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© Operational Excellence Consulting. All rights reserved.
Business Model Canvas
© Operational Excellence Consulting. All rights reserved. 2© Operational Excellence Consulting. All rights reserved. 2
Learning Objectives
Understand the
key concepts of
business model
thinking.
Acquire
knowledge of the
9 building blocks
of the Business
Model Canvas for
value creation.
Learn how to
apply the
Business Model
Canvas to map
out your current
business model
for understanding
and analysis.
Gain basic
knowledge of the
Business Model
design process
and related
frameworks.
© Operational Excellence Consulting. All rights reserved. 3
Contents
1.  Introduction to Business Model Thinking
2.  The 9 Building Blocks
3.  The Business Model Canvas
4.  Business Model Design Process
5.  Basics of Design Thinking
6.  The Value Proposition Canvas
7.  Presenting the Business Model Canvas
NOTE: This is a PARTIAL PREVIEW. To
download the complete presentation, please
visit: http://www.oeconsulting.com.sg
© Operational Excellence Consulting. All rights reserved. 4© Operational Excellence Consulting. All rights reserved. 4
3 Traits of Successful Entrepreneurs
Do not focus on
product innovation
alone
Do not copy an
existing business
model
Willing to take
risks and
experiment with
their businesses
© Operational Excellence Consulting. All rights reserved.
5
“While	product	innovation	
and	process	innovation	are	
important	aspects	in	
entrepreneurship,	having	
the	right	business	model	
more	often	than	not	would	
make	the	difference	
between	success	and	
failure.”	
Yves Pigneur
© Operational Excellence Consulting. All rights reserved. 6© Operational Excellence Consulting. All rights reserved. 6
Definition of Business Model
“A business model describes the
rationale of how an organization
creates, delivers, and captures
value.”
Source: Strategyzer
© Operational Excellence Consulting. All rights reserved. 7© Operational Excellence Consulting. All rights reserved. 7
Business Model
Product/Service
Revenue ($)
Organization Customers
Capture
Create Deliver
© Operational Excellence Consulting. All rights reserved. 8
The Business Model Canvas is a Strategic Management
framework for developing business models
Key
Partners
Key
Activities
Value
Proposition
Customer
Segments
Key
Resources
Cost Structure Revenue Streams
Customer
Relationships
Channels
Source: Strategyzer
© Operational Excellence Consulting. All rights reserved. 9
The Business Model Canvas is a Visual Tool
§  A visual representation of the various elements of your
business model
§  The canvas allows you to:
–  see the relationships among the parts of your model
–  identify hypothesis, assumptions and risks
–  plan validation testing (market, channels, pricing)
–  find ways to add value or reduce cost
–  brainstorm market disruption strategies
© Operational Excellence Consulting. All rights reserved. 10
Integrated Suite of ToolsZoom out
Zoom in
Environmental
Map
Business Model
Canvas
Value Proposition
Canvas
Source: Strategyzer
© Operational Excellence Consulting. All rights reserved. 11
The Value Proposition Canvas allows us to dive deeper into the
Value Proposition and Customer Segments of the business model
- Zoom
?
?
?
? ?
?
?
Are you creating value for your business?
The Business Model Canvas makes explicit how you
are creating and capturing value for your business.
+ Zoom
Are you creating value for your customer?
The Value Proposition Canvas makes explicit how
you are creating value for your customers.
Zoom out to the
bigger picture to
analyze if you can
profitably create,
deliver and capture
value around this
particular customer
value proposition.
Zoom in to the
detailed picture to
investigate if the
customer value
proposition in your
business model
really creates value
for your customer.
Source: Strategyzer
© Operational Excellence Consulting. All rights reserved. 12
Applications of the Business Model Canvas
1.  Strategizing
2.  Dashboard
3.  Understanding competition
4.  Portfolio of business models
5.  Innovation
6.  New idea template
7.  Understanding customers
8.  Organizational alignment
9.  Strategy diffusion and co-
creation
10.  Shared language across
functions
11.  Aligning value side (revenue)
and infrastructure side (costs)
12.  Investing
13.  Mergers and acquisitions
14.  Exit strategies
© Operational Excellence Consulting. All rights reserved. 13
The Business Model Canvas consists of 9 generic building blocks
for developing new or documenting existing business models
Key Partners Key Activities Value Proposition Customer Relationships Customer Segments
Key Resources Channels
Cost Structure Revenue Streams
Source: Strategyzer
© Operational Excellence Consulting. All rights reserved. 14
The 9 Building Blocks
1
Customer
Segments
An organization
serves one or
several Customer
Segments.
