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Slide 1: How to Describe and Improve your Business Model Openinnovation, Dublin, 24 Oct 2007 © Arvetica © Arvetica, September 2007 Page 1
Slide 2: photos are from flickr under a « creative commons » license - authors are referenced in the comment section © Arvetica Page 2
Slide 3: IBM Global CEO Survey Business model innovation matters and it is a top priority of CEOs © Arvetica Page 3
Slide 4: How Do We Describe Business Models Today? © Arvetica Page 4
Slide 5: Going to War without a Map& Karl von Clausewitz (~1800) © Arvetica Page 5
Slide 6: Insufficiently Well Here Ok Here CEOs 10° Managers 60° © Arvetica Staff 360° Page 6
Slide 7: The Result © Arvetica Page 7
Slide 8: Could it Be Different? © Arvetica Page 8
Slide 9: It Exists in Business Process Modeling © Arvetica Page 9
Slide 10: A Management Toolbox for Business Model Design and Innovation © Arvetica Page 10
Slide 11: A Template to Describe Business Models 42’941 downloads © Arvetica Page 11
Slide 12: Describe a Business Model: 9 Building Blocks PARTNER CLIENT CLIENT NETWORK SEGMENTS SEGMENTS CLIENT CLIENT CLIENT RELATIONSHIPS SEGMENTS SEGMENTS KEY ISSUES TO CLIENT CLIENT SOLVE SEGMENTS SEGMENTS CLIENT OFFER CLIENT SEGMENTS SEGMENTS CLIENT CLIENT CLIENTS CLIENT SEGMENTS SEGMENTS SEGMENTS COMPETENCIES, CLIENT ACTIVITIES, CLIENT SEGMENTS RESOURCES SEGMENTS DISTRIBUTION CLIENT CLIENT CHANNELS SEGMENTS SEGMENTS COST CLIENT CLIENT STRUCTURE SEGMENTS SEGMENTS REVENUE CLIENT CLIENT FLOWS SEGMENTS SEGMENTS © Arvetica Page 12
Slide 13: Example: Bizner Bank PARTNER CLIENT Reeleezee CLIENT NETWORK SEGMENTS SEGMENTS automatized CLIENT CLIENT CLIENT RELATIONSHIPS relationship SEGMENTS SEGMENTS IT, ISSUES TO KEYaccounting, CLIENT CLIENT banking SOLVE SEGMENTS SEGMENTS BizBallance CLIENT (integrated banking OFFER CLIENT SEGMENTS andSEGMENTS accounting) CLIENT CLIENT entrepreneurs CLIENTS CLIENT SEGMENTS SEGMENTS SEGMENTS COMPETENCIES, IT infra mgmt CLIENT ACTIVITIES, account mgmt, CLIENT SEGMENTS RESOURCES transactions, etc. SEGMENTS DISTRIBUTION CLIENT Web CLIENT CHANNELS SEGMENTS SEGMENTS IT infrastructure, COST CLIENT marketing, CLIENT STRUCTURE SEGMENTS partnership costs SEGMENTS REVENUE CLIENT monthly fee CLIENT FLOWS SEGMENTS SEGMENTS © Arvetica Page 13
Slide 14: Xerox 914 Business Model PARTNER CLIENT CLIENT NETWORK SEGMENTS SEGMENTS CLIENT CLIENT transactional regular CLIENT RELATIONSHIPS SEGMENTS SEGMENTS financing TO R&D KEY ISSUES & CLIENT CLIENT SOLVE billing manufacturing SEGMENTS SEGMENTS COMPETENCIES, CLIENT ACTIVITIES, CLIENT SEGMENTS RESOURCES SEGMENTS leaseCLIENT high-end OFFER photocopiers CLIENT photocopiers SEGMENTS SEGMENTS DISTRIBUTION CLIENT sales teams sales team CLIENT CHANNELS SEGMENTS SEGMENTS large CLIENT CLIENT CLIENTS CLIENT SEGMENTS companies SEGMENTS SEGMENTS COST CLIENT CLIENT STRUCTURE SEGMENTS SEGMENTS leaseCLIENT per & sales 1 REVENUE time 4ct CLIENT FLOWS copy (2k+) fee SEGMENTS SEGMENTS © Arvetica Page 14
Slide 15: Multis Example IT brand PARTNERS manufacturer s manage secondary supply chain RELATIONS deep integration long term reverse logistics systems KEY ISSUES knowledge TO SOLVE manufacturing ACTIVITIES manufacturing inventory management total remanufacturing OFFER solutions of high end IT platforms re-marketing brand manufacturers customers base CHANNELS « sales » team CLIENTS brand manufacturers of high end IT platforms manufacturing sales commission COSTS inventory REVENUES flat fee © Arvetica Page 15
Slide 16: The Process © Arvetica Page 16
