doujak business model handbook

8/3/2019 Doujak Business Model Handbook

http://slidepdf.com/reader/full/doujak-business-model-handbook 1/12

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By Marc Sniukas

©2010CopyrightDoujakCorporateDevelopment

BUSINESS MODEL HANDBOOK

Howtodescribeyourbusinessmodel.



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C ONT ENT S

I. TheBusinessModel..............................................................................................................................................................................3

WhatisaBusinessModel?..................................................................................................................................................................................................3

KeyElementsofaBusinessModel ......................................................................................................................................................................................4

II. DescribingYourBusinessModel...........................................................................................................................................................5

WHOisyourcustomer?.......................................................................................................................................................................................................5

WHATisyouroffer? ............................................................................................................................................................................................................6

HOWareyoucreatingyourvalueproposition? ..................................................................................................................................................................6

HOWareyoudeliveringyourvalueproposition? ...............................................................................................................................................................7

HOWareyougeneratingrevenues? ...................................................................................................................................................................................7

HOWdocostsoccur? ..........................................................................................................................................................................................................7

Example:AppleiPod/iTunesBusinessModel ....................................................................................................................................................................8

III. DescribingYourEnvironment .............................................................................................................................................................10

IV. FurtherReading..................................................................................................................................................................................11

V. References ......................................................................................................................................................................................... 11



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I. T H EB U SINESSM OD EL

WHATISABUSINESSMODEL?

„A business model describes the rational of how an organization

creates,delivers,andcapturesvalue .“(Osterwalder200914)

“Abusinessmodelissimplythe‘wayofdoingbusiness’thatafirmhaschosen:itsentiresystem

forcreatingandprovidingconsistentvaluetocustomersandearningaprofitfromthatactivity,as

wellasbenefitforitsbroaderstakeholders.Itreferstothecorearchitectureorconfigurationofthe

firm, specifically how it deploys all relevant resources (not just those within the companyboundaries),tocreatedifferentiatedvalueforcustomersataprofit…”(Davenport,Leiboldetal.

200620).

Itistheunderlying economiclogicthatexplainshowvalueisdeliveredtothecustomer

atanappropriatecost(Magretta2002).

The business model is a company’s answer to the

questionofhowtomakemoneyinitschosenbusiness.

It describes, “…as a system, how the pieces of a

businessfittogether”(Magretta200291).



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KEYELEM ENTS OF A B US I NES S M OD EL

Inordertodescribeanddiscussabusinessmodelyourorganizationneedsasharedlanguage,outliningthevariouspiecesofyourbusinessandhowthey

fittogether.The“BusinessModelCanvas”issuchalanguage(Figure1).TheBusinessModelCanvasconsistsofninebuildingblocks.

Figure1



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II . D ESC R IB ING YOU R B U SINESSM OD EL

Thegoalisnottoexplaineverydetail,butthedescriptionshouldberathertothepoint,highlightingtheessenceandthemaincompetitivefactorsyour

businessreliesupon.

Thefollowingprocesshasprovenhelpfulfordescribingyourbusinessmodel:

1. Gothroughthequestionsonthe nextpagesanddocumentyouranswers.It willprobablynotbe necessarytoanswereveryquestioningreat

detailandsomequestionsmightnotfityourparticularbusiness.Thinkofthequestionsasinspirationoracookingrecipe:therecipegivesyou

somedirections,butfeelfreetouseyourcreativityandthestylethatfitsyouandyourbusinessbest.

2. Afteryouhaveformulatedyouranswers,usetheBusinessModelCanvastoillustratethemainpointsandprovideasummary(notadetailed

description!)andhighlightthemostimportantfactorsofyourbusinessmodel.Havealsoalookattheexamplesprovided.

W HOI S YOURCUS TOM ER?

Whichcustomersegmentsdoyouserve? Thetermcustomerisusedbroadlyhere.Itcanincludebusinesscustomersorendcustomers.

Insteadofdescribingyourdirectcustomers,youmightwanttothink

abouttherealendcustomer,whoisfinallyusingtheproduct.Itmight

alsobeworthtothinkaboutwhoisbuyingtheproduct,whois

influencingthedecision,whoispayingforitandwhoisfinallyusingit.

Describingyourcustomersegmentsalongnewcharacteristicsand“the

jobtobedone”(seenextpart)mightopenopportunitiesforre-

segmentingyourmarkets.