2 3
Value
Propositions
It seeks to solve
customer problems
and satisfy
customer needs
with value
propositions.
Channels
Value propositions
are delivered to
customers through
communication,
distribution and and
sales Channels.
© Operational Excellence Consulting. All rights reserved. 15
1. Customer Segments
The Customer Segments Building Block defines the different
groups of people or organizations an enterprise aims to reach and
serve
Key Questions:
§  For whom are we creating value?
§  Who are our most important customers?
Key Points:
§  A company may group customers into
distinct segments with common needs,
common behaviors or other attributes
§  A business model may define one or
several large or small Customer
Segments
§  Types of Customer Segments:
•  Mass market (e.g. car)
•  Niche market (e.g. Rolex)
•  Segmented
•  Diversified
•  Multi-sided platforms (or multi-sided markets)
© Operational Excellence Consulting. All rights reserved. 16
2. Value Propositions
The Value Propositions Building Block describes the bundle of
products and services that create value for a specific Customer
Segment
Key Questions:
§  What do we deliver to the customer?
§  Which one of our customer’s problems
are we helping to solve?
§  What bundles of products and services
are we offering to each Customer
Segment?
§  Which customer needs are we satisfying?
Key Points:
§  A Value Proposition creates value for a
Customer Segment through a distinct mix
of elements catering to that segment’s
needs
§  Values may be quantitative (e.g. price,
speed of service) or qualitative (e.g.
design, customer experience)
§  Elements that contribute to customer
value creation: Newness, Performance,
Customization, “Getting the job done”,
Design, Brand/Status, Price, Cost
Reduction, Accessibility, Risk Reduction,
Convenience/Usability
© Operational Excellence Consulting. All rights reserved. 17© Operational Excellence Consulting. All rights reserved. 17
LEFT CANVAS
efficiency
RIGHT CANVAS
value
Left Canvas vs. Right Canvas
Source: Strategyzer
KP KA VP CR CS
KR CH
C$ R$
© Operational Excellence Consulting. All rights reserved. 18
Low Cost Airlines Business Model
Source: Strategyzer
KP KA VP CR CS
KR CH
C$ R$
Car Rental
Hotel
Maint-
enance
Call
Centers
Airports
Cheap
Airports
Single
Aircraft
Model
Cheap
Flights
www
Call
Centers
Impersonal
Automated
No Frills
Insurance
Training
Tickets
Budget
Travelers
Fees
Quick Turn-
arounds
© Operational Excellence Consulting. All rights reserved. 19
Skype Business Model
Source: Strategyzer
KP KA VP CR CS
KR CH
C$ R$
Payment
Providers
Distribution
Partners
Software
Development Complaint
Management
Software
Development
Software
Software
Developers
Headset
Partnerships
Skype.com
Mass
Customized
Telco
Partners
Cheap Calls
to Phones
(SkypeOut)
Free Internet
& Video
Calling
SkypeOut
Pre-paid or
Subscription
Free
Web Users
Globally
People Who
Want to Call
Phones
© Operational Excellence Consulting. All rights reserved. 20© Operational Excellence Consulting. All rights reserved. 20
5 Phases of Business Model Design
OBJECTIVE
§  Prepare for a successful business model design project
§  Research and analyze elements needed for the
business model design project
§  Generate and test viable business model options, and
select the best
§  Implement the business model prototype in the field
§  Adapt and modify the business model in response to
market reaction
Mobilize
Understand
Design
Implement
Manage
© Operational Excellence Consulting. All rights reserved. 21© Operational Excellence Consulting. All rights reserved. 21
Business Models and Business Plans
BUSINESS PLAN
EXECUTIVE SUMMARY
THE TEAM
Management Profile
Why We Are a Winning Team
THE BUSINESS MODEL
Vision, Mission and Values
How Our Business Model Works
Value Proposition
Target Markets
Marketing Plan
Key Resources and Activities
FINANCIAL ANALYSIS
Breakeven Analysis
Sales Scenarios and Projections
Capital Spending
Operating Costs
Funding Requirements
EXTERNAL ENVIRONMENT
The Economy
Market Analysis and Key Trends
Competitor Analysis
Competitive Advantage of Our Business Model
IMPLEMENTATION ROADMAP
Projects
Milestones
Roadmap
RISK ANALYSIS
Limiting Factors and Obstacles
Critical Success Factors
Specific Risks and Countermeasures
CONCLUSION
ANNEXES
KP KA VP CR CS
KR CH
C$ R$
Financial spreadsheets
Environmental analysis
Implementation roadmap
SWOT and uncertainty analysis
Source: Strategyzer
© Operational Excellence Consulting. All rights reserved.
