Design Thinking

BUSINESS CANVAS
Presented by Dr. Sandy RIHANA

What is a business Model
2
 Model
 A model is a plan or diagram that’s used to make or describe
something.
 Business Model
 A firm’s business model is its plan or diagram for how it
competes, uses its resources, structures its relationships,
interfaces with customers, and creates value to sustain itself on
the basis of the profits it generates.
 The term “business model” is used to include all the activities
that define how a firm competes in the marketplace.
Copyright ©2010 Pearson Education, Inc.
publishing as Prentice Hall
Business Model
3
 A business model describes the rationale of

how an organization creates, delivers, and
captures value
BUSINESS MODEL
Product/Service
Deliver
Create
Organization Customers
Capture
Revenue ($)
Guy Kawasaki Business Model
Definition
 The answer to these two questions
 Who has your money in their pockets?
 How do you get it into your pockets?
Diversity of Business Models
6-6
• There is no standard business

model for an industry or for
Diversity or Variety in a target market within an
Business Models industry.
• However, over time, the most
successful business models
in an industry predominate.
• There are always opportunities
for business model innovation.
Copyright ©2010 Pearson Education, Inc.
publishing as Prentice Hall
Value Proposition
7
 A business model describes the rationale of

how an organization creates, delivers, and
captures value
Value Proposition in the Business Model
10
 What is it?
 Who is it for?
 Why do they need it?
 What job does your product/service perform for your customer?
 How important is the problem that you are solving for the
customer?
 How does it work?
 What is unique or different?
Value Proposition in the Business Model
11
The Value Propositions Building Block describes the bundle of products and services that create value
for a specific Customer Segment
The Value Proposition is the reason why customers turn to one company over another.
It solves a customer problem or satisfies a customer need.
Each Value Proposition consists of a selected bundle of products and/or services that caters to the
requirements of a specific Customer Segment. In this sense, the Value Proposition is an aggregation, or
bundle, of benefits that a company offers customers.
Some Value Propositions may be innovative and represent a new or disruptive offer.
Others may be similar to existing market offers, but with added features and attributes.
Value Prposition
Value Proposition
Performance
Newness
VS
Customization Vision
Price VS
Cost reduction
Marketing slogan/Branding
Usability/conveneince
Capture
Brand/status
Product/service
Risk reduction
Benefits
Getting job done
Problem trying to solve;
Accessibility
customer who is benefiting
Design
Why and how different
12
Target Customers in the Business Model
14
 The groups for whom you are creating value

 • For whom are you creating value?
 • What is the Total Available Market?
 • What is your formula for success in terms of
how customers view the Value Proposition
Differentiation – Channel - Pricing?
Target Customers in the Business Model
15
 The Customer Segments Building Block defines the different groups
of people or organizations an enterprise aims to reach and serve
 Customers comprise the heart of any business model.
 Without (profitable) customers, no company can survive for long.
 In order to better satisfy customers, a company may group them into distinct segments with
common needs, common behaviors, or other attributes.
 A business model may define one or several large or small Customer Segments. An
organization must make a conscious decision about which segments to
serve and which segments to ignore.
 Once this decision is made, a business model can be carefully designed around a strong
understanding of specific customer needs.
Customer Segments
Mass Market
Value proposition, distribution channels and
Customer Relationships
Focused on One large group
with broadly similar needs and problems
Niche Market
Specialized customer segments
Value proposition, Distribution Channels and
Customer relationships
16
Tailored to a Niche Market
Channels
18
 The ways in which you sell to customers

• How will you reach the customers ? Each segment ?
• How are they reached today? Direct? Indirect? Owned? Partnered?
• What services/relationship is offered with each?
• Which channels work best ?
• Are the channels integrated?
• Which channels are most efficient?
Channels
19
 Channels serve several functions, including:

• Raising awareness among customers about a company’s products and services
• Helping customers evaluate a company’s Value Proposition
• Allowing customers to purchase specific products and services
• Delivering a Value Proposition to customers
• Providing post-purchase customer support
Channels
20

