Business Idea Generation for Management Consultants & Managers

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Business Idea Generation for Management
Consultants & Managers
Practical guide how to come up with killer business ideas

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To build a business you need a good idea that you can explore and
develop. Unfortunately, coming up with a good business idea is not easy

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Most firms and universities don’t show how to come up with a business
idea. They concentrate on teaching you how to run existing business

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In this course I will show you different methods
to come up with killer business ideas.

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Target Group What you will learn What you will get
 Management Consultants &
Business Analysts
 Managers
 Analysts working in Strategic
Departments
 Startup Founders
 How to come up with business
ideas by improving existing
products, solving existing problems
 How to build add-on business
using your current business
 Case studies
 Ready made analyses in Excel
 List of Recommended readings
(articles, books)

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Jobs to be done Build on existing businessImproving existing things
There are several sources from where you can get ideas for your
business. We have divided them into 3 sections

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What you will see in this presentation is a part of my online course where you
can find case studies showing analyses along with detailed calculations in Excel
Business Idea Generation for
Management Consultants
$190
$19
Click here to check my course

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Improving Existing Things –
Introduction

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It’s always a good idea not to build in vacuum but have a good starting point. You can
for example improve already existing business or solve existing problem better.

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Carve out existing business Cloning 1 to 1Solve your own problem
Blue OceanIdea Cloning
10 x current solution using
first principals
In this section we will look at how you can build a business by simply
improving already existing business or solving existing problem
Ride a trendFrom Free to Paid Disrupt others

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Do what you have done but on
your own

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One of the easiest way to start business is to do what you have done
so far but become independent. In other words do it on your own

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Consulting
 Bain & Company – was created by ex BCG employees
 Kolaja & Partners – was created by ex McKinsey
 Alvarez & Marsal – was created by ex PwC (Coopers & Lybrand at that time)
B2C Services
 Restaurants
 Language Schools
 Beauty salons / Hairdresser
B2B Services
 Transportation companies
 Architects & Designers
 Lawyers
 SaaS i.e. Zoom creator was previously developing WebEx for Cisco
E-commerce
 Small companies that started selling through Amazon of 3rd party products start selling their own products
 Some of them also set-up their own websites
FMCG
 Sport equipment: Puma was founded by Rudolf Dassler who used to co-created Adidas; Nike was selling shoes made in
Japan before starting his own brand
 Sports drink (i.e. Polish brand Oshee started by people who worked for Foodcare – another beverage brand)
 Supplements and nutrients
 Yves Saint Laurent was working previously for Dior
 Tom Ford was working previously for Gucci and Yves Saint Laurent
This principal have been applied numerous times in many industries

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Going on your own requires low
capital
No license is required
A lot of small / medium customers
Customers can easily switch from the
current solution to your solution
You know how to do it better than
current players
You know how to do it cheaper than
current players
This method is great under some conditions

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Start working in a
firm which you want
to copy
Gain experience
Define what you
want to specialize in
Develop and
improve the
business plan
Create your own
firm
 Start working and
learning in company
which is interesting
to you
 Make sure that
later on you can do
this on your own
 Make sure there are
no legal or other
barriers
 Learn the processes
 Identify the
competitive
advantages
 Build relationships
with customers
 This usually takes 2-
5 years
 Using your
experience define
how the future
business will look
like
 You can do exactly
the same or you
change the
customer group,
pricing, limit or
expand the product
range
 Make sure using
Excel model that
the business is
viable before you
start it
 Identify what
assets, people you
have to have to be
profitable fast
 Try to acquire them
before you leave
the firm
 Would be greate if
you can take the
customers will you
 Leave the current
firm
 Create your own
firm
To use this method you first have to gain experience by working for
others

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Solving your own problem is another nice way to create a business. You
know very well the customers because you are a customer yourself.

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Guess the problem
Research customer
segments
Create MVP
Learn how to sell &
market the product
Create a scalable
business
 Think about
problem you have
or others have
 Group customers by
common attributes
or characteristics
 Conduct consumer
& market research
 Learn what matters
to them, what is the
real problem
 Learn how current
solutions fail and
what has to be
done to improve
their lives
 Collect the
maximum amount
of validated
learning about
customers
 Create a prototype
of the product
(MVP) and test it on
customers
 Use the learnings to
improve the
product
 You modify the
product till you
reach product-
market-fit
 Using the research
test how you can
sell and market the
product to your
customers
 Create the final
version of the
product
 Create a business
that will produce
and sell the product
 Scale the business
Most startups when they try to create a business have to go through the
following process

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Guess the problem
Research customer
segments
Create MVP
Learn how to sell &
market the product
Create a scalable
business
When you are doing products for people like you 50% of the work is
done because you know intimately the customer
Areas that still need to be
developed

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Let’s have a look at some examples of firms that have solved their own
problem and by accident created a viable business
Codecademy
 Codeacademy was created to help people around the world gain the skills they need to find a job
 The founders of the company, as students saw the potential on the US market for programming schools. One of the founder was
terrible at coding so they have decided to solve his own problem
 They started an online interactive platform that offers free coding classes in 12 different programming languages
Airbnb
 The idea of the Airbnb was created to help people who are looking for accommodation and not expensive place to stay
 Two roommates came across this idea by accident. They provide a place to sleep to people who came to the design conference in San
Francisco and had problems with finding a hotel
 Currently, the Airbnb is one of the biggest online marketplace that connects people who want to rent out their homes with people
who are looking for accommodations in that locale
Amazon Web Service (AWS)
 AWS is a subsidiary of Amazon that provides a secure cloud platform and infrastructure service for private and commercial users.
 AWS was created first for internal need of Amazon, to deal with the hyper growth and development the company was experiencing
and the need for servers.
 The services was so good that they started offering it to external customers
Fulfilment by Amazon
 Amazon to grow their sales had to build a professional logistics and warehousing service all over the USA.
 At some point Amazon decided to allow sellers to use their own warehouse infrastructure and transport to reduce costs and increase
sale. This is know as Fullfilment By Amazon (FBA)
 In FBA the Sellers can use Amazon network of fulfillment centers to store, pick, pack and ship customer’s orders for a predictable fee
Tesla batteries
 Tesla for the cars production is using electric battery cells.
 Due to a problem with the availability of suitable batteries and the high prices of those batteries, Tesla has decided to start its own
production of these components. Moving into own battery production helps company to control production, reduce exposure to price
increases from battery manufacturers and scale production
 It also is attempting to sell the batteries as a standalone product (Powerwalls)

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For this method to work certain conditions have to be met
Sufficient group of customers
Problem is a real pain in the ass
There are quite a lot of customers
willing to pay for the solution
You have a way to solve this problem
better than others
You can reach potential customers
cheaper than others
Niche problem – main players will not
be interested in solving it

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Carve out existing
business

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Carving out a piece from an existing business is interesting option to build a new
business. Usually you already have a customer base and ways to deliver value

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Let’s have a look at some examples of businesses that were created by
carving out part of the business
Integrated Airlines
Aircraft Maintenance
Handling luggage on
airports
Airports Management
Pure Airlines
Plane Leasing
Cars
Tiers Production
Seats Production
Car design
Production of cooling
systems
Domestic Appliances
Production of Engines
Production of
Aluminum elements
Production of metal
elements
Drugs / Pharmaceuticals
Clinical Testing
Packaging Production
Research
Real estate
Construction
Supervision
Design
Investment
Car assembling
Domestic appliances
assembling
Wholesaling &
Distribution
Retail

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Usually the carving out is a 2 stage process
Integrated Firm
Business Unit 2
Business Unit 3
Business Unit 4
Business Unit 1
Business Unit 5
Business Unit 2
Business Unit 3 – carved
out into new firm
Business Unit 4
Business Unit 1
Business Unit 5 – carved
out into new firm

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This option becomes interesting in the following situations
The firm is huge and inefficient
It provides low level of service
The firm has a high cost of delivery
The firm has not reached economies of
scales for specific part of their business
The industry requires big investments
High failure rate

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One of the most interesting methods is simply to clone a successful business from the
original market to a new market. You make almost exact copy of the original business

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Let’s have a look at some examples of successful cloning
Original concept Original country Clone Clone country
Amazon
Ebay
Zappos
Zara (Inditex)
Audible
Alibaba
Allegro
Zalando
LPP
Audioteka
South West Airlines Ryanair

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Cloning 1-1 is great idea to create a business but under certain
conditions
The new market is similar to the
original market
The new market is big enough to cover
the required expenses
The new market cannot be easily
accessed by the original concept
The creator of the original concept is
not interested in your market
There are some serious legal barriers
preventing the original concept from
entering
The original concept requires a lot of
adjustments for the new market
The product requires some localization
– adjustment to the new market
The original concept wants to have 1-
size fits all