22
“Businesspeople	
don’t	just	need	to	
understand	
designers	better;	
they	need	to	become	
designers.”		
Roger Martin
Dean, Rotman School of Management
© Operational Excellence Consulting. All rights reserved. 23© Operational Excellence Consulting. All rights reserved. 23
Principles of Design Thinking
Human-centered
Discover people’s real needs and
wants. Be able to gain deep
insights of their motivations and
share the feelings of others.
Highly-creative
Look at situations differently. Push
past obvious solutions and existing
alternatives to get to breakthrough
ideas.
Collaborative
Work as a team to look at the
problem holistically and implement
solutions to improve people's
experience.
Hands-on
Ideas are made tangible through
prototyping. Build rough or lo-fi
prototypes to learn how to make
ideas better.
Iterative
Repeat each phase backwards
and forwards and arrive at each
decision or desired result, after
rounds of learning and discovery.
Show, don't tell
Enable the user to experience the
story through action, words,
thoughts, senses and feelings
rather than pure description.
z
© Operational Excellence Consulting. All rights reserved. 24
The Design Thinking Process Consists of 5 Action
Phases
Learn about
the audience
for whom you
are designing,
by observation
and interview.
Who is my
user? What
matters to this
person?
Create a point
of view that is
based on user
needs and
insights.
What are their
needs?
Brainstorm
and come up
with as many
creative
solutions as
possible.
Wild ideas
encouraged!
Build a
representation of
one or more of
your ideas to
show to others.
How can I show
my idea?
Remember: A
prototype is just
a rough draft!
Share your
prototyped
idea with your
original user
for feedback.
What worked?
What didn’t?
Empathize
Define
Ideate
Prototype
Test
© Operational Excellence Consulting. All rights reserved. 25
What is a Value Proposition?
§  Describes the benefits customers can expect from your
products and services
VALUE PROPOSITION
PRODUCT / SERVICE CUSTOMER
© Operational Excellence Consulting. All rights reserved. 26© Operational Excellence Consulting. All rights reserved. 26
72%
of new product and
service innovations
fail to deliver on
expectations
Source: Simon-Kucher & Partners, 2014
© Operational Excellence Consulting. All rights reserved. 27
Role of Value Proposition Designer – Determine the best fit
between the value proposition and customer needs
Key Partners Key Activities Value Proposition Customer
Relationships
Customer Segments
Key Resources Channels
Cost Structure Revenue Streams
VALUE
PROPOSITION
CUSTOMER
SEGMENT
BUSINESS MODEL
CANVAS
VALUE
PROPOSITION
DESIGNER
+
© Operational Excellence Consulting. All rights reserved. 28© Operational Excellence Consulting. All rights reserved. 28
Fit is achieved when your value proposition alleviate extreme
pains and create essential gains that customers care about
Value Map Customer Profile
FIT
© Operational Excellence Consulting. All rights reserved. 29
Presenting the Business Model Canvas – Don’ts
1.  Commit cognitive murder – showing the entire canvas all at once
2.  Too much granularity and detail
3.  Too many ideas in one canvas
4.  “Filling out” each box one after another like a checklist
5.  Orphan elements – elements that have no connection to other
elements (e.g. a revenue stream without a customer who is paying
for a value proposition)
6.  Mixing present and future state
7.  Gives in to the urge to blah blah blah
© Operational Excellence Consulting. All rights reserved.
