STRUCTURE

CLIENTRELATIONSHIPS

CLIENTSEGMENTS

COMPETENCIES, ACTIVITIES,

RESOURCES

PARTNER NETWORK

REVENUEFLOWS

DISTRIBUTION CHANNELS

KEY ISSUES TO SOLVE

end usersspeedy processors

partners with ever “heavier” applications

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Planning & Implemention

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Introducing a Family Office Service through a Partnership

OFFER

COST STRUCTURE

CLIENTRELATIONSHIPS

CLIENTSEGMENTS

COMPETENCIES, ACTIVITIES,

RESOURCES

REVENUEFLOWS

DISTRIBUTION CHANNELS

KEY ISSUES TO SOLVE

affluent clients (100k-1+mio)

tight personal relationships

branches & bankers

local private banking

mainly product revenues

ultra high net worth individuals

family office services

revenue sharing agreement

local branch of family office

tight relationships with UHNWI

PARTNER NETWORKPARTNER NETWORK

independent multi-family

office

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OFFER

CLIENT RELATIONSHIPS

CLIENT SEGMENT

ACTIVITIES

PARTNER

REVNUE STREAMS

ACQUISITION CHANNELS

Project Roadmap

family office services

UHNWI relationships

UHNWI

client trust, internal cooperation

mutli-family office partner

revenue sharing

relationship managers & new

office

design collaboration process

training program develop marketing material

internal concept presentation

generate prioritized prospect list

work out client presentation

establish acquisition learning process

relationship manager collaboration process

team set-up

client reception area

profit center set-up

set-up CRM tool

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the only thing that’s not designed is nature

Dave Kelly, IDEO

“”

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business people don’t just need to understand designers

better; they need to become designers

Roger Martin, Dean Rotman School

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Thank You

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www.arvetica.com

business-model-design.blogspot.com

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Alexander Osterwalder

Before joining Arvetica Alex founded Business Model Design, a consulting boutique specialized in

business model innovation. Besides consulting the private sector he was also involved in building

up a globally active NGO based in Thailand in the field of knowledge management, HIV/AIDS and

malaria. Prior to consulting, Alex worked at the University of Lausanne, as an entrepreneur in the

banking sector and as an online journalist for the major Swiss business magazine BILANZ. He

holds a PhD and Masters degree of the HEC Business School of the University of Lausanne,

Switzerland. Alex is an active member of the IMD based Open World Initiative (OWI).

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Waster Water Treatment Example

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offer customer segment

revenue stream

distribution channel

waste water treatment system

Canadian mining sites

one time sales fee

sales force

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sell waste water treatment system

Canadian mining sites

one time sales fee

sales forcetotal waste water

treatment management

Canadian mining sites

recurring service fee

sales force

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sell waste water treatment system

Canadian mining sites

one time sales fee

sales forcecore activitiescore capabilities

costs

partner network client relationship

build treatment systems

water treatment knowledge

production costs

suppliers follow-up

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build treatment systems

water treatment

knowledge

production costs

suppliers follow-up

total waste water treatment

management

Canadian mining sites

recurring service fee

sales forcedispatch repair teams

error free systems

development

call center

variable costs of repair services