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Cloning 1 to 1 can be done using a 5-stage process
Find an idea from
developed markets
Check whether it
would make sense
on your market
Adjust the business
model
Clone the business
Scale the business
on the new market
 Not in every area
there is a clear
leader (due to
consumer
preferences,
technology etc.)
 Find this market
and observe for
interesting ideas
and clear winners
 Once you find an
interesting model
you should check
whether you can
build similar
product / business
on your market
 The market usually
should have similar
customer groups
and not to be too
distant in
development from
the original market
 Usually there will be
some modification
of the product
range
 You will also have to
do adjustments due
to difference in
earnings, costs
 New market may
also require
different method of
delivery or different
sales channel
 Build the business
after the
adjustment on the
new market
 If needed further
modify
 Most modification
are around
customer
experience, prices,
further product
adjustment
 If the business
reached product-
market fit scale it as
fast as possible
 Your exit strategy is
quite often to sell
the business to the
very business you
have copied

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Let’s have a loot at some examples of successful cloning
Original concept Original country Clone Clone country
Amazon
Ebay
Zappos
USA
USA
USA
Zara (Inditex)
Audible
Alibaba
Allegro
Zalando
LPP
Audioteka
China
Poland
Germany
Spain Poland
USA Poland
South West Airlines RyanairUSA Ireland

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Some business ideas are coming from an attempt to apply famous concept to a new industry.
This has produced a lot of interesting businesses and can be used in wide range of industries

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This idea cloning can be described using the following formula
New concept Famous formula
New industry /
market
is for
Presentationis
Scootersis for
Online coursesis for
for
Furnitureis for

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There are 4 main ways to clone an idea using this framework
Idea cloning
Narrow down
target group
Change the product
Innovative Revenue
Streams
Change Operations
Business Model
 Subset of the
original target group
≈
Target Group
Product
Pricing
 Different than in the
original concept
original concept
original concept
≈

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Let’s have a look at some examples
Grindr
Bumble
Tinder for gay
Tinder – only female users can make
the first contact with male users
Superhuman email Gmail with new features
Macdonald with Mexican foodTaco bell restaurant / Chipotle
Salad story
Audible
Macdonald with salads
Kindle for audiobooks
Spotify
ITunes for music paid by subscribers
in a form of a subscription
Instacart
Webvan for food delivery but done
from local stores
Narrow down target
group
Change the product
Innovative Revenue
Streams
Change Operations

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Blue Ocean – How to
Generate Business Ideas

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Blue Ocean is a great framework that can be used to generate business ideas by
observing existing industries and looking for unsatisfied customer, non-users

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In the next few lectures we will have a look how to use it in practice
Non-users
4 action framework used in
Blue Ocean
What is Blue Ocean
Case studies of successful
application of Blue Ocean
6 paths to achieve Blue
Ocean

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Blue Ocean –
Introduction

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Let’s have a look at a Blue Ocean Strategy
 The strategy in which instead of competing in the current market
segmentation you look for a niche / market where there is no competition
or very less competition
 In this approach you search for a business in which only a few firms operate
and where there is no pricing pressure
 In Blue Ocean Strategy through value innovation, diversification and low
cost you try to achieve a significant and profitable growth of the company
 In Blue Ocean Strategy you redefine the market and concentrate on non-
users.
 You try to create a center of gravity that will suck customer from other
markets / niches / strategic groups
Blue Ocean
Strategy
=

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Hotels
Online services
Retail
Blue ocean strategy was successfully implemented by many companies
from different industries
Entertainment
Transport
B2B

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There are few main characteristics of Blue Ocean Strategy
Avoid head to head competition
Taping into non-users
No industry boundaries
Value innovation. Break the value-
cost trade off
Looking for high profit and growth
opportunity niches
Align the whole business to pursue
diversifications
Low costs – you do not spend money
on things of little value
Creates quite often entirely new
markets

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The non-users can be divided into 3 groups
Current
Market
First Tier
Purchase only out of
necessity, are on the
edge of market and wait
to join
Second Tier
Non-users that ignore
your industry consciously
Third Tier
Non-users that have
never consider your
product

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Let’s have a look how this tiers look like for Yellow Tail – an Australian wine
that is much simpler and cheaper drink than regular wine
Wine
market
First Tier
Occasional wine drinkers
Second Tier
Drinkers of easier to
consume alcohols: beer,
drinks
Third Tier
All people who drink
water
Yellow Tail wine – easy to drink /does not require any
knowledge about wine

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There are few main characteristics of Blue Ocean Strategy
Player 1
Player 3
Player 2
Player 4
Player 1
Player 3
Player 2
Player 4
Niche of
Blue Ocean

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Blue Ocean Strategy –
4 action framework

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Bellowed 4 action framework which can be used to redefine and redesign
the current company strategy into the blue ocean strategy
Eliminate
Reduce
Raise
Create
All aspects that are not value added
for company and customers
Certain (not important to the
customer) aspects below industry
standards
Additional value for the customers.
Which features should be above the
industry standard?
Innovative products or services.
Create things that the industry has
never offered

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Blue Ocean Strategy – 6 paths to
achieve it

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You can reach Blue Ocean by taking one of the six paths. You can look
across
Industry
Strategic Groups
Buyer Groups
Complimentary Products
Functional / Emotional
Orientation
Time
Red Ocean Blue Ocean

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You can reach Blue Ocean by taking one of the six paths. You can go across
Industry
Strategic Groups
Buyer Groups
Complimentary Products
Functional / Emotional
Orientation
Time
Red Ocean Blue Ocean

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0
20
40
60
80
100
Price Production
costs
# Food
products
Quality Brand Location Customer
service
Variety
Starbucks Coffe Competitors
Starbucks has been very successful in implementing blue
ocean strategy
Wide range of products
Customer experience – selling not the coffee
but rather the place to meet
High product quality - ethically, sustainably
grown coffee (C.A.F.E.)
Value innovation
High market penetration and short distance to
the closest Starbucks
High standard service and low prices

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The company is also innovative in many fields of its activity
New flavors
Happy hours
Free Wi-Fi
Free birthday treat
Mobile ordering

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Starbucks has created strong accessibility. This is due to the fact that stores are
located close to each other to make it easier for customers to buy a cup of coffee

60
CitezenM is an example of company that has created a new market
space in hotel industry
Relatively low prices
High standard – they kept what is
important from the 5-start hotels and
removed the rest
0
20
40
60
80
100
Price Front desk Restaurants Room type Room size Room
standard
Location Self check in
Luxury hotels Three-star hotels CitizenM
Value innovation
Build from premanufactured sleeping
rooms

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They created an affordable luxury hotels which have a great standard - like 5-
star hotels. They were many things that the have added / raised to make the
experience similar to 5-star hotel
High boutique standard
High quality of sleeping environment
Good locations
Free extras

62
CitizenM offers a stay in very affordable prices, like in 3-star hotels, This
together with a high standard creates a big competitive advantage. To achieve
this they had to eliminate or reduce some aspects
No front desk
No restaurants
No lobby
Limited room type and size
Lower prices than in 5-star hotel

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Thanks to this they achieved great results
Occupancy rate – 90%
Labor costs – 50% lower
Cost of construction – 35%
lower
Construction time – down by
up to 50%
Premanufactured sleeping
rooms

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Zappos is one of the online retailers who decided to move into a blue
oceans
Low prices
Value innovation
New market
0
20
40
60
80
100
Price Shipping costs Costs of returns Frequency of
promotions
Variety Delivery speed Customer
assistance
Zappos Online retailers
Customer experience

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Variety
High delivery speed
24h customer assistance
Free shipment
Customer experience
They created a unique online service where customer can order a batches of
shoes to try them on and send them back for free if they do not fit

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Zappos was able to lower the services costs thanks to few things
Long return time
Close warehouse location
Close relations with business partners
Changing shipping cost to a marketing cost
Increasing sales through returns

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10 x current solution using first
principals

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One of the ways in which you can come up with new business ideas is to use the 10x framework
where you resort to so called first principals. This is favorite method of Elon Musk

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There are 3 main ways in which you can improve existing business. This will
help you come up with the proper business idea
Improving existing
business
Make it faster Make it better Make it cheaper
Ikea
Dell
MacDonald
Uber
Apple

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Let’s see how you can use this technique
Identify what you
want to improve
Identify the business
drivers of the
business
Estimate the impact
of the drivers on
your business
Select what and how
you would like to
change
Implement the
changes
 Think about
whether you want
your product,
service to be
cheaper, faster or
better
 Select one or up to
two features you
want to improve
 Learn what are the
drivers of your
business
 Identify how drivers
affect your business
and your results
 Prepare the
calculation in Excel
 See what has to
change in terms of
each and every
driver to achieve
the goal of 10x the
specific feature
(cost, speed,
customer
satisfaction)
 Choose a few
drivers that you
want to change to
make your product
cheaper, better or
faster
 Decide how you
would like to
change them
 Implement the
selected changes to
your business
 Remember to
monitor the
progress of changes
during and after the
implementation to
be sure that you
have achieved your
goal