Slide 17: find a way to play poker to unlock these models Prof Henry Chesbrough, Berkeley © Arvetica Page 17
Slide 18: 5 Steps to Business Model Design & Renewal 1 VISUALIZE 2 ASSESS 3 RENEW 4 PLAN 5 IMPLEMENT → describe → assess existing strengths and business model weaknesses → brainstorm on → turn new model → implement project improvements into a project roadmap & opportunities roadmap © Arvetica Page 18
Slide 19: Visualize © Arvetica Page 19
Slide 20: © Arvetica Page 20
Slide 21: Visualizing © Arvetica Page 21
Slide 22: Visualizing Amazon.com © Arvetica Page 22
Slide 23: PARTNERS partners RELATIONS relationships automatized product selection distribution Amazon.com content management warehousing ACTIVITIES & distribution selling stuff on the Web affiliates mass customer KEY ISSUES TO SOLVE product search OFFER CHANNELS CLIENTS data services Amazon.com data grid selling stuff IT infra COSTS marketing REVENUES © Arvetica Page 23
Slide 24: Assess, Design & Renew © Arvetica Page 24
Slide 25: good ideas are widely distributed, nobody has a monopoly on innovation Prof Henry Chesbrough, Berkeley © Arvetica Page 25
Slide 26: 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? © Arvetica Page 26
Slide 27: PARTNERS partners RELATIONS relationships automatized product selection distribution Amazon.com content management warehousing ACTIVITIES & distribution selling stuff on the Web affiliates mass customer KEY ISSUES TO SOLVE product search OFFER CHANNELS CLIENTS data services Amazon.com data grid selling stuff IT infra COSTS marketing REVENUES © Arvetica Page 27
Slide 28: Leveraging IT at Amazon.com © Arvetica Page 28
Slide 29: PARTNERS partners RELATIONS relationships automatized product selection distribution Amazon.com content management warehousing ACTIVITIES & distribution selling stuff on the Web affiliates mass customer KEY ISSUES TO SOLVE product search OFFER Amazon S3 A9 product search CHANNELS Internet API companies Web2.0 CLIENTS data services Amazon.com data grid e-commerce sites Internet selling stuff IT infra data storage COSTS marketing REVENUES fees search engine revenues © Arvetica Page 29
Slide 30: Changing the Business Model: Examples © Arvetica Page 30
Slide 31: Building on Existing Customer Relationships: Walmart Clinics PARTNER CLIENT CLIENT NETWORK SEGMENTS SEGMENTS frequent CLIENT CLIENT CLIENT relationship RELATIONSHIPS SEGMENTS SEGMENTS KEY ISSUES TO medical knowledge CLIENT CLIENT SOLVE and staff SEGMENTS SEGMENTS Walmart CLIENT OFFER CLIENT Clinics SEGMENTS SEGMENTS CLIENT CLIENT shoppers CLIENTS CLIENT SEGMENTS SEGMENTS SEGMENTS COMPETENCIES, CLIENT ACTIVITIES, health services CLIENT SEGMENTS RESOURCES SEGMENTS DISTRIBUTION CLIENT CLIENT CHANNELS SEGMENTS SEGMENTS COST CLIENT CLIENT STRUCTURE SEGMENTS SEGMENTS REVENUE CLIENT CLIENT FLOWS SEGMENTS SEGMENTS © Arvetica Page 31
Slide 32: Changing the Game: Cirque de Soleil PARTNER CLIENT CLIENT NETWORK SEGMENTS SEGMENTS CLIENT CLIENT CLIENT RELATIONSHIPS SEGMENTS SEGMENTS create art TO KEY ISSUES & CLIENT CLIENT SOLVE atmosphere SEGMENTS SEGMENTS stage & manage COMPETENCIES, CLIENT ACTIVITIES, spectacle & CLIENT SEGMENTS RESOURCES SEGMENTS logistics artistic circus CLIENT OFFER CLIENT without lions SEGMENTS SEGMENTS theater & opera CLIENT CLIENT CLIENTS CLIENT SEGMENTS visiitors SEGMENTS SEGMENTS DISTRIBUTION CLIENT CLIENT CHANNELS SEGMENTS SEGMENTS COST CLIENT CLIENT STRUCTURE SEGMENTS SEGMENTS higher ticket REVENUE CLIENT CLIENT FLOWS prices SEGMENTS SEGMENTS © Arvetica Page 32
