Workshop Business Model Design

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Business Model Design

01 October 2019

Eduardo Gil da Costa


[email protected]
why a Business Model?

why not a Business Plan?


I have an but I have no
I need a loan, or
I need to find investors

I need a Business Plan


Business Plan
Information to justify 5-year sales forecast with 5-year:
my assumptions about: assumptions on: • P&L statement,
• Problem, Opportunity, • Revenue model, • Balance sheet,
• Market size, • Pricing, • Cash flow,
• my Solution, • Sales, • Amortization table,
• my Competitors, • Marketing, • Cap table.
• my Team. • Customer acquisition
cost,
• ...
what if the

key assumptions

are wrong?
“no Business Plan

survives a first contact

with customers” Blank (2012)


so, why a Business Plan?
Because
in the early days of venture capital,
investors and entrepreneurs
were familiar with the format of
business plans from large companies
and adopted it for startups. Blank (2012)
Companies write business plans
when planning product-line extensions
where customer, market and
product features are known.
The plan is an operating document
describing the execution strategy
for addressing these “knowns”. Blank (2012)
A startup is not about
executing a series of “knowns”.
Most startups face a series of “unknowns”:
• “unknown” customer segments,
• “unknown” customer needs,
• “unknown” product feature set,
• etc...
Blank (2012)
For a startup
unless you have tested the assumptions
in your business model first,
outside the building,
your business plan is just creative writing.
Blank (2012)
A business model describes
how and where you choose
to operate your company.

A business plan describes


what your company does.

The model you choose is detailed


in your business plan. Bolden-Barrett
The business model is
the company’s foundation.
The business plan is
the company’s structure.

U.S. Small Business Administration


cited by Bolden-Barrett
A business model describes
the rationale of how an
organization creates, delivers,
and captures value .

Osterwalder (2010)
Episode One

Getting from
Business Idea to
Business Model
Source: https://www.youtube.com/watch?v=wwShFsSFb-Y
Episode One highlights
Idea = Boomer travel agency
Boomer = people born 1946~1964
In 2016 boomers are 52~70 years old
Episode One highlights
“Even if you have a great idea,
success is far from assured”
“A great business idea needs
a great business model,
and they are not the same thing”
Introduction to Episode Two
Lowcost airlines
• Ultra cheap flights to budget travellers
• Sales through internet
• No offices > call centers
• Single model aircraft
• Cheap airports
• Partners: hotels, car rentals, insurance
Episode Two

Visualizing Your
Business Model
Source: https://www.youtube.com/watch?v=wlKP-BaC0jA
Episode Two highlights

Business Canvas Model


A painting canvas is
the artist’s playground.

A business canvas is
the entrepreneur’s playground.
Key Key Value Customer Customer
partnerships activities propositions relationships segments
Who can help
you leverage
your business
7
Which things
you really need
to be able to
Bundle of
products and
services that
4
Type of
relationship you
are establishing
Groups of
people or
organizations

8 perform well

Key resources 2
create value
for your
customers
w/ customers

Channels 1
for which you
create value

6 3
Infrastructures Touch points to
needed to interact with
create, deliver your customer
and capture and deliver
value value
Cost structure Revenue streams

model
9
Costs incurred to operate your business

5
Cash that your business generates from
each Customer Segment
Introduction to Episode Three
Nespresso
• Coffee capsules for
dedicated coffee
machines,
• Sold in Nespresso
shops only, or
through internet,
• Sense of belonging
to an exclusive club.
Episode Three

Prototyping
Source: https://www.youtube.com/watch?v=iA5MVUNkSkM
Episode Three highlights
Prototyping: 3 rules to start
Episode Three highlights
Rule 1
Focus on the business model
and not just the product, the technology,
or the service
Episode Three highlights
Rule 2
Don´t fall in love with the first models
the best models are built on
clever unexpected elements
Episode Three highlights
Rule 3
Iterate rapidly, test your models early
in the real world
Episode Four

Navigating Your
Environment
Source: https://www.youtube.com/watch?v=7O36YBn9x_4
Key trends
• new regulations coming up?
• new technologies?
• society previsional changes?

Industry forces Market forces


• who are the main • which segments
competitors? are growing?
• are they a threat? • which segments are
• does the model the most lucrative?
have a competitive
edge?

Macro economic forces


• how is global economy doing?
• how are markets evolving?
• what is venture capital attitude?
Key trends
• Is the model prepared for
emerging trends?

Industry forces Market forces


• Does the model • Is the model in line
have a competitive with evolving
edge today? customer needs?

Macro economic forces


• How will the model adjust to
macro economic shifts?
Episode Five

Proving It
Source: https://www.youtube.com/watch?v=-2gd_vhNYT4
Episode Five highlights

It’s time to fail


Hypotheses are likely to be wrong

Test hypotheses

New ideas might come


Episode Five highlights
State the most important hypotheses,
and test them
• perform low cost experiments,
• talk with prospective customers,
• talk with suppliers, distributors and partners.
Episode Five highlights
By the end of the “Proving It” phase,
the Business Model will have been
• tested,
• adapted,
and is likely to succeed.
Episode Six

Telling Your Story


Source: https://www.youtube.com/watch?v=SshglHDKQCc
Episode Six highlights
Be ready to present your Business Model
• to prospective customers,
• to partners,
• and to investors.

Present it like telling a story.


Episode Six highlights
And now, and only now,
you may think of preparing
a Business Plan.
Further steps
Value Proposition Canvas

Explore it
https://www.youtube.com/watch?v=aN36EcTE54Q
References
Blank (2012), Blank Steven, Validate Your Business Model Start With a Business
Model, Not a Business Plan. The Wall Street Journal, November the 26th, 2012.
http://blogs.wsj.com/accelerators/2012/11/26/start-with-a-business-model-not-a-
business-plan/, accessed in 23rd May 2016

Bolden-Barrett, Valerie Bolden-Barrett, Business Plan Vs. Business Model.


Smallbusiness.chron.com, 2012.
http://smallbusiness.chron.com/business-plan-vs-business-model-58223.html,
accessed in 23rd May 2016

Osterwalder (2010), Alexander Osterwalder and Yves Pigneur, Business Model


Generation, 1st Edition.
John Wiley and Sons, 2010

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