The evolution of Business Plans: Business Model Canvas (BMC)

Presentation

Difference between a Business Plan and Business Model Canvas

Introduction to Business Models

Value Creation

Business Model Canvas

What is a Business Plan?

A business plan is a formal statement of a set of business goals, the

reasons why they are believed attainable, and the plan for reaching those

goals

What does it contain?

Executive summary, business description/overview, market research,

operations, plan, financial plan, and project management, marketing plan

etc.

What are the differences between a Plan and a Business Model Canvas

• Outside versus Inside the Building.• Input versus Output Focus• Lean Development versus Product Development• Change versus Fortify• Chasing Customers versus Chasing Funding• Financial Projections versus Metrics

Business Model Definitions

Magretta (2002) “at heart, stories — stories that explain how enterprises

work”.

Teece (2010)” A business model articulates the logic and provides data and

other evidence that demonstrates how a business creates and delivers

value to customers.”

Osterwalder & Pigneur (2010) “ it describes the rationale of how an

organization creates, delivers and captures value”.

Value Creation

What is value?Value creation?

Value Created Through…

Newness Price

Performance Cost Reduction

Customization Risk Reduction

Getting the job done Accessibility

Design Convenience

Brand/Status Usability

Customer Value

http://www.lginnotek.com/company/creation.jsp

Value Value is created anytime an action is taken for which the benefit

exceeds the cost or anytime an action is prevented for which the cost

exceeds the benefit

Organization Customer

Products

Revenue

Feedback

Personal

Service

Sense of

Community

Loyalty

Proposed Venture

How & where the business acquires cash from customers

How it uses the cash

How product and services flow from suppliers & the firm to clients

How does the firm connects (sales & marketing) with the customer

Business Model Canvas Explained

Source:

Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and

challengers. John Wiley & Sons.

Customer Segments(different group of people or organizations an enterprise aims to reach and serve)

Customer Types

Segments defined by:

• Customer needs

• Reach

• Relationships

• Profitability

• Willingness to pay

BMC Value Proposition (bundle of products and services that creates value)

BMC Channels(how customer communicates with and reaches its customer segments to deliver value proposition)

BMC Channels(how customer communicates with and reaches its customer segments to deliver value proposition)

AIM: to make this as smooth as possible

Channel Phases

Direct (e.g. Sales Force, Web Sales)

Indirect (Own Store/Franchising, Partner Stores Wholesaler)

Channel phases

- Awareness

- Evaluation

- Purchase

- Delivery

- After sales

https://www.cleverism.com/selecting-managing-channels-business-model-

canvas/

Customer Relationships(Type of relationship a company establishes with specific customer segments

Customer Relationship Types Personal Assistance (e.g. call centers)

Dedicated persona assistance (e.g. private banking HNIs)

Self-service (e.g. online banking)

Automated services (e.g. customer rating/review)

Communities (e.g. http://inthemix.junkee.com/).

Co-Creation (e.g. Youtube. com)

Revenue Streams(Cash a company generates from each customer segment (transaction vs. recurring revenue)

Revenue Models Asset sales (cars)

Usage fees (mobile phone provider)

Subscription Fee (gym)

Lending/renting/leasing (car rental)

Licensing (patent royalties)

Broker fee (credit cards)

Advertising (media industry)

https://www.cleverism.com/revenue-streams-in-business-model-canvas/

Internal BMC Canvas elements

Key Resources(The most important assets required to make a business model work)

Resource Types

Human Capital

Social Capital

Intellectual Capital

Physical

Finance

https://www.cleverism.com/key-resources-building-block-in-business-

model-canvas/

Key Activities(The most important things a company must do to make its business model work)

Key Business Activities Production

Problem Solving

Platform/network e.g. Eharmony

https://www.cleverism.com/key-activities-block-business-model-canvas/

Key Partners(network of partners or suppliers that make the business model work)

Partner Types

Strategic alliance between non competitors

Coopetition, as alliances between competitors

Joint ventures for developing new products

Buyer-supplier relationships to assure reliance supplies

Cost Structure(cost incurred in operating a business model)