The Channels Building Block describes how a company communicates with and
reaches its Customer Segments to deliver a Value Proposition
Communication, distribution, and sales Channels comprise a company's

interface with customers.
Channels are customer touch points that play an important role in the customer
experience.
Channels have five distinct phases: Awareness; Evaluation;
Purchase; Delivery; After-sales
Each channel can cover some or all of these phases.
We can distinguish between direct Channels and indirect ones,
as well as between owned Channels and partner Channels
Own/Direct Channels
Sales force
Web
Stores
Partners/Indirect Channels
Stores
Sales force
Wholesalers
Web
21
Revenue Streams
The Revenue Streams Building Block represents the cash a company generates from each
Customer Segment (costs must be subtracted from revenues to create earnings)
A company must ask itself, For what value is each Customer Segment truly willing to
pay?
Successfully answering that question allows the firm to generate one or more Revenue
Streams from each Customer Segment.
Each Revenue Stream may have different pricing mechanisms, such as fixed list prices,
bargaining, auctioning, market dependent, volume dependent, or yield management.
23
Revenue Streams
A business model can involve two different types of Revenue Streams:

• Transaction revenues resulting from one-time customer payments
• Recurring revenues resulting from ongoing payments to either deliver a Value
Proposition to customers or provide post-purchase customer support
24
Key partners
Alliances, joint-ventures, agreements with outside entities
• Who are your key partners?

• What value is delivered by each?
• How critical are partners to delivering the value proposition?
• What key resources or activities are delivered by each?
• What risks or uncertainties are reduced?
26
CASE STUDY
Starbucks
Starbucks has established several key partnerships worldwide such as with
coffee growers worldwide to grow eco and farmer friendly coffee beans. This key
partnership is a typical buyer-supplier relationship, motivated by a need to
acquire key resources. Another key partnership is with specialized coffee
machine makers who make specialized coffee makers for Starbucks. Again this
helps Starbucks mitigate cost because it does not have to invest in
infrastructure, R&D, and manpower to create these coffee machines in-house.
Instead, it is much more cost effective to partner with an organization that
already holds expertise in this area and has the infrastructure in place already to
cater to Starbucks’ needs. Conversely, Starbucks provides them with a steady
buyer for their product as well as the added boost that the Starbucks brand holds
for the coffee machine manufacturer.
27
Key resources
Physical, intellectual, human, and financial resources
• What key assets are required to deliver on the value proposition?

(Human, Financial, Physical, Intellectual)
• How will value delivery to the customer be measured?
• Are these resources available to you at a reasonable cost?
• What can be rented, leased or borrowed rather than purchased?
29
Key activities
What specific key activities are necessary to deliver your value proposition?
What activities set your company apart from others?
Consider how your company’s unique difference in its revenue streams, distribution
Channels or customer relationships.
31
32
Cost structure
Identify the key costs in your company’s business model
What are the major drivers of costs?
How do your costs relate to your revenue streams?
33
34
Customer Relationships
What type of relationship do you have with your customers?

How do you interact with customers and how does this differ amongst
Customer segments?
Do you communicate frequently with your customers?
How much support does your company provide?
35
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BUSINESS CANVAS

Presented by Dr. Sandy RIHANA

 A business model describes the rationale of

• There is no standard business

 A business model describes the rationale of

It solves a customer problem or satisfies a customer need.

 The groups for whom you are creating value

 The ways in which you sell to customers

 Channels serve several functions, including:

Communication, distribution, and sales Channels comprise a company's

A business model can involve two different types of Revenue Streams:

• Who are your key partners?

• What key assets are required to deliver on the value proposition?

• How will value delivery to the customer be measured?

• Are these resources available to you at a reasonable cost?

• What can be rented, leased or borrowed rather than purchased?

What activities set your company apart from others?

Identify the key costs in your company’s business model

What are the major drivers of costs?

How do your costs relate to your revenue streams?

What type of relationship do you have with your customers?

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