END OF PREVIEW
To download this presentation,
please visit:
www.oeconsulting.com.sg

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Business Model Canvas

  • 1. © Operational Excellence Consulting. All rights reserved. Business Model Canvas
  • 2. © Operational Excellence Consulting. All rights reserved. 2© Operational Excellence Consulting. All rights reserved. 2 Learning Objectives Understand the key concepts of business model thinking. Acquire knowledge of the 9 building blocks of the Business Model Canvas for value creation. Learn how to apply the Business Model Canvas to map out your current business model for understanding and analysis. Gain basic knowledge of the Business Model design process and related frameworks.
  • 3. © Operational Excellence Consulting. All rights reserved. 3 Contents 1.  Introduction to Business Model Thinking 2.  The 9 Building Blocks 3.  The Business Model Canvas 4.  Business Model Design Process 5.  Basics of Design Thinking 6.  The Value Proposition Canvas 7.  Presenting the Business Model Canvas NOTE: This is a PARTIAL PREVIEW. To download the complete presentation, please visit: http://www.oeconsulting.com.sg
  • 4. © Operational Excellence Consulting. All rights reserved. 4© Operational Excellence Consulting. All rights reserved. 4 3 Traits of Successful Entrepreneurs Do not focus on product innovation alone Do not copy an existing business model Willing to take risks and experiment with their businesses
  • 5. © Operational Excellence Consulting. All rights reserved. 5 “While product innovation and process innovation are important aspects in entrepreneurship, having the right business model more often than not would make the difference between success and failure.” Yves Pigneur
  • 6. © Operational Excellence Consulting. All rights reserved. 6© Operational Excellence Consulting. All rights reserved. 6 Definition of Business Model “A business model describes the rationale of how an organization creates, delivers, and captures value.” Source: Strategyzer
  • 7. © Operational Excellence Consulting. All rights reserved. 7© Operational Excellence Consulting. All rights reserved. 7 Business Model Product/Service Revenue ($) Organization Customers Capture Create Deliver
  • 8. © Operational Excellence Consulting. All rights reserved. 8 The Business Model Canvas is a Strategic Management framework for developing business models Key Partners Key Activities Value Proposition Customer Segments Key Resources Cost Structure Revenue Streams Customer Relationships Channels Source: Strategyzer
  • 9. © Operational Excellence Consulting. All rights reserved. 9 The Business Model Canvas is a Visual Tool §  A visual representation of the various elements of your business model §  The canvas allows you to: –  see the relationships among the parts of your model –  identify hypothesis, assumptions and risks –  plan validation testing (market, channels, pricing) –  find ways to add value or reduce cost –  brainstorm market disruption strategies
  • 10. © Operational Excellence Consulting. All rights reserved. 10 Integrated Suite of ToolsZoom out Zoom in Environmental Map Business Model Canvas Value Proposition Canvas Source: Strategyzer
  • 11. © Operational Excellence Consulting. All rights reserved. 11 The Value Proposition Canvas allows us to dive deeper into the Value Proposition and Customer Segments of the business model - Zoom ? ? ? ? ? ? ? Are you creating value for your business? The Business Model Canvas makes explicit how you are creating and capturing value for your business. + Zoom Are you creating value for your customer? The Value Proposition Canvas makes explicit how you are creating value for your customers. Zoom out to the bigger picture to analyze if you can profitably create, deliver and capture value around this particular customer value proposition. Zoom in to the detailed picture to investigate if the customer value proposition in your business model really creates value for your customer. Source: Strategyzer
  • 12. © Operational Excellence Consulting. All rights reserved. 12 Applications of the Business Model Canvas 1.  Strategizing 2.  Dashboard 3.  Understanding competition 4.  Portfolio of business models 5.  Innovation 6.  New idea template 7.  Understanding customers 8.  Organizational alignment 9.  Strategy diffusion and co- creation 10.  Shared language across functions 11.  Aligning value side (revenue) and infrastructure side (costs) 12.  Investing 13.  Mergers and acquisitions 14.  Exit strategies
  • 13. © Operational Excellence Consulting. All rights reserved. 13 The Business Model Canvas consists of 9 generic building blocks for developing new or documenting existing business models Key Partners Key Activities Value Proposition Customer Relationships Customer Segments Key Resources Channels Cost Structure Revenue Streams Source: Strategyzer
  • 14. © Operational Excellence Consulting. All rights reserved. 14 The 9 Building Blocks 1 Customer Segments An organization serves one or several Customer Segments. 2 3 Value Propositions It seeks to solve customer problems and satisfy customer needs with value propositions. Channels Value propositions are delivered to customers through communication, distribution and and sales Channels.
