6 gates to business model profitability for startups and investors: visually organize, manage, and...
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6 GATES TO BUSINESS MODEL PROFITABILITY
Visually Organize, Manage, and Test Ideas for Improving Business Model Profitability
#4ROD. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
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Problem-‐SoluQon Fitness
Value ProposiQon Fitness
Product-‐Market Feasibility
Revenue Model Feasibility
Resource-‐Based Feasibility
BUSINESS MODEL ADVANTAGE
25 INVESTOR QUESTIONS (IQs) for BUSINESS MODEL PROFITABILITY
Visually Organize, Manage, and Test Ideas for Improving Business Model Profitability
#4ROD. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
1. Problem-‐SoluQon Fitness 1.1 What is the main physical/intellectual/emo=onal/spiritual task or Job To Get Done for the customer segment (archetype)? 1.2 What are the top 3 problems, challenges, constraints, barriers, or trade-‐offs before/during/aKer the Job To Get Done? 1.3 What are features of the product/service/business model that resolve the top 3 problems or trade-‐offs of the targeted customer segment (archetype)?
2. Value ProposiQon Fitness 2.1 What is the Value Proposi=on for the customer segment (archetype)? 2.2 How likely, on a scale from 0 (not likely) to 10 (highly likely), would customers purchase product/service based on the Value Proposi=on? 2.3 How is the Value Proposi=on similar to that of compe=tors? 2.4 How is the Value Proposi=on different from that of compe=tors? 2.5 How does the (minimum viable) ad/product/service/business model embody or reflect the Value Proposi=on? 2.6 To what extent does the Value Proposi=on help engage, acquire, and retain targeted customers?
3. Product-‐Market Feasibility 3.1 What hierarchy of jobs or tasks does the product/service help the targeted customers to do? 3.2 What is the minimum viable market size, value, share, and growth rate for the product/service? 3.3 What is the minimum viable product/service for delivering the primary func=onality, benefit, or delight to the targeted customers? 3.4 What is the level of compa=bility between main func=onality of the product/service and the customer’s core jobs to get done? 3.5 Through what channels and rela=onships would the product/service be delivered to the targeted customers? 3.6 What are customer experiences as well as level of loyalty (Net Promoter Score) for the product/service?
4. Revenue Model Feasibility 4.1 How does the business make money: What are minimum revenue streams and volume of revenue for the business? 4.2 How does the business increase revenue as well as customer value (experience) and loyalty? 4.3 What are alterna=ve means such as profit, revenue, and business model pa\erns by which the business can increase (recurring) revenue?
5. Resource-‐Based Feasibility 5.1 What physical/intellectual/emo=onal/spiritual resources and competences of the business model are valuable, rare, inimitable, and non-‐subs=tutable? 5.2 What is the cost structure as well as cost of resources for (a minimum viable) business model?
6. Business Model Advantage 6.1 What is the profit margin (Return On Investment) for the business model? 6.2 What are the compe==ve strategy and tac=cs (including switching costs and network effects) for the business model? 6.3 What is the trade-‐off of the compe==ve strategy or business model? 6.4 How disrup=ve and scalable is the business model? 6.5 How does the business con=nuously discover and solve Big Urgent Market Problems (BUMPs) especially in an environment of great uncertainty?