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Reduce water using 10x
framework – Case Introduction

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Let’s imagine that you want to drastically reduce the
usage of water. Use the 10x framework to achieve this

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You don’t know what is your water
consumption currently
You want to estimate both direct
and indirect water consumption
Direct involves bathing, drinking
water, using water for cleaning
A few information about the problem
Indirect involves the usage of water
for producing products for you

75
Just as a reminder below the 10x framework that I recommend using
Identify what you
want to improve
drivers of the
business
Estimate the impact
of the drivers on
your business
Select what and how
you would like to
change
Implement the
changes
 Think about
whether you want
your product,
service to be
cheaper, faster or
better
two features you
want to improve
drivers of your
business
and your results
 Prepare the
 See what has to
change in terms of
each and every
driver to achieve
the goal of 10x the
specific feature
(cost, speed,
customer
satisfaction)
 Choose a few
drivers that you
want to change to
make your product
cheaper, better or
faster
 Decide how you
would like to
change them
 Implement the
selected changes to
your business
 Remember to
monitor the
progress of changes
implementation to
be sure that you
have achieved your
goal

76
framework – Drivers

77
Just as a reminder you want to drastically reduce the

78
A few information about the situation

79
The general 10x framework using first principles looks like this
Identify what you
want to improve
drivers of the
business
Estimate the impact
of the drivers on
your business
Select what and how
you would like to
change
Implement the
changes
 Think about
whether you want
your business to be
cheaper, faster or
better
two features you
want to improve
drivers of your
business
and your results
 Prepare the
 See what has to
change in terms of
each and every
driver to achieve
the goal of 10x the
specific feature
(cost, speed,
customer
satisfaction)
 Choose a few
drivers that you
want to change to
make your business
cheaper, better or
faster
 Decide how you
would like to
change them
 Implement the
selected changes to
your business
 Remember to
monitor the
progress of changes
implementation to
be sure that you
have achieved your
goal

80
Let’s apply it to our case study
 We want to reduce
water consumption
expressed in liters
of water
 We will look at
direct and indirect
consumption
 The main drivers
affecting your water
consumptions are:
o Frequency of
consumption
o # of liters
consumed /
used per
consumption
 We will look at
drivers for different
categories: Bathing,
Drinking water,
Water used for
growing vegetables,
producing meat,
clothing, cleaning
dishes
Identify what you
want to improve
drivers of the
business
Estimate the impact
of the drivers on
your business
Select what and how
you would like to
change
Implement the
changes

81
Now let’s see what the water consumption depends on
Bathing
Drinking water
Water used for growing
vegetables
Total water
consumption
Water used for
producing meat
Water used for
producing clothing's
Water used for cleaning
the dishes
Other sources
+

82
# of times you take a
bath
Water usage per 1
bathing
xBathing
Drinking water
vegetables
Total water
consumption
Water used for
producing meat
Water used for
the dishes
Other sources
+

83
# of days
# of liters that you drink
per day
x
Bathing
Drinking water
vegetables
Total water
consumption
Water used for
producing meat
Water used for
the dishes
Other sources
+

84
# of days
Amount of vegetables
eaten per day
Water required to grow
1kg of vegetables
x
Bathing
Drinking water
vegetables
Total water
consumption
Water used for
producing meat
Water used for
the dishes
Other sources
+

85
# of days
Amount of meat eaten
per day
Water required to
produce 1 kg of meat
x
Bathing
Drinking water
vegetables
Total water
consumption
Water used for
producing meat
Water used for
the dishes
Other sources
+

86
# of pieces of clothing
bought a month
Water required to
produce 1 piece
x
Bathing
Drinking water
vegetables
Total water
consumption
Water used for
producing meat
Water used for
the dishes
Other sources
+

87
# cleanings per month
Water usage per 1
cleaning
x
Bathing
Drinking water
vegetables
Total water
consumption
Water used for
producing meat
Water used for
the dishes
Other sources
+

88
Let’s have a look at the following options
Currently
 You use water for all needed activities
 You don't make any changes to your behavior or habits
Description of the options
Option 1 – change of
frequencies
 You limit the frequency of performed activities
frequencies, mix
 You change your behavior by reducing the meat and increasing the vegetables consumption
frequencies, mix & method
 You change the bathing method by pouring less water into the bathtub or showering faster
frequencies, mix, method &
technology
 You use brand new technologies (i.e. meat grown artificially, atomizing shower system like Nebia)

89
framework – Summary

90
Just as a reminder you want to drastically reduce the

91
A few information about the situation

92
We looked at 4 options that can help us get to the target
Currently
 You use water for all needed activities
 You don't make any changes to your behavior or habits
frequencies
frequencies, mix
technology
 You use brand new technologies (i.e. meat grown artificially, atomizing shower system like Nebia)

93
Identify what you
want to improve
drivers of the
business
Estimate the impact
of the drivers on
your business
Select what and how
you would like to
change
Implement the
changes
 Think about
whether you want
your business to be
cheaper, faster or
better
two features you
want to improve
drivers of your
business
and your results
 Prepare the
 See what has to
change in terms of
each and every
driver to achieve
the goal of 10x the
specific feature
(cost, speed,
customer
satisfaction)
 Choose a few
drivers that you
want to change to
make your business
cheaper, better or
faster
 Decide how you
would like to
change them
 Implement the
selected changes to
your business
 Remember to
monitor the
progress of changes
implementation to
be sure that you
have achieved your
goal

94
Let’s summarize what we have done
 We want to reduce
water consumption
expressed in liters
of water
 We will look at
direct and indirect
consumption
affecting your water
consumptions are:
o # of water liters
consumed
o Time of
consumption
o Frequency of
consumption
 We will look at
exact drivers for
different categories:
Bathing, Drinking
water, Water used
for growing
vegetables,
producing meat,
clothing, cleaning
dishes
Identify what you
want to improve
drivers of the
business
Estimate the impact
of the drivers on
your business
Select what and how
you would like to
change
Implement the
changes
 The biggest impact
comes from
reducing meat
consumption and
buying fewer
clothes
 We would
implement Option 3
 Option 4 requires in
most cases a
cheaper technology
 To get to 10x we
most likely have to
further reduce
certain activities

95
Let’s summarize what every option helps us achieve
77
30 28 23
9
Current water consumption Option 1 - change of
frequencies
Option 2 - change of
frequencies, mix
technology
Monthly water consumption
In thousands of liters

96
We can also look at the incremental impact of every option
77
47
2
5
14
9
Current water
consumption
frequencies
frequencies, mix
frequencies, mix &
method
frequencies, mix, method
& technology
Target water
consumption
Monthly water consumption and incremental reduction delivered by options

97
Let’s also look at the reduction by type of usage. The biggest impact is
from reducing the meat consumption and buying less clothes
5
0 2
42
19
1 0
68
Bathing Drinking Water Water Used for
growing vegetables
Water used for
producing meat
Water used for
producing clothing
Water for cleaning
the dishes
Other sources Total
Monthly reduction in water consumptions by type of usage

98
For more details and content check my online course where you can find case
studies showing analyses along with detailed calculations in Excel
$190
$19

99
Decrease cost using 10x
framework – Case Introduction

100
Let’s imagine that you are an owner of a bus company and you want to find
a way to make the cost per 1 seat cheaper. Use the 10x framework

101
They have 300 buses
Currently they use 1-floor diesel
buses
They want to dominate the
European market
A few information about the firm
To achieve that they need to lower
the cost per 1 seat

102
Identify what you
want to improve
drivers of the
business
Estimate the impact
of the drivers on
your business
Select what and how
you would like to
change
Implement the
changes
 Think about
whether you want
your business to be
cheaper, faster or
better
two features you
want to improve
drivers of your
business
and your results
 Prepare the
 See what has to
change in terms of
each and every
driver to achieve
the goal of 10x the
specific feature
(cost, speed,
customer
satisfaction)
 Choose a few
drivers that you
want to change to
make your business
cheaper, better or
faster
 Decide how you
would like to
change them
 Implement the
selected changes to
your business
 Remember to
monitor the
progress of changes
implementation to
be sure that you
have achieved your
goal

103
framework – Drivers

104
Just as a reminder you are an owner of a bus company and you want to
find a way to make the cost per 1 seat cheaper. Use the 10x framework

105
They have 300 buses
buses
European market
the cost per 1 seat

106
Identify what you
want to improve
drivers of the
business
Estimate the impact
of the drivers on
your business
Select what and how
you would like to
change
Implement the
changes
 Think about
whether you want
your business to be
cheaper, faster or
better
two features you
want to improve
drivers of your
business
and your results
 Prepare the
 See what has to
change in terms of
each and every
driver to achieve
the goal of 10x the
specific feature
(cost, speed,
customer
satisfaction)
 Choose a few
drivers that you
want to change to
make your business
cheaper, better or
faster
 Decide how you
would like to
change them
 Implement the
selected changes to
your business
 Remember to
monitor the
progress of changes
implementation to
be sure that you
have achieved your
goal