  • 15. © Operational Excellence Consulting. All rights reserved. 15 1. Customer Segments The Customer Segments Building Block defines the different groups of people or organizations an enterprise aims to reach and serve Key Questions: §  For whom are we creating value? §  Who are our most important customers? Key Points: §  A company may group customers into distinct segments with common needs, common behaviors or other attributes §  A business model may define one or several large or small Customer Segments §  Types of Customer Segments: •  Mass market (e.g. car) •  Niche market (e.g. Rolex) •  Segmented •  Diversified •  Multi-sided platforms (or multi-sided markets)
  • 16. © Operational Excellence Consulting. All rights reserved. 16 2. Value Propositions The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment Key Questions: §  What do we deliver to the customer? §  Which one of our customer’s problems are we helping to solve? §  What bundles of products and services are we offering to each Customer Segment? §  Which customer needs are we satisfying? Key Points: §  A Value Proposition creates value for a Customer Segment through a distinct mix of elements catering to that segment’s needs §  Values may be quantitative (e.g. price, speed of service) or qualitative (e.g. design, customer experience) §  Elements that contribute to customer value creation: Newness, Performance, Customization, “Getting the job done”, Design, Brand/Status, Price, Cost Reduction, Accessibility, Risk Reduction, Convenience/Usability
  • 17. © Operational Excellence Consulting. All rights reserved. 17© Operational Excellence Consulting. All rights reserved. 17 LEFT CANVAS efficiency RIGHT CANVAS value Left Canvas vs. Right Canvas Source: Strategyzer KP KA VP CR CS KR CH C$ R$
  • 18. © Operational Excellence Consulting. All rights reserved. 18 Low Cost Airlines Business Model Source: Strategyzer KP KA VP CR CS KR CH C$ R$ Car Rental Hotel Maint- enance Call Centers Airports Cheap Airports Single Aircraft Model Cheap Flights www Call Centers Impersonal Automated No Frills Insurance Training Tickets Budget Travelers Fees Quick Turn- arounds
  • 19. © Operational Excellence Consulting. All rights reserved. 19 Skype Business Model Source: Strategyzer KP KA VP CR CS KR CH C$ R$ Payment Providers Distribution Partners Software Development Complaint Management Software Development Software Software Developers Headset Partnerships Skype.com Mass Customized Telco Partners Cheap Calls to Phones (SkypeOut) Free Internet & Video Calling SkypeOut Pre-paid or Subscription Free Web Users Globally People Who Want to Call Phones
  • 20. © Operational Excellence Consulting. All rights reserved. 20© Operational Excellence Consulting. All rights reserved. 20 5 Phases of Business Model Design OBJECTIVE §  Prepare for a successful business model design project §  Research and analyze elements needed for the business model design project §  Generate and test viable business model options, and select the best §  Implement the business model prototype in the field §  Adapt and modify the business model in response to market reaction Mobilize Understand Design Implement Manage
  • 21. © Operational Excellence Consulting. All rights reserved. 21© Operational Excellence Consulting. All rights reserved. 21 Business Models and Business Plans BUSINESS PLAN EXECUTIVE SUMMARY THE TEAM Management Profile Why We Are a Winning Team THE BUSINESS MODEL Vision, Mission and Values How Our Business Model Works Value Proposition Target Markets Marketing Plan Key Resources and Activities FINANCIAL ANALYSIS Breakeven Analysis Sales Scenarios and Projections Capital Spending Operating Costs Funding Requirements EXTERNAL ENVIRONMENT The Economy Market Analysis and Key Trends Competitor Analysis Competitive Advantage of Our Business Model IMPLEMENTATION ROADMAP Projects Milestones Roadmap RISK ANALYSIS Limiting Factors and Obstacles Critical Success Factors Specific Risks and Countermeasures CONCLUSION ANNEXES KP KA VP CR CS KR CH C$ R$ Financial spreadsheets Environmental analysis Implementation roadmap SWOT and uncertainty analysis Source: Strategyzer