Lean Business Model Canvas A One-‐page Tool for Visually Organizing and Managing Responses to
The 25 Investor QuesEons for Business Model Profitability
TOPICS FOR STORY OF LEAN BUSINESS MODEL CANVAS
HolisEcally Document, Present, and Manage OrganizaEonal Success (Failure) in Business and Life
#4ROD. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
Lean Business Model Canvas = Lean Canvas + Business Model Canvas
Lean Canvas Business Model Canvas
q Problem
q SoluQon
q Key Metrics
q Profit (Value)
q Cost Structure
q Revenue Streams
q Value ProposiQons
q Channels
q Customer Segments
q Unfair Advantage
q Key Partners
q Key Resources
q Key AcQviQes
q Customer RelaQonships
Problem Finding & Solving/Performance Management Business Model VisualizaEon, Resources, and Viability
#4ROD. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
Problem Pain: (Un)Known
RED OCE
AN BLU
E OCEAN
SoluQon Gain: (Un)Known
Business Model
Business Model
Before
AWer
Key Metrics
Lean Business Model Canvas
Source: Based on Business Model Canvas -‐ hXp://en.wikipedia.org/wiki/Business_Model_Canvas & Lean Canvas -‐ hXp://pracEcetrumpstheory.com/2012/02/why-‐lean-‐canvas/
Job To Get Done/Experience (Journey: Strategy/Execu=on)
Lean Business Model Canvas
#4ROD. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
Problem Pain: (Un)Known
RED OCE
AN BLU
E OCEAN
SoluQon Gain: (Un)Known
Business Model
Business Model
Before
AWer
Busine
ss M
odel
(System)
Key Metrics
Lean Business Model Canvas
Source: Based on Business Model Canvas -‐ hXp://en.wikipedia.org/wiki/Business_Model_Canvas & Lean Canvas -‐ hXp://pracEcetrumpstheory.com/2012/02/why-‐lean-‐canvas/
VALUE CREATION (Enterprise Engine)
VALUE DELIVERY (Customer Growth Engine)
VALUE CAPTURE/SHARING (Value Engine)
KP
KA VP CR CS C$ P$
KR CH R$
BUSINESS MODEL ENVIRONMENT (Compe==ve/Unfair Advantage)
Lean Business Model Canvas
Job To Get Done/Experience (Journey: Strategy/Execu=on)
#4ROD. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
Problem Pain: (Un)Known
RED OCE
AN BLU
E OCEAN
SoluQon Gain: (Un)Known
Business Model
Business Model
Before
AWer
Key Metrics E: Engagement; Experience A: Acquisi=on; Ac=va=on R: Reten=on; Referral; Revenue
q Big/clunky music players
q Complex: difficult to use
q Small song storage
q Ultra-‐portable digital music player
q Simple: easy to use
q Large song storage
Listen to music (at home/work/outdoors)
Apple’s Lean Business Model Canvas for the Classic iPod (2001)
Visually Organize, Manage, and Test Ideas for Improving Business Model Profitability
Job To Get Done/Experience (Journey: Strategy/Execu=on)
#4ROD. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
Problem Pain: (Un)Known
RED OCE
AN BLU
E OCEAN
SoluQon Gain: (Un)Known
Business Model
Business Model
VALUE CREATION (Enterprise Engine)
VALUE DELIVERY (Customer Growth Engine)
VALUE CAPTURE/SHARING (Value Engine)
KP KA VP CR CS C$ P$
KR CH R$
BUSINESS MODEL ENVIRONMENT (Compe==ve/Unfair Advantage) Digital Hub/Ecosystem including iTunes
Before
AWer
Busine
ss M
odel
(System)
Key Metrics E: Engagement; Experience A: Acquisi=on; Ac=va=on R: Reten=on; Referral; Revenue
q Big/clunky music players
q Complex: difficult to use
q Small song storage
q Ultra-‐portable digital music player
q Simple: easy to use
q Large song storage
Listen to music (at home/work/outdoors)
Apple’s Lean Business Model Canvas for the Classic iPod (2001)
Visually Organize, Manage, and Test Ideas for Improving Business Model Profitability