Slide 33: Demand-Creating Alliances: Intel Processor Platform partners with PARTNER everCLIENT “heavier” CLIENT NETWORK SEGMENTS SEGMENTS applications CLIENT CLIENT CLIENT RELATIONSHIPS SEGMENTS SEGMENTS KEY ISSUES TO CLIENT CLIENT SOLVE SEGMENTS SEGMENTS speedy CLIENT OFFER CLIENT processors SEGMENTS SEGMENTS CLIENT CLIENT end users CLIENTS CLIENT SEGMENTS SEGMENTS SEGMENTS COMPETENCIES, CLIENT ACTIVITIES, CLIENT SEGMENTS RESOURCES SEGMENTS DISTRIBUTION CLIENT CLIENT CHANNELS SEGMENTS SEGMENTS COST CLIENT CLIENT STRUCTURE SEGMENTS SEGMENTS REVENUE CLIENT CLIENT FLOWS SEGMENTS SEGMENTS © Arvetica Page 33
Slide 34: Planning & Implemention © Arvetica Page 34
Slide 35: Introducing a Family Office Service through a Partnership independent PARTNER CLIENT multi-family CLIENT NETWORK SEGMENTS SEGMENTS office tight tightCLIENT CLIENT personal relationships CLIENT RELATIONSHIPS relationships SEGMENTS with UHNWI SEGMENTS KEY ISSUES TO CLIENT CLIENT SOLVE SEGMENTS SEGMENTS family office local private CLIENT OFFER CLIENT services banking SEGMENTS SEGMENTS ultra high net affluent clients CLIENT CLIENT CLIENTS CLIENT worth individuals SEGMENTS (100k-1+mio) SEGMENTS SEGMENTS COMPETENCIES, CLIENT ACTIVITIES, CLIENT SEGMENTS RESOURCES SEGMENTS localCLIENT&of branch DISTRIBUTION branches CLIENT CHANNELS family office bankers SEGMENTS SEGMENTS COST CLIENT CLIENT STRUCTURE SEGMENTS SEGMENTS revenueproduct mainly sharing REVENUE CLIENT CLIENT FLOWS agreement revenues SEGMENTS SEGMENTS © Arvetica Page 35
Slide 36: Project Roadmap CLIENT UHNWI SEGMENT family office OFFER services CLIENT UHNWI RELATIONSHIPS relationships relationship ACQUISITION managers & new CHANNELS office work out client presentation set-up CRM tool generate prioritized prospect list establish acquisition learning process client trust, internal ACTIVITIES cooperation mutli-family office PARTNER partner REVNUE revenue sharing STREAMS internal concept presentation design collaboration process profit center set-up Page 36 relationship manager collaboration process training program client reception area develop marketing material team set-up © Arvetica
Slide 37: the only thing that s not designed is nature Dave Kelly, IDEO © Arvetica Page 37
Slide 38: business people don t just need to understand designers better; they need to become designers Roger Martin, Dean Rotman School © Arvetica Page 38
Slide 39: Thank You © Arvetica Page 39
Slide 40: www.arvetica.com business-model-design.blogspot.com © Arvetica Page 40
Slide 41: 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). © Arvetica Page 41
Slide 42: Waster Water Treatment Example © Arvetica Page 42
Slide 43: waste water offer treatment system distribution channel sales force Canadian mining sites customer segment revenue stream one time sales fee © Arvetica Page 43
Slide 44: total waste water sell waste water treatment treatment system management sales force Canadian mining sites recurring one time servicefee sales fee © Arvetica Page 44
Slide 45: partner network suppliers client follow-up relationship water treatment core capabilities knowledge build treatment core activities systems sell waste water treatment system sales force Canadian mining sites production costs costs one time sales fee © Arvetica Page 45
Slide 46: suppliers follow-up call center water error free treatment systems knowledge development build dispatch treatment repair teams systems total waste water treatment management sales force Canadian mining sites variable costs production of repair costs services recurring service fee © Arvetica Page 46