  • 22. © Operational Excellence Consulting. All rights reserved. 22 “Businesspeople don’t just need to understand designers better; they need to become designers.” Roger Martin Dean, Rotman School of Management
  • 23. © Operational Excellence Consulting. All rights reserved. 23© Operational Excellence Consulting. All rights reserved. 23 Principles of Design Thinking Human-centered Discover people’s real needs and wants. Be able to gain deep insights of their motivations and share the feelings of others. Highly-creative Look at situations differently. Push past obvious solutions and existing alternatives to get to breakthrough ideas. Collaborative Work as a team to look at the problem holistically and implement solutions to improve people's experience. Hands-on Ideas are made tangible through prototyping. Build rough or lo-fi prototypes to learn how to make ideas better. Iterative Repeat each phase backwards and forwards and arrive at each decision or desired result, after rounds of learning and discovery. Show, don't tell Enable the user to experience the story through action, words, thoughts, senses and feelings rather than pure description. z
  • 24. © Operational Excellence Consulting. All rights reserved. 24 The Design Thinking Process Consists of 5 Action Phases Learn about the audience for whom you are designing, by observation and interview. Who is my user? What matters to this person? Create a point of view that is based on user needs and insights. What are their needs? Brainstorm and come up with as many creative solutions as possible. Wild ideas encouraged! Build a representation of one or more of your ideas to show to others. How can I show my idea? Remember: A prototype is just a rough draft! Share your prototyped idea with your original user for feedback. What worked? What didn’t? Empathize Define Ideate Prototype Test
  • 25. © Operational Excellence Consulting. All rights reserved. 25 What is a Value Proposition? §  Describes the benefits customers can expect from your products and services VALUE PROPOSITION PRODUCT / SERVICE CUSTOMER
  • 26. © Operational Excellence Consulting. All rights reserved. 26© Operational Excellence Consulting. All rights reserved. 26 72% of new product and service innovations fail to deliver on expectations Source: Simon-Kucher & Partners, 2014
  • 27. © Operational Excellence Consulting. All rights reserved. 27 Role of Value Proposition Designer – Determine the best fit between the value proposition and customer needs Key Partners Key Activities Value Proposition Customer Relationships Customer Segments Key Resources Channels Cost Structure Revenue Streams VALUE PROPOSITION CUSTOMER SEGMENT BUSINESS MODEL CANVAS VALUE PROPOSITION DESIGNER +
  • 28. © Operational Excellence Consulting. All rights reserved. 28© Operational Excellence Consulting. All rights reserved. 28 Fit is achieved when your value proposition alleviate extreme pains and create essential gains that customers care about Value Map Customer Profile FIT
  • 29. © Operational Excellence Consulting. All rights reserved. 29 Presenting the Business Model Canvas – Don’ts 1.  Commit cognitive murder – showing the entire canvas all at once 2.  Too much granularity and detail 3.  Too many ideas in one canvas 4.  “Filling out” each box one after another like a checklist 5.  Orphan elements – elements that have no connection to other elements (e.g. a revenue stream without a customer who is paying for a value proposition) 6.  Mixing present and future state 7.  Gives in to the urge to blah blah blah
  • 30. © Operational Excellence Consulting. All rights reserved. END OF PREVIEW To download this presentation, please visit: www.oeconsulting.com.sg