Job To Get Done/Experience (Journey: Strategy/Execu=on)
#4ROD. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
Problem Pain: (Un)Known
RED OCE
AN BLU
E OCEAN
SoluQon Gain: (Un)Known
Business Model
Business Model
VALUE CREATION (Enterprise Engine)
VALUE DELIVERY (Customer Growth Engine)
VALUE CAPTURE/SHARING (Value Engine)
KP q Record
companies q Original
Equipment Manufactu-‐rers
KA q Hardware/
SoKware Design q Marke=ng &
Sales
VP “A Thousand Songs in Your Pocket” Seamless Music XP iPod Hardware
CR Online/Face-‐to-‐Face; Lock-‐in
CS Luxury Spo\er: Listen to music everywhere
C$ q Staff/Employees q Manufacturing/
Infra’ q Marke=ng &
Sales
P$ q High Profit
Margin q Extraordinary
Profit q Luxury Spot
Strategy
q Pain: Low q Delight: High q Value: High
KR q Staff/Employees q Brand/Culture q IP q Infrastructure: IT
CH Apple.com; Big Retailer/ iTunes Store; Retail stores
R$ q iPod Hardware q iTunes q Commissions
BUSINESS MODEL ENVIRONMENT (Compe==ve/Unfair Advantage) Digital Hub/Ecosystem including iTunes
Before
AWer
Busine
ss M
odel
(System)
Key Metrics E: Engagement; Experience A: Acquisi=on; Ac=va=on R: Reten=on; Referral; Revenue
q Big/clunky music players
q Complex: difficult to use
q Small song storage
q Ultra-‐portable digital music player
q Simple: easy to use
q Large song storage
Listen to music (at home/work/outdoors)
Apple’s Lean Business Model Canvas for the Classic iPod (2001)
Visually Organize, Manage, and Test Ideas for Improving Business Model Profitability
Job To Get Done/Experience (Journey: Strategy/Execu=on)
Apple’s 6 GATES TO BUSINESS MODEL PROFITABILITY for the Classic iPod
Visually Organize, Manage, and Test Ideas for Improving Business Model Profitability
#4ROD. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
1
2
3
4
5
6
Problem-‐SoluQon Fitness
Value ProposiQon Fitness
Product-‐Market Feasibility
Revenue Model Feasibility
Resource-‐Based Feasibility
BUSINESS MODEL ADVANTAGE
Digital Music Player
51 PaGerns for Business Model DisrupQon & Profitability
Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
ENTERPRISE ENGINE
CUSTOMER GROWTH ENGINE
VALUE ENGINE
delivers
requires
drives
requires
Product/Value ProposiQon
Channels & RelaQonships
Customer/Job-‐To-‐Get-‐Done
require(s)
require(s)
Inputs/Partners
Internal Resources
Processes/AcQviQes
require(s) affect(s)
require(s) deliver(s)
Cost (Pain)
Revenue (Delight)
PROFIT (VALUE)
requires
drive(s)
delights
delight(s)
delight(s)
(Problem
-‐Solu=
on Fit; Produ
ct-‐M
arket F
it)
Job-‐To-‐ Get-‐Done
Create Value Deliver Value Capture/Share Value
BUSINESS MODEL STORYBOARD Visualize the Building Blocks and NormaEve Logic of a Business Model
#VPGen. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
ENTERPRISE ENGINE Value CreaEon (Reduce Cost)
CUSTOMER GROWTH ENG. Value Delivery (Increase Rev.)
Inputs/Partners
Internal Resources
Processes/AcQviQes
Product/Value ProposiQon
Channels & RelaQonships
Customer/Job-‐To-‐Get-‐Done
Cost (Pain)
Revenue (Delight)
PROFIT (VALUE)
BUSINESS MODEL STORYBOARD (Building Blocks)
VALUE ENGINE Value Sharing (Increase Profit)
#VPGen. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
ENTERPRISE ENGINE: Value CreaEon (Reduce Cost)
CUSTOMER GROWTH ENGINE: Value Delivery (Increase Revenue)
Inputs/Partners q Co-‐crea=on; Social Media q Open Source Collabora=on q Crowd-‐funding/sourcing q Frac=onaliza=on/Co-‐owner q Investor/Sponsor/Donor q Mergers & Acquisi=ons
