Homework due for today
- Business Model Canvas (by Alexander Osterwalter)
- Watch this video introducing the concept by Alexander Osterwalder: Tools for Business Model Generation. Pay special attention to this:
- Try to understand really what is meant by the term business model. Think about how that applies to your product. Think about what a business built around it would work.
- He organizes the space into nine building blocks And then illustrates a series of questions to think about in each block and start seeing the relationships between them. Try to really understand what each block is about and that you follow is example.
- Divide up the Business Canvas ‘building blocks’ among your team, so each student will have two or three blocks.. Review the part of the video that pertains to your blocks. Also you might do some web research about the blocks you are responsible for.
- Deliverable: Blog post with thoughts and responses to ‘your block’ specifically as it relates to your term project.
- Term Project Teams:
- Discuss and write down product feature stories. See Mockups and Prototypes for a reminder on how to do them. Feature stories should be 1 sentence and fairly “granular.” You should order them from most important to least important. It’s ok if the later ones are not backed by a proven hypothesis, yet. But eventually and ideally all the stories should have such empirical backing.
- Team Deliverable: Prioritized list of stories
- Continue and complete your Peer Feedback Session.
- Create a write up of how you assessed the three considerations of the other team’s product, and also summarizing what the other team and you heard in terms of feedback about your product. Make sure you include the team names and team member names. Team Deliverable: Peer review writeup
Discussion
- Lets take a look at some of the story lists from the projects, and discuss what we see there. Think about:
- Why are the priorities the way they are, do they make sense?
- Are the stories clear enough to actually execute/implement?
- Are there any obvious omissions? For example, if the product assumes a two sided market or user base, are they represented in the stories?
Business Model
- Term’s definition is not set in concrete (as usual)
- Blueprint for how a business will function
- Describe how a business will creates, delivers and captures value
- Incorporates the value proposition, the pricing, the growth model and more
- In a way this is the final deliverable for the term project :)
Business Model Canvas
Pro Tip As you watch this very brief video, keep your term project's business in mind! What is its value proposition? Customer Segments? etc. etc.
References
Background of the Business Model Canvas
- One way to sructure strategic planning, analysis
- Checklist helps cover all the bases when designing a business model
- Handy if have one of several possibilities that you are examining
- Note that a single business might operate based on two different models (but it’s more complex to do that and usually not the right way to go.)
Building Blocks of a business model
- Value Proposition (the offer)
- What problem do we solve for the customer?
- What product/service do we deliver to the customer?
- How do we do that compared to what they do today?
- There’s more than “solving a totally new problem/needs”
- Examples: performance, customization, convenience, price, etc.
- Customer Segments
- What customer or groups of customers?
- And who are the most important ones?
- What makes a distinct segment?
- If a set of customers require: A different offer, different channels, different types of relationships, different payment models, etc
- Examples: Mass market? Niche market? Segment of larger market? Two sided market?
- Note that you might be going after more than one!
- Revenue Streams (or pricing model)
- Per customer segment/offer, who pays and what do they pay for?
- Examples: simple purchase; usage fee (“pay by the drink”); subscription; licensing; in-“game”-purchases
- Channels
- How do you reach a customer? How do they want to be reached?
- Are you able to reach them in that way?
- You need to figure out how to: generate awareness, allow evaluation, enable purchase, deliver the product, provide after sales follow up
- Examples: Web site, Direct Sales, Reseller web site (e.g. Amazon), Stores, Wholesaler.
- Customer Relationships
- What kind of ongoing relationship does your customer want with you?
- Examples: personal email; self-service support site; face-to-face; online community; co-creation
- (Key) Resources
- Go a level deeper than just “money”. Identify all the things you will need
- For example: expertise (we need a bigdata person), IP (we need to license music), physical (we will need a shop floor to do assembly.)
- (Key) Activities
- This might seem obvious but it’s worth calling out, because it’s so ‘obvious’
- Examples: software development; packaging and shipping; manufacturing; support; marketing; manufacturing; licensing; etc.
- (Key) Partnerships
- What outside entities do you have to establish trust with for your model to work?
- Suppliers? Resellers? Distributors? Maybe a web distributor like Amazon? Maybe Apple, because they have to approve your app. Are you licensing something from a partner?
- Cost Structure
- ‘Simply’ all the costs needed to run the businss model
- Fixed costs, per-unit variable costs, per-employee variable costs
- Based on Key resources, key activities and key partnerships
Conclusions - Business Model Canvas
- Assures that you consider and address all the pieces of your business model
- Is it a business or a hobby? Business includes much more than just the product
- Gives you a way to partition the work, and present the results
Next Class
Frame 1 Conclusion