107
Let’s apply it to our case study
 You are the owner
of a bus company
that transports
people from city A
to B
 You want to lower
the cost per seat
10x
affecting your
business are:
o Number of
customers
o Cost per km /
hour
o Duration or the
distance of the
trip
 We will look at 4
main groups of
costs: driver costs,
fuel, maintenance
cost and leasing
cost
Identify what you
want to improve
drivers of the
business
Estimate the impact
of the drivers on
your business
Select what and how
you would like to
change
Implement the
changes

108
Profit from any trip will depend on 2 things: revenue and costs
Profit from the trip
Revenue from tickets
sales
Costs of the trip
-

109
Revenues will depend on 2 things as well: price of a ticket and number of seats
Revenue from tickets
sales
Costs of the trip
x
Price for 1 ticket
# of seats
(potential customers)
% Utilization
x

110
We have 4 main cost positions
Revenue from ticket
sales
Costs of the trip
- Cost of the driver
Cost of fuel
Cost of maintenance
Cost of leasing
+

111
Let’s have a look what the cost of the driver depends on
Revenue from ticket
sales
Costs of the trip
Cost of fuel
Cost of maintenance
Cost of leasing
+
Average salary per hour
# of drivers
# hours (duration of the
trip)
x

112
Let’s have a look what the cost of the fuel depends on
Revenue from ticket
sales
Costs of the trip
Cost of fuel
Cost of maintenance
Cost of leasing
+ Cost of fuel per 1 km
# km (trip length)
x

113
Let’s have a look what the cost of the maintenance depends on
Revenue from ticket
sales
Costs of the trip
Cost of fuel
Cost of maintenance
Cost of leasing
+
Average cost of
maintenance per 1 km
# km (trip length)
x

114
Let’s have a look what the cost of leasing depends on
Revenue from ticket
sales
Costs of the trip
Cost of fuel
Cost of maintenance
Cost of leasing
+
Purchasing price of the
bus
# of km that the bus will
be used
÷
# km (trip length)
x

115
In our drive to lower the costs 10x we will consider 3 scenarios
Currently
 For transporting people you use a standard, one-floor bus driven by gasoline
Option 1 – change bus model
 You change the bus model from one-floor to two-floor bus to increase the number of potential
customers
 Your bus still uses gas / petrol
and power supply
customers
 Your also switch to electric engine
Option 3 – change bus model,
power supply and self driving
customers
 The bus is self-driven

116
framework – Summary

117
Just as a reminder you are an owner of a bus company and you want to
find a way to make the cost per 1 seat cheaper. Use the 10x framework

118
They have 300 buses
buses
European market
the cost per 1 seat

119
In our drive to lower the costs 10x we considered 3 scenarios
Currently
 For transporting people you use a standard, one-floor bus driven by gasoline
customers
 Your bus still uses gas / petrol
and power supply
customers
Option 3 – change bus model,
power supply and self driving
customers
 The bus is self-driven

120
After we did the calculations in Excel we will do from the suggested
changes
 You are the owner
of a bus company
that transports
people from city A
to B
 You would like to
change your
business and make
it cheaper
affecting your
business are:
o Number of
customers
o Cost of fuel
o Cost of the
driver
o Cost of
maintenance
o Cost of
mortgage
 We have identified
3 options that help
us get closer to 10x
cheaper cost per
seat
 We will implement
option 2
 This will help us go
down from EUR 7.4
per seat to EUR 2.3
per seat
 Moving to self-
driving buses will be
done when the
technology is
available. This will
help us go down to
EUR 1.1 per seat
 In our case
implementing the
change would mean
ordering new buses
and slowly but
surely changing the
whole fleet
Identify what you
want to improve
drivers of the
business
Estimate the impact
of the drivers on
your business
Select what and how
you would like to
change
Implement the
changes

121
Let’s summarize what every option helps us achieve
7,4
4,2
2,3
1,1
Currently Option 1 - change bus model Option 2 - change bus model and
power supply
Option 3 - change bus model, power
supply and self driving
Cost pe 1 seat
In EUR per seat per average trip

123
An inspiration for the business you can also find in free solutions already existing
on the market. They generate a sufficient demand for a paid solution as well.

124
Free solutions help create initial demand. At some point the customers
start looking for paid solutions with higher quality
Zero demand
Free solution
introduced
Mass demand
Paid solution
introduced
Scaling of paid
Demand
# of suppliers
# of paid
solutions
 None
 None
 Small  Big  Huge  Mass market
 High penetration
of the market
 Few and mainly
amateurs
 Many suppliers
but still amateurs
 Many
 Majority are still
free solutions
 Many
 Free solutions are
marginalized
 Majority
provided by paid
solutions
 None  Small  Many

125
Free solutions
Illegally copied music
Movies downloaded via torrents
Paid solutions
iTunes
Netflix
Gmail Superhuman
Couchserfing Airbnb

126
Ride a trend –
Introduction

127
Trends can change something small into unstoppable beast. That’s why you can
gain a lot by spotting trends early on and creating a business around the trend.

128
Let’s see how you can use this technique to generate business idea
Spot a trend
Identify people,
industries that the
trend will affect
Estimate the impact
of the trend
Pick a business that
will benefit from the
trend
Build the business
ahead of time
 Analyze the market
and follow new
trends that are
spreading on the
market
 Analyze new
technologies and
observe the change
in people's behavior
 Think about
potential trends
that may arise
 Watch what the
new trends are
about
 Analyze who is
affected by new
trends industries or
people (social
groups, gender,
age, education etc.)
 Analyze the trends
and estimate how it
will affect the
market
 How will product
prices change
 What new services
will be created?
 For what products
the demand will
grow?
 For what products
the demand will go
down?
 Create a product
 Create a business
model
 Find or create
unfair advantage
 Choose the timing –
when to enter to
make the most of
the trend (how
ahead of the trend)
 Act quickly before
others come up
with the same idea
 Scale the business
as the trend will
become more
prevalent

129
Let’s have a look at example
20
30
40
50
60 55 50 45 44 43 42 40
1 2 3 4 5 6 7 8 9 10 11 12
# of children per age
In thousand

130
Let’s see how you can use this technique to generate business idea –
Example 1
Spot a trend
Identity people,
industries that the
trend will affect
Estimate the impact
of the trend
trend
Build the business
ahead of time
 The number of kids
will increase in the
next few years
 Big cities
 Kids products (toys,
feeding accessories,
wipes, disposable
diapers, body care
products)
 Services for kids
 Industries supplying
industries
producing products
and services for kids
 The demand will
increase 3x in the
next 5 years
 Chain of
kindergartens
 Create first 10-15
locations 2-3 years
and scale as the
number of kids
appears on the
market

131
Let’s see how you can use this technique to generate business idea –
Example 2
Spot a trend
Identity people,
industries that the
trend will affect
Estimate the impact
of the trend
trend
Build the business
ahead of time
 Stores with baby
products
 Create first 2-3
locations 3-4 years
ahead of the big
jump in the demand
 Scale fast
afterwards as the
number of kids
increases 3x
 The number of kids
will increase in the
next few years
 Big cities
 Kids products (toys,
feeding accessories,
wipes, disposable
diapers, body care
products)
 Services for kids
 Industries supplying
industries
producing products
and services for kids
 The demand will
increase 3x in the
next 5 years

132
Ride a trend –
What trends to follow

133
When it comes to what trends to follow let’s have a look at the usual
suspects
Demographic trends
Migration trends
Macro trends (i.e. unemployment rate,
inflation)
Life style trends
Technology adoption Trends on the job market

134
Disrupt others –
Introduction

135
Many industries are ready to be disrupted. This was a huge source of business ideas in
the last 15 years. There are still many industries in which this method can be used

136
Let’s have a look under what conditions disrupting industries &
incumbent players makes sense
Disrupt others
Expensive workers or
big share of labor costs
Market structure
New technology or a
process
Stores without cashiers
No code startups / Shopify
/ Airtable / AppSheet
Zapier
Uber
Fitness cards like Class Pass
/ Benefit System
Private Healthcare in Easter
Europe (i.e. Luxmed)
Amazon
Uber
Low cost business
Ryanair / South West /
Easy Jet
Lidl / Aldi / Biedronka /
Costco
IKEA
Ibis Budget
Lack of logic
Shipping container
Aircraft Maintenance based
on the health of the plane
Healthcare instead of sick
care
Xerox
SaaS replacing marketing
specialists
Telemedicine / AI instead
of diagnostics
Prosthesis and dentures
from 3D printer

137
Analyze existing mistake –
Introduction

138
You can learn from your own mistakes. You can also learn from other
people's mistakes and turn those mistakes into a successful business