Internal Resources (Physical/Intellectual/EmoEonal/Spiritual Resources) q Creator; Broker; Landlord q Peer-‐to-‐Peer Planorm q Facilitated Network q Patents (“Fences”; Barriers)
Processes/AcQviQes q Opera=onal Excellence; JIT q Automa=on (Self-‐service/DIY) q Gamifica=on; Digitaliza=on q Ecosystem Management q Problem Solving; Consul=ng q Compe==ve Strategies
Product/Value ProposiQon q Asset Sale/Direct Sale q Product Leadership/Extension q Used/2nd Hand Product; Bargain q Customiza=on (Value Factors) q Bundling/Unbundling q Product/SoKware as a Service
Channels & RelaQonships q Offline/Online; (In)direct Sale q Franchise; Licensing; Affiliates q Distributor; Disintermediator q Ad Network; Brand Mul=plier q Aggrega=on/Disaggrega=on q Auc=on/Reverse Auc=on
Customer/Job-‐To-‐Get-‐Done q Customer In=macy/Loyalty q B2B; B2C q Long Tail; Community (Hub) q Two-‐sided Market (Segments) q Mul=-‐sided Market (Planorm) q Luxury/Mass Market/Niche
Cost (Pain) q Outsourcing; Specializa=on q Group Deals q Lending/Ren=ng/Leasing q Cross-‐subsidiza=on q Frac=onaliza=on/Co-‐owner
Revenue (Delight) q Pre-‐payment; Amor=za=on q Discount; Dynamic Pricing q Razor Blade (“Bait & Switch”) q Usage Fee; Subscrip=on Fee q Tiered Payment; Freemium q Dona=on; Free
PROFIT (VALUE) q Shared Value (Profit) q Transient Compe==ve Adv. q Sustainable Compe==ve Adv. q Red Ocean; Low Cost/Margin q Blue Ocean; Luxury Spot q Disrup=on/Lean Spot
VALUE ENGINE: Value Sharing (Increase Profit)
51 BUSINESS PROFIT PATTERNS (Strategic Choices for Business Model Profitability)
#VPGen. Dr. Rod King. [email protected] & hGp://businessmodels.ning.com & hGp://twiGer.com/RodKuhnKing
Inputs/Partners q Co-‐crea=on; Social Media q Open Source Collabora=on q Crowd-‐funding/sourcing q Frac=onaliza=on/Co-‐owner q Investor/Sponsor/Donor q Mergers & Acquisi=ons
Internal Resources (Physical/Intellectual/EmoEonal/Spiritual Resources) q Creator; Broker; Landlord q Peer-‐to-‐Peer Planorm q Facilitated Network ü Patents (“Fences”; Barriers)
Processes/AcQviQes ü Opera=onal Excellence; JIT q Automa=on (Self-‐service/DIY) q Gamifica=on; Digitaliza=on ü Ecosystem Management q Problem Solving; Consul=ng ü Compe==ve Strategies
Product/Value ProposiQon ü Asset Sale/Direct Sale ü Product Leadership/Extension q Used/2nd Hand Product; Bargain q Customiza=on (Value Factors) q Bundling/Unbundling q Product/SoKware as a Service
Channels & RelaQonships ü Offline/Online; (In)direct Sale q Franchise; Licensing; Affiliates q Distributor; Disintermediator q Ad Network; Brand Mul=plier q Aggrega=on/Disaggrega=on q Auc=on/Reverse Auc=on
Customer/Job-‐To-‐Get-‐Done ü Customer In=macy/Loyalty ü B2B; B2C q Long Tail; Community (Hub) q Two-‐sided Market (Segments) q Mul=-‐sided Market (Planorm) ü Luxury/Mass Market/Niche
Cost (Pain) ü Outsourcing; Specializa=on q Group Deals q Lending/Ren=ng/Leasing q Cross-‐subsidiza=on q Frac=onaliza=on/Co-‐owner
Revenue (Delight) q Pre-‐payment; Amor=za=on q Discount; Dynamic Pricing q Razor Blade (“Bait & Switch”) q Usage Fee; Subscrip=on Fee ü Tiered Payment; Freemium q Dona=on; Free
PROFIT (VALUE) q Shared Value (Profit) q Transient Compe==ve Adv. q Sustainable Compe==ve Adv. q Red Ocean; Low Cost/Margin ü Blue Ocean; Luxury Spot ü Disrup=on/Lean Spot
Apple’s PROFIT PATTERNS for Classic iPod (2001)
ENTERPRISE ENGINE: Value CreaEon (Reduce Cost)
CUSTOMER GROWTH ENGINE: Value Delivery (Increase Revenue)
VALUE ENGINE: Value Sharing (Increase Profit)