• Whichcustomersegmentsareyoucurrentlytargeting?

• Forwhomareyoucreatingvalue?

• Whoareyourmostimportantcustomers?

• Areyourcustomerslocalorglobal?

• Businessorconsumer?

• What’sthedemographicsegment?

• What’sthelifestagesegment?



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W HA TI S YOUROF F ER?

What is the customer value proposition? T he c us tome r v alue

proposition (CVP)is aboutwhat products,services and solutionsyouoffer your customers. Itcan beformulated intermsof what need is

fulfilled orwhatproblem issolved for the customer. Customervalue

propositionscan be describedas individual products or services or as

bundles.In case yousellmorethanoneproduct,you might want to

think about the underlying need or problem allof your products or

services fulfill. Maybe the products and services fall into several

categoriesservingdifferentneeds?

• Whatneedsdoesyourofferfulfill?

• Whatisthejobthatyourproductsandserviceshelpyourcustomerstogetdone?

• Whatproblemdoyourproducts,servicesandsolutionssolve

foryourcustomers?

• Whatbundlesareyouofferingtoeachcustomersegment?

HOW A REYOUCREA TI NG YOURVALUEPROPOS I TION?

Whatarethekeyactivitiesyouperform? Keyactivitiescanincludeprocesseslikeforexample:marketresearch,design,research,product

development,sourcing,manufacturing,recruiting,training,IT,licensing,

marketing,sales,etc.

• Whichactivitiesarethemostimportanttoyourbusiness?• Whichdoyouperformbest?

• Whichdoyououtsource?

Whatareyourkeyresourcesandassets? Whatareyourmostvaluable

assetsandresources?Whichdoyouneedtomakeyourbusinessmodel

work?Keyresourcescanbephysical,intellectual,human,orfinancial.

• People

• Technology

• Equipment

• Information

• Channels

• Exclusiveaccesstopartnershipsandalliances

• Brands

• …

Whoareyourkeypartners,alliancesandsuppliers?Whoperforms

importantactivitiesinyourvaluechain?

• Supplierscanbedefinedasthosewhofulfillstepsinthevalue

chainthatyourcompanyhasdecidedtooutsource.



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• Partnersofferadditionsandactonahorizontallevelas

opposedtosupplierswhoactonaverticallevel.

• Alliancesarecoalitionswithcompetitorsincertainareas.

HOW A REYOUD ELIVERI NG YOURVALUEPROPOS I TION?

Howdoyoureachthecustomer?Deliveringthevaluepropositionisas

muchabouthowyousellasabouthowyoureachyourcustomer.

• Whatchannelsdoyouuse?E.g.directorindirectsales,high

pressureorconsultativeselling,referrals,internetsales,etc.

• Howdoyouorganizefulfillmentandsupport?

• Howdoyoucreateawarenessforyouroffer?

• Howdoyouorganizeaftersales?

Whatisyourrelationshiptothecustomer? Whatistheimageyour

customershaveofyourcompany?Areyoudifferentiatingyourself

through:

• operationalexcellence“bestbuy”

• productleadership“bestproduct”

• exceptionalcustomerrelationship“bestbrand”

HOW A REYOUG ENERA TI NG REVENUES ?

Whatspecificrevenuestreams

doyoucurrentlyhave?Where

doesthemoneycomefrom?

• Sales

• Licensing

• Renting/Leasing

• Usage

• Subscription

Howdoyouprice?Howdoyou

fixprices?

• Fixedordynamic

• Low,competitive,high

• Listprice

• Valuebased

• Auction

• …

HOW D OCOS TS OCCUR?

Whatarethemostimportantcostsinourbusinessmodel? Whatarethecostdrivers?Whichkeyresources,activities,partnerships,…arethe

mostexpensive?

• Isyourbusinesscost-drivenorvalue-driven?

• Fixed

• Variable

• Economiesofscale

• Economiesofscope



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EXAMPLE:APPLEIPOD/ITUNESBUSINESSMODEL

“Bythelate1990s,Apple’sinitialpathwayto growthwas runningout ofsteam.Thecompany’sproprietaryapproachto designingbothhardwareand

softwarelimitedittobeinganicheplayerandhampereditsabilitytocompeteonprice.In2001,Applebeganintroducingaseriesofsuccessfulnewproductsandservices—theiPod,theiTunesonlinemusicservice,andtheiPhone—thatpropelledthecompanyto thetopofits industry.Buttheshift

wasn’t onlya matter of product innovation.Apple’ssuccessresultedfrom itsability to define a workable business modelfor downloadingmusic—

somethingthathadeludedthemusicindustryforyears.

Thiscombinationofproductinnovationandbusinessmodelinnovation(BMI)putAppleatthecenterofamarketapproximately30timeslargerthanits

originalmarket.Italsohelpedexpandthecompany’sshareofthetraditionalcomputermarket,asnewcustomersbecamesoattachedtotheiriPodsthat

theytookanotherlookatApple’scomputers.”(Lindgardtetal2009)

“Applesvaluepropositionistoallowcustomerstoeasilysearch,buy,andenjoydigitalmusic.Appleearnsmostofitsmusicrelatedrevenuesfromselling

iPods,whileusingtheintegrationwithandonlinemusicstorestoprotectitselffromcompetitors.”(Osterwalder200946)

Thecanvasonthefollowingpagecanbedownloadedfromwww.businessmodelgeneration.com.



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(Osterwalder200946)



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III. D ESC R IB ING YOU R ENVIR ONM ENT

Sensingandseizingopportunities. Themainpurposeofdescribingtheenvironmentistosenseopportunitiesthatcanthenbeseizedthroughentirelynew

businessmodelsorthereinventionofexistingones.

Theneedforinventingnewbusinessmodelsorforreinventingexistingonescanarisefrominternalandexternalsources.Internallythegoaloforganicgrowthcanbeoneofthesesourcesforexample.Anothersourcecouldbeanewtechnologythatneedstobebroughttomarketwithanewbusiness

model.

Externalpressurelikeincreasedcompetition,newentrants,orshiftingcustomerneedscanmakeitnecessarytothinkaboutnewbusinessmodelsaswell.

Thissectiondealswithdescribingtheseexternaltrendsandpressuresthatmightrequirenewbusinessmodels,butmightalsooffernewopportunities

thatcanbeseizedwiththehelpofa newbusinessmodel.Theaimisnottofindananswertoallofthesetrendsandenvironmentalfactors.Thelistis

meant toprovideinspiration forareasto lookinto.Focus onthose thatyou thinkhavethe biggest impact onyour business,be itas athreator an

opportunity.

Here’sanoverviewofexternalforcestothinkabout.

KeyTrends Macro-EconomicForces IndustryForces MarketForces

• Regulatory

• Technological

• Social

• Cultural

• Socio-Economic

• Demographic

• …

• Globalmarketconditions

• Capitalmarkets

• Economicinfrastructure

• Commoditiesandother

resources

• …

• Suppliers

• Stakeholders

• Competitors

• Newentrants

• Substituteproductsand

services

• …

• Marketattractiveness

(fromyourBCGprofile)

• Marketshare(fromyour

BCGprofile

• Marketsegments

• Needsanddemand

• Marketissues

• Switchingcosts

• …



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IV . FURTHERREADING

Doujak,A.(2008)„StrategicInnovation–BuildingNewGrowthBusinesses“,firstchapteravailablefordownloadatwww.doujak.eu

Sniukas,M.(2010)„ReshapingStrategy–TheContent,ContextandProcessofStrategicInnovation“VDMVerlag.Firstchapteravailablefordownloadat

www.sniukas.com

V. R EF ER ENC ES

Davenport,T.H.,M.LeiboldandS.Voelpel(2006).StrategicManagementintheInnovationEconomy.PublicisWiley.

Osterwalder,A.(2009).BusinessModelGeneration–AHandbookforVisionaries,GameChangers,andChallengers.SelfPublished

LindgardtZ.,M.Reeves,G.Stalk,andM.S.Deimler(2009)“BusinessModelInnovation:WhentheGameGetsTough,ChangetheGame.”Boston

ConsultingGroupreport.

Magretta,J.(2002)."WhyBusinessModelsMatter."HarvardBusinessReview80(5)May:86-92.



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ContactInformation

MarcSniukas

SeniorConsultant

[email protected]

+4369912233303

Visit www.doujak.eu to learn more about Doujak Corporate Development.

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