139
Let’s see how you can use this technique to generate business idea
Identify the
mistakes
Define what caused
the mistakes
Find solutions to
problems / mistakes
Build a business that
is immune to
historical mistakes
Scale the business
 Identity the mistake
that other
companies on the
market have made
 Identify the source
and type of mistake
 Identity the reasons
of those mistakes
 Was it caused by
external or internal
factors? Can you
remove this mistake
and make a
successful business?
 Most mistakes are
caused by: high
acquisition costs,
lack of proper
technology, lack of
customers, high
production costs,
legal barriers
 Think what can be
done better
 Consider actions,
steps that will help
fixing the mistakes
that other firms did
 Most solutions
require: better
execution, cheaper
source of
customers, faster
delivery, cheaper
production /
delivery costs,
innovation in the
business model
 Model the business
using the lesson
learnt form other
firms’ mistakes
 Check whether
after implementing
the solution the
business makes
economical sense
 Estimate in Excel
the profitability of
the business as well
as the scale it can
reach
 If the solution in
practices removes
the obstacles and
the business is
profitable scale it

140
Companies that made the mistake
Myspace
Snapchat
Companies that learned from that
mistake
Facebook
Instagram
Hoover Dyson
Webvan Instacart

141
$190
$19

143
Jobs To Be Done framework –
Introduction

144
Jobs to Be Done concept is a great tool to find a way to improve your business
or create a new business. That’s why we will discuss it in this section

145
Jobs To Be Done – Definition

146
Let’s start with a short definition
 When we buy a product we essentially hire the product to get a
specific job done.
 We define the “job” as the progress that the person is trying to
make in particular circumstances and area
 The very same job can be done by totally different products or
services
 Therefore, don’t fall in fall with your product and don’t look too
narrowly at the competitive landscape
 Be obsessed with the problem and the job that the customer hires
you to do
 The same product for the specific customer can perform different
jobs in different circumstances
Jobs To Be Done
Theory =

147
Let’s see the process that will help you understand the Job To Be Done
for specific group of customers
What progress the
person is trying to
achieve
What are the
circumstances of the
struggle
What are the
obstacles preventing
the customer from
progress
Are consumers
making do with
imperfect solutions?
How customers
defines a better
solution?
 You have to
understand what
are the functional,
social and
emotional
dimensions of the
desired progress
 In other words how
the end result
should look like so
the customer is
happy
 You have to
understand the
circumstances in
which the struggle
is happening
 In other words you
have to understand
the specific context
of the customer
 When and where it
happens, what is
doing in the
meantime and with
whom
 You have to
understand what
the customers
struggles with, what
obstacles prevent
him from achieving
the progress
 In other words what
is stopping him
from achieving the
progress he desires
 You want to know
whether the
customers are using
imperfect solutions
to their problem.
 Some customers
will use some sort
of workaround,
combine 2-3
separate products
or services to get
the job done
 There may be also
some sort of
compensating
behavior
 You should find out
how customers
define “quality”, in
what dimensions
the new product or
services has to be
 You should also
understand the
tradeoffs he is
willing to make to
get this better
performance

148
Bear in mind that the customer hires the product more than one time
Big Hire
First moment of truth
 This is the moment when you decide
to buy the product or a service in the
hope that he will get the job done
Little Hires
Second moments of truth
 This is the moment (after the
purchase) when he puts the product
to use and can either get the
progress that he was hopping for or
he main be disappointed with the
result
 If the disappointment is big and there
is a better alternative on the horizon
he will fire the product

149
Jobs to Be Done – Examples

150
Coffee
Let’s try to define what jobs does the coffee
Helps me become
focused
I like the taste
It is an opportunity to
meet people
Acceptable break at
work
Warms me up
Wakes me up

151
Facebook
Let’s try to define what jobs does Facebook for an average customer
Stay in touch with
people
Efficient way to
communicate
I use it to kill boredomI can show off
I can see what my ex-
boyfriend does
Gives me adrenaline
boost

152
Jobs to Be Done – How to use it
to improve an existing product

153
Understand the Jobs
to Be Done
Define the changes
to your product
Implement the
changes and adjust
the organization
Change the
positioning and the
messaging
Keep Focused on the
Jobs to Be Done
 Define what
progress the
customers desires,
what he hires you
to do with your
product or a service
 Try to understand
also the
experiences the
customers seeks in
order to make the
progress
 Analyze the
functional,
emotional and
social dimension of
their desire for
progress
 List the obstacles
that are preventing
the customer from
the achieving the
desired progress
 Estimate what is the
cost and benefit of
implementing it
 Decide which things
you will do in the
first order / what
obstacles you will
remove
 Start one by one
removing the
obstacles
preventing the
customer from the
desired progress
 Change the
organization of the
firm to be centered
around the Jobs to
Be Done
 Change the way you
communicate with
the customers
 Adjust your
messaging /
marketing towards
the job that you are
solving, the
progress you are
helping the
customer to achieve
 Adjust customer
experience
 Make sure that you
don’t try to satisfy
too many jobs
 Don’t dilute too
much your brand by
adding too many
new products and
services that are
not linked to the
main job
 Design the KPI
system to measure
how well you do the
job
 Adjust your
processes
 Adjust your
organizational chart
 Pay attention to
leading input KPIs

154
Jobs to Be Done – How to use it
to create a new product

155
Understand the Jobs
to Be Done
Identify who is
currently doing the
Job
Create the prototype
of the product
Start selling &
marketing
Keep Focused on the
Jobs to Be Done
 Define what
progress the
customers desires,
what he hires you
to do with your
product or a service
 Try to understand
also the
experiences the
customers seeks in
order to make the
progress
 Analyze the
functional,
emotional and
social dimension of
their desire for
progress
 List the firms that
deliver the progress
/ do the job
 Identify in what way
they fail the
customer
 Identify the non-
users that have the
problem but don’t
hire any product at
all
 Identify the
workaround used
by the customers
 Create the
prototype of the
product that you
can use to learn in
practices with the
customer
 Modify the solution
till you reach
product-market fit –
your product does
the job so well that
we majority of
customers would be
unhappy if your
product disappears
 Define what the
customers have to
fire to hire you
 Adjust the
positioning and the
messaging to the
jobs you have
identify
 Organize the firm
around the delivery
of the job much
better than current
alternatives
 Identify and use to
your advantage the
push and pull forces
that may support
the adoption of
your product
 Adjust customer
experience
 Make sure that you
don’t try to satisfy
too many jobs
 Don’t dilute too
much your brand by
adding too many
new products and
services that are
not linked to the
main job
 Design the KPI
system to measure
how well you do the
job
 Adjust your
processes
 Adjust your
organizational chart
 Pay attention to
leading input KPIs

156
Jobs to Be Done – How to find
them

157
There are 5 main ways to find the Jobs to Be Done
Observe jobs in your
own life
 Find a problem, a job that
is poorly solved or not
solved at all
 If you observe a small
number of customers
most likely there will be
others as well
Analyze
non-consumption
 In this method we
concentrate on people
that don’t hire any
product or service
 In some cases it may
suggest that the existing
solutions are not
sufficiently good so the
customers choose to do
nothing instead
 In other words Jobs to Be
Done exists but the
solutions are crappy
 Ask yourself a question
who is not using your
product and why?
 You can use a top-down
approach for that
Analyze
workarounds &
compensating behaviors
 In this method you analyze
cases where a lot of
people are using some
sort of workarounds to
solve their problem and
achieve progress
 The workaround suggests
that the jobs is really
important to the customer
so he is using substitutes
or combining together
different products to get
the job done
Negative jobs
 Look for what people
DON’T want to do
 People are able to pay for
totally removing certain
things from their life
Spot unusual usage of
the product
 You can learn a lot by
observing how customer
use your product,
especially if the product is
used in a different way
than the company has
envisioned

158
Observe jobs in your
own life
Analyze
non-consumption
Analyze
workarounds &
compensating behaviors
Negative jobs
Spot unusual usage of
the product
Khan Academy
Sony Walkman
Airbnb hosts
Kimberly-Clark & briefs
(diapers for adults)
Open Table
ING Direct – accounts for
low net worth people
Procedures in Healthcare
(vaccination)
Udemy Teachers
Podcasters / YouTuber /
Bloggers
Cosmetics for men
Arm & Hammer –
Baking Soda
Arm & Hammer –
Baking SodaGM – OnStar systemAutopilot in airplanes

160
Netflix
Let’s guess the main competitors of Netflix
HBO GO
Disney +
Hulu
Amazon Video
Amazon Prime
Other streaming platform
Cable channels
Traditional TV
providers
Traditional TV
Cinema
Cinema
Video on demand
Online platforms of
traditional TV
YouTube
Facebook
Games including
Twitch
Others
Other online entertainment

161
Coffee at Starbucks
Let’s guess the main competitors of a coffee at Starbucks
Tea
Juice
Water
Shakes
Other beverages at
Starbucks
Coffee at home
Coffee at work
Coffee at other places Other places for a meeting
Coffee at other
restaurant
Vending Machine
Working at home
Office
Co-work space
Others
Other places to work
Cinema
Restaurant
Walk in the park
Others

162
$190
$19

163
Build on existing business

164
Build on existing business
– Introduction

165
You have to use a bit different approach if you already have
existing business and want to build on top of it new businesses.

166
In this section we will talk about the following things
Vertical Consolidation via
M&As
Build add-on business
Go up or down the Value
Chain
Enabling Investments
Build entirely new
businesses
Expand the brand into new
categories
Use existing assets in a new
way
Disrupt yourself
Experiment with different
sales channels & revenue
streams
Repurpose a product / Find
new application to a
product
Turn failure into success

167
Go up / down the value chain –
Introduction

168
The first step is to draw value chain and check the margins
Transport and
Warehousing
FMCG producer Retail Chain
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Producers of
raw materials
and
components
Elements of value chain
that you want to take over

169
Going down the value chain / downstream usually means getting closer
to the customer
Transport and
Warehousing
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Producers of
raw materials
and
components

170
Going up / upstream means going closer to the source of materials that
you use
Transport and
Warehousing
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Producers of
raw materials
and
components

171
When it makes sense

172
Going up or down makes a lot of sense if at least one of the below
condition is met
Your supplier position is very
strong
Your customer has high
purchasing power
In other part of the value chain
you can get higher margins
You want to block competitors
You acquire players to show how
to improve their businesses
To increase responsiveness of
your base business
Too much cash that cannot be
put to good use

173
Benefit System

174
Let’s see how this technique was applied by Benefit System – an operator of
Fitness Card that gives you access to different fitness clubs. It is partly covered
by employers

175
They have been constantly increasing the number of users…
614
744
865
2015 2016 2017
Number of active sports cards users in Poland
In thousands of people

176
…which helped them growth 2x revenues and almost 3x EBITDA in 4 years
320 383 452
581
742
2012 2013 2014 2015 2016
Revenue of Benefit Systems S.A.
In millions of PLN
40 38 55 70
119
2012 2013 2014 2015 2016
EBITDA of Benefit Systems S.A.
In millions of PLN

177
Let’s have a look at the Benefit System value chain…
Operator of the
fitness card
Fitness Clubs HR Managers
Developers
Landlords
Equipment
Producers
Others
Producers of
raw materials
and
components
Financing Fitness Clubs
where Benefit System is
present

178
Benefit System has managed to enter other elements of the value chain
Operator of the
fitness card
Developers
Landlords
Equipment
Producers
Others
Producers of
raw materials
and
components
where Benefit System is
present

179
Zara

180
Before we move to analyzing the value chain of Zara let’s have a look at
the supply chain of a typical fashion retailer

181
Let’s have a look at Zara Value Chain
Transport Transport Transport
Supplier Manufacturing Warehousing Stores Consumers
Transport
Flow of information
Design
 40% of raw materials
in company Conditex
– Inditex subsidiary
 Other raw materials
come from 260
different suppliers
 Important products
are produced by Zara
manufactures
 Simple or time-
consuming products
are outsourced to
local manufactures
 Zara distributes by
planes or by tracks
products to almost
2 000 stores all
over the word
 Ready garments
from manufactures
are shipped back to
the Zara logistics
center
 From there all
products are
distributed to Zara’s
stores
 Zara uses its own
design team

182
Vertical Consolidation via M&As –
Case Introduction

183
Let’s imagine that you have to help fitness card operator decide what will be
the impact of M&A on his strategy to vertically integrate
Fitness card operator wants to have 40%
of his revenue delivered by own fitness
clubs
He is considering 2 options: only organic
growth or M&A with organic growth
Check what will be the impact of both
options on Revenues, EBITDA and
Market Cap

184
Let’s have a look at value chain in the fitness segment
Operator of the
fitness card
Developers
Landlords
Equipment
Producers
Others
Producers of
raw materials
and
components
where he is currently
present

185
– Introduction

186
If you build an add-on business it means that you do not replace elements of
the business model but rather add. This changes will not be marginal but will
transform your business
Key partners Key activities
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Cost structure Revenue structure
Key resources
Relationships
Channels
Value
proposition
Customer
segments
New revenue stream
New
customer
group
New
product

187
As you may remember in building add-on businesses we said that there are 6
usual suspects
Customer segment
Revenue structure
Channels
Value Proposition – Product
Key Partners esp. suppliers
Relationships

188
– Amazon

189
If you build an add-on business it means that you do not replace elements of
the business model but rather add. Below the usual suspects you would usually
play with
Customer segment
Revenue structure
Channels
Relationships

190
Let’s see what Amazon has managed to apply this strategy
Customer segment
Revenue structure
Channels
 Added new segments of customers as they have added new products
 Added people who want to publish their own books via Amazon Kindle
 They have allowed Amazon to work not only as e-commerce but also as a marketplace
 Logistics fee (for the FBA customers)
 Advertisement fee
 Revenue sharing from apps
 Subscription fees – Amazon Prime, Amazon Video, Audibles
 Digital distribution of products i.e. Amazon Kinde, Amazon Video,
 They have entered mobile apps market
 They have entered offline world
 Started with physical books but then entered also digital books (Kindle), audiobooks (Audibles) as well as all
possible physical products

191
Developed companies can operate multiple models under one or many
companies. Have a look at Amazon
SaaS
E-commerce Media site2-sided market
UGC
B2B Service
B2C ServiceRetailer

192
– WordPress

193
As we said building add-on business requires you usually to change one of the
elements of your business model. Below the usual suspects
Customer segment
Revenue structure
Channels
Relationships

194
Let’s see how has WordPress managed to apply this strategy
Customer segment
Revenue structure
 First an open source solution that enables flexibility
 Second group they targeted are non-technical customers – mainly SMB with 1-stop solution – Wordpress.com
 Third group they targeted are enterprise customers i.e. TechCrunch, CNN, NBC,
 Fees from Wordpress.com plans
 Fees from the marketplace of themes that is linked to worpdress.org
 Fees from Word Ads (similar to AdWords belonging to Google)
 1-stop solution for non-technical customers – mainly SMB
 E-commerce solution
 Plugins
 Creators of themes / plugins
Relationships
 Getting customers via marketplace build by them as well as Partners that build themes / plugins
 Getting customers via influencers

195
Let’s recap the changes done to the business model of WordPress
Open source solution
for blogging
Open source solution
for building online
presence and selling
1-stop solution for
non-technical
customers – mainly
SMB
Marketplace of
themes and add-ons
for WordPress

196
– Shopify

197
As we said building add-on business requires you usually to play with one of
the elements of your business model. Below the usual suspects
Customer segment
Revenue structure
Channels
Relationships

198
Let’s see how has Shopify managed to apply this strategy
Customer segment
Revenue structure
Channels
 From Micro firms to SMB and then to enterprises
 From online to multichannel customers
 Developers building apps on the bases of Shopify API
 Fees from apps sold via Shopify marketplace
 Shopify Experts & Shopify Partners
 Apps as add-on products
 POS offline solution for customers that were acting as a multichannel (combining online and offline sales)
 Buy-Buttons – enabling to sell not only from the Shopify website solution but any place i.e. WordPress blog
 Developers building apps on the bases of Shopify API
Relationships
 Get and keep customers via Shopify Experts & Shopify Partners
 Get customers via marketplace build by them as well as developers building add-ons
 Get customers via content marketing

199
Let’s recap the changes done to the business model of Shopify
Online store for
snowboards
Solution to run your
e-commerce – for
micro firms
Shopify App Store –
Marketplace of apps,
adds-on for Shopify
Solution to run your
online sales – all sizes
of firms
Shopify Experts &
Shopify Partners
Integrated solution
to run your online
and offline sales

200
Build entirely new businesses
– Introduction

201
Sometimes transformation is more abrupt. You may be forced or choose to
build an entirely new business on top of what you already have
New businessYour original business

202
This happens usually due to following reasons….
You need the new business to be
successful in the current business
Your supplier sucks
Your customer sucks
There is no sufficient capacity
available
Owing the business will give you
unfair competitive advantage
You want to develop skills that can
be applied to your current business

203
This happens usually to following reasons….
You need the new business to be
successful in the current business
Your supplier sucks
Your customer sucks
There is no sufficient capacity
available
Owing the business will give you
unfair competitive advantage
You want to develop skills that can
be applied to your current business

204
How to expand the brand –
Introduction?

205
Let’s have a look at milk producer that wants to expand its product
range
Leader in milk
2nd place in butter
25 products considered

206
There are things you should consider when selecting the right products
to be developed within the same brand
Is the product consistent with the
current brand?
Does it require the same
distribution?
Do you have strong players on the
market you enter?
What is the potential of the market?
Are there customers who already
think that you have the product?
What is the growth rate of the
market for the product?

207
How to expand the brand –
Case Solution

208
After we have gone through research we got the following results. This suggest
that we should start with yoghurt and yellow cheese
0
50
100
150
200
250
300
350
0 0,5 1 1,5 2 2,5 3
Market size
In mln USD
Attractiveness
(1-Low;3-High)
Cheddar
Cottage cheese
Yoghurt
Milk Desserts
(i.e. Monte)
Yellow (swiss)
cheese
Ice cream
Feta

209
Enabling Investments –
Introduction

210
In many cases your demand is limited by something that you cannot control
directly. In such cases you may be interested in enabling investments

211
Enabling investments help you drive the demand or sales by removing
the main bottleneck – lack of the demand
1 2 3 4 5 6 7 8 9 10
Market size Your capacity
Market size and your capacity

212
Enabling investment can be done in different places depending on
where the bottleneck is
Demand side Supply side Distribution side
Increase the demand from
current customers
Increase the number of potential
customers
Find new applications for your
products
Kill substitutes
Increase throughput of
bottlenecks
Increase the availability of
required resources and materials
Increase availability of potential
employees
Increase the throughput of the
distribution system
Create your own distribution –
existing channels
Create your own distribution –
new channels

213
Enabling Investments –
Examples

214
Let’s have a look how Tesla was doing enabling
investments to support the sales of its cars

215
Let’s have a look how Tesla managed to apply this strategy
Demand side Supply side Distribution side
Convince governments and
regulators to support electric cars
usage
Develop infrastructure to
facilitate the use of electric cars,
e.g. supercharger network
Invest in solar production
capacity (Solar City, Powerwall,
Solar Roofs)
Provide car insurance for Tesla
cars
Build the cars from a scratch to
simplify it
Eliminate a large number of
intermediaries and create own
components for the car
Build own factory for batteries
Own retail chain to sell cars
Service centers combined with
sales centers
Tesla Rangers – mobile
technicians who can service
vehicles from your house
Automate the work in the
factories (fewer employees
needed)

217
Disrupt Yourself –
Introduction

218
Do what you do
but better
Expand TransformGo niche Disrupt yourself

219
If you have a nice cash generating business you are unfortunately running the
risk of being disrupted by some new comer operating in different business
model
Taxi / Cabs
Combustion
car producers
 Mailing the DVD
 No late fees
 Streaming
 Better value proposition
 Lower Price
 No friction in usage
 Totally new design from a scratch
 Value proposition pretty close to the existing
solutions
 Emotional value appealing to certain segments
 Self-driving feature
 Software that helps you constantly improve the
product
 Infrastructure that supports electric cars
How the businesses were disrupted?

220
You can immune yourself against disruption by….disrupting yourself. This
however may have dire consequences
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

221
In short term you may be loosing a lot of money
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

222
Once you find the new business model you not only gain what you have lost…..
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

223
… but you also start taking more and more market share from competitors that
did not adjust to new business model
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

224
Do what you do
but better
Expand TransformGo niche Disrupt yourself
Change the
business
model
Intrapre-
neurship
M&A
potential
competitors
Copy
competitors
that may
disrupt you

225
Change the business model –
Introduction

226
Sometimes when you change the business model you will not gain anything in
the short term but rather protect what you have from external disruption
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Model A Model B

227
Moreover in order to survive you have to disrupt yourself even further and
change the model in such a manner that it has nothing to do with the original
one
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Model B
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Model C

228
Moreover in order to survive you have to disrupt yourself even further and
change the model in such a manner that it has nothing to do with the original
one
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Model C
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Model A

229
There are a few examples of such a behavior
 Build a Kindle – after creating fulfilment centers to ship fast physical books
they have invested heavily in Kindle that did not need the infrastructure
 They have moved to totally free product (after being bought by Facebook.
This killed the payment that created the valuation of WhatsApp)
 A Facebook introduced the calling in their main product
 This was done as a move against WeChat that by offering the free calls could
take away customers both from Facebook and WhatsApp.
How did they change their business model to disrupt themselves?
WhatsApp + Facebook
Amazon

230
Intrapreneurship
– Introduction

231
Intrapreneurship is a great source of disruption
 Is the act of behaving like an entrepreneur while
working within a large organization
 Entrepreneurship within corporate world
Intrapreneurship =

232
Intrapreneurship can be a successful way to find ways to disrupt
yourself, provided certain rules are followed
Autonomy
Separate budget
Freedom to be often wrong
Judged on the basis of the long run
results
Proper mix of people (not necessary
related to mother company)
Permission to kill core business
Decentralized decision making

233
Intrapreneurship –
Google

234
Google has been very successful in implementing intrapreneurship programs in their
organization. They encouraged employees to spend 20% of their work time on its
own projects. Thanks to that they were able to create many well-known products
Google
Gmail
Google Maps
Google News
AdWords
Google Glasses
AdSense

235
Below you can find practices which were used by the Google in order to encourage
employees to take part in intrapreneurship program
Employees can choose the project on
which they would like to work
Access to courses and professional
trainers
Organization support for internal
enterprises
Rewards for team members
Teams are more like profit centres than
cost centres

236
Intrapreneurship –
Apple

237
Apple is a business which was born out of intrapreneurship inside a big
company
Apple
iPhone
iCloud
iPod
iTunes
Mac

239
3M
Post-it note Masking Tape
Waterproof (Wet and dry)
Sandpaper
The 3M is also an example of the company which supported the intrapreneurship
programs inside the organization. Employees could spend their 15% time working on
new projects

240
M&A potential competitors –
Introduction

241
M&As are a fast way to disrupt yourself. It has plenty of advantages
You tame potential significant
competitor that could have killed your
business
M&A is a fast method of creating
alternative business models
Acquihire
Diffusion of knowledge from bought
company to your current business
You de-risk your business model
against future trends
Acquired firm can be used to kill
competition

242
Altassian

243
Altassian is a M&A machine
2 IT guys built on
the side their own
issue tracker called
Jira
2002 2004 2007
M&A
They created a new
dev team
collaboration
platform —
Confluence
Altassian buys
Cenqua, which
made 3 developer
tools — Fisheye,
Crucible, and
Clover. These tools
filled the gaps in
Atlassian’s product
offerings
Atlassian raised $60
M for M&A
2010 2012
Atlassian acquired
and integrated into
its main products
the hosted private
chat service
Hipchat
Atlassian combined
all of their Git-
based services
under the Bitbucket
brand
2015
IPO – starting
market cap $ 5.8 B
Atlassian acquired
Statuspage, which
allows businesses
to keep users
updated about the
status of their
online services
2016 2017
Acquisition of
Trello – a simpler
version of Jira for
Project
Management. It
cost them $425 M
Organic growth

244
Let’s recap the changes done to the business model of Altassian thanks
to M&A
Simple tool for
tracking tasks for
Developers
Complicated tool for
tracking tasks for
developers
Simple tool for
tracking tasks for All
Integrated solutions
that makes the life of
developer easier

245
Adobe

246
Adobe released
PostScript. The
software could
control output
devices like laser
printers from
personal
computers
1983 1987 1993
M&A
Adobe released
Illustrator, and a
year later
Photoshop
Adobe released
Acrobat, a suite of
applications for
creating and
viewing files in a
new way. Adobe
has come up with
the pdf format
Adobe acquires its
main competitor
Aldus (PageMaker)
1994 1996
Adobe released
PhotoDeluxe as an
“easier to use”
version of
Photoshop
Adobe released
Acrobat 4.0, an
important set of
updates and
feature additions
that skyrocketed
sales for corporate
users
1999 2003
Adobe bundled all
of their products
together in the
Adobe Creative
Suite to unify their
branding and start
tying their products
together
Adobe acquired a
competitor,
Macromedia –
owner of an easier-
to-use Photoshop
competitor called
Dreamweaver and
a platform for
animations and
video players called
Flash
2005 2008
Adobe released a
webtop version of
Photoshop called
Photoshop Express.
This was designed
as a consumer
product to be really
easy to learn and
use
Adobe acquired the
top enterprise
analytics company
Omniture. It
allowed to offer
web analytics,
measurement, and
optimization
technologies to
Adobe product
users
2009 2013
Adobe released
Creative Cloud (CC)
to replace Creative
Suite. From now on
it would only be
available for
purchase through a
subscription-based
service
Organic growth
2015
Adobe Stock – a
microstock agency
that is part of
Adobe Creative
Cloud has acquired
one of its
competitors -
Fotolia
Adobe was busy not only with organic growth but also acquisitions

247
If we would like to observe their journey we could sum it up in the
following manner
Software allowing
printing
Integrated text and
image processor
Adobe Illustrator
Acrobat, a suite of
applications for
creating and viewing
files on any device
and system
Adobe Creative Cloud
– integrated solution in
the cloud
Photoshop, a photo
editing tool
Adobe Stock - stock
agency

248
Copy competitors that may
disrupt you – Introduction

249
If you cannot buy the competitor sometimes you have to copy him to stay
relevant for your customers. A great example is Facebook strategy towards
Snapchat
Snapchat becomes
popular
Facebook tried to
buy Snapchat
Facebook started to
copy some Snapchat
features
Facebook copied the
features into its
main product
Snapchat user
growth went
drastically down
 Snpachat was
established in 2011
 Very fast it become
number one social
media used by
teenagers and
college students
 Snapchat launched
Snapchat Stories in
October, 2013.
 Instagram launched
Instagram Stories in
August 2016.
 WhatsApp
launched an update
to WhatsApp Status
in February 2017
that incorporated
features which
resembled
Snapchat Stories.
 Messenger Day (a
copy of Snapchat
Stories) launched in
March 2017
 Few weeks later
Facebook launches
the Stories clone in
the Facebook app
 Facebook tried to
create a clone of
Snapchat (Poke)
which was a failure
 It offered $ 3
billion for Snapchat
in 2013
 The offer was
declined and
Snapchat prepared
for IPO
 In March 2017
Instagram Stories
had already more
active users than
Snapchat
 Till August 2017
Snap has lost 51%
of its valuation
from IPO (In less
than 6 month
shareholders of
Snap lost $16 B)
 In the same time
Facebook
shareholders
gained 21% ($89 B)

250
Copy competitors that may disrupt
you – When you have to do it

251
On many occasions copying the competitor is a must
Your competitor grows very fast
among segments that are important
to you
The competitor has refused the
M&A offer
You want to defend a cash
generating business
You have sufficient competence to
copy
You can copy successfully fast the
competitor
After copying you will still remain
attractive to your current customers

252
Use existing assets in a new way

253
One of the ways to generate new businesses is to put to use existing assets. This is
usually a pretty fast way to generate additional cash and maybe create a new business

254
Old shopping malls
 Retail
 Fast services
 Cinema
Previous usage
Old hangars
 Storing planes
 Repairing planes
Merchandising team
 Putting into order products only of 1 brand
R&D department in
pharmaceutical firm
 Checking quality
 Performing tests
 Providing R&D only for 1 firm
 Museum
 Offices
 Housing
 Amusement parks
 Offices
 Venue for events
 Putting into orders products of all brands for a
specific retail chain or location
 Providing R&D for other brands
New usage
Free production capacities
 Production of only 1 brand  Production of private labels for other firms
 Production of second brand from the same firm

255
You can put to use different types of assets that you firms has
Psychical assets
Organized team /
Business unit
Other business
assets
Facilities (office,
factories, land)
Tools
Machines
Sales Team
R&D Team
Warehouse
Employees
Infrastructures
Inventory
Free Production
Capacity
Brand
Other psychical
assets
Data
Content
Production
Employees
Maintenance Team

256
sales channels

257
By changing sales channels you can reach new customers or create different business
models. Sales channel may require sometimes change in the product and your policies

258
Apple
 3rd party retail chain
Typical sales channel
 Own retail chain
 E-commerce
New sales channel
Tesla
 3rd party retail chain  Own retail chain
 E-commerce
Fitness clubs
 B2C  B2B – reach HR manager with sales force selling
the fitness as employee benefits and perks
Software
 Salesforce / direct sales  Freemium model
 Content marketing & Inbound Sales
 Digital paid marketing
Games
 Retailer
 Digital distribution
 Platform 3rd party
 Own digital distribution platform
 In-app sales (via other games owned)
 Emailing & Loyalty program
Cakes
 Retail chains  Own franchising restaurants

259
Entering new sales channels has a lot of benefits
New revenue streams
e.g. Apple
You increase the number of customer
within your reach (catchment area)
Some channels may have lower costs
than the ones you are currently using
Some sales channels have a higher
efficiency
Some sales channels have a higher
retention

260
revenue streams

261
Another way to generate new businesses is to change the revenue stream. This
may mean how you charge your customer and for what you charge him

262
Let’s start with a short definition
 The way you charge your customer for a service or a
product
 Here you also should define what you charge him for
 Revenue streams will impact your revenues
Revenue streams =

263
In the next lectures we will explore this idea in more details
Revenue streams for milk –
case study
When to use specific
revenue streams?
Innovative selling / revenue
streams – Introduction
Case studies

264
Innovative selling / revenue streams
– Introduction

265
1-off / lump sum
payment
Instalments
Subscription
Payment / fee per usage
Payment / fee per result
Payment / fee per effort
Free
Freemium
Free Trial
Penalty
There are many potential ways in which you can claim your money

267
The best way to understand things is to start with an interesting example.
Imagine that you want to drink milk. Let’s see how the farmer can get the
money back

268
1-off / lump sum payment
Instalments
Subscription
Payment / fee per result
 Customer pays up-front for all the milk he will drink over the course of his life
 Alternatively he buys the cow and can milk the cow as long as the death does not tell them
and the cow apart
 You can drink milk as much as you want until the cow dies.
 Every moth you pay installment which is a fraction of the cow’s value.
 After you pay off the whole value (last instalment) you drink for free
 You pay every month a set fee.
 Within this fee you can drink as much as you want milk
 You can get out of the agreement anytime you want
 You pay for the glass of milk you have drunk. You can go to the farmer anytime you want
and rink milk.
 If you don’t drink you don’t have to pay
 You pay for the glass of milk only if your thirst was quenched
 If this did not happen you do not pay for this glass of milk
Let’s have a look how the customer would have to pay for the milk in
the case of different revenue streams models

269
 You have an agreement with the farmer that he gives you max 2 glass as he believes that this
should quench you thirst. Usually, it is the case
 You pay him fixed amount for that
 You drink for free as much as you want. You can even bath in the milk
 The farmer is secretly making photos of you drinking milk and using it to promote his
YouTube, Facebook and Instagram account
 You can have for free 1/3 of the glass of milk
 Everything above that you have to pay
 For 1 week you can drink the milk for free but afterwards you have to start paying
 If you don’t drink at least 7 glasses a milk a week you will have to pay a penalty
Payment / fee per effort
Free
Freemium
Free Trial
Penalty
Let’s have a look how the customer would have to pay for the milk in
the case of different revenue streams models

270
When to use specific revenue
streams?

271
Let’s have a look under what conditions and in what industries you should use
the specific revenue stream model
1-off / lump sum
payment
 The most often used model, especially when the price is low,
customer like to change the supplier a lot
 This is similar to one-night stand, so strength of the brand is crucial
 If you have a strong brand that matters a lot for your customer this
model is for you
 Mainly used in FMCG, some SMCG, small services
When to use Examples
Instalments
 This model is often used with expensive items
 Going from lump sump to installments usually drastically change the
customer base size
 Mentally much easier to swallow than 1-off payments
 Great model for SMCG: TV sets, computers, furniture, houses
Subscription
 Holly Grail of startups
 It is often used for services that you will repetitively use over long
period of time: mobile phone, health insurance, SaaS, Video on-
demand
 Gives you huge predictability of revenues and you concentrate on
value and content and less on marketing

272
Payment / fee per
usage
 This model is used when you are not able to predict the usage
 You set the price per unit of usage (i.e. time, natural unit, number of
uses etc.) in a contract and then the payment is based on usage
 Widely used i.e. for electricity, water etc.
Payment / fee per
result
 Here as a customer you want to buy the specific result. You are not
interested in the effort
 Widely used in B2B especially in the services
 In advertisement the result can be view (CPM), clicks (CPC), lead
(CPL), sale (CPS)
Free
 Very often used in 2-sided markets and UGC when 1-side has a free
access and the other one covers all costs
 Usually requires great number of users
 Still you collect money somehow to support you: fees for
advertisement, fees for access, donations etc.

273
Freemium
 This model goes usually hand in hand payment per usage or
subscription
 Can be treated as a selling tactic
 Often used for digital goods especially software (SaaS)
 Very popular with the mobile apps especially games where you create
virtual economy
Free trial
 This model goes usually hand in hand with payment per usage or
subscription
 Can be treated as a selling tactic
 Often used for digital goods especially for B2C market i.e. video on
demand
Penalty
 Penalty are used heavily as a part of other contracts
 Can be used also in cases when you want to motivate people to obey
certain rules based on behavior contracts
 Heavily used by the government, education and in many apps

275
B2C Services
Acquisition
Activation
Retention
Revenue
Referral
Dynamic pricing and no so low
prices
Unbundling
Charge for everything
Alternative revenue stream
Ryanair has been also very creative on the revenue side

277
Legimi has managed to capture more of e-book market by
innovative approach to revenue
Acquisition
Activation
Retention
Revenue
Referral
SaaS / 2-sided
market
They keep traditional sales per
piece
Subscription models with limits to
consumption
Free trial
E-book reader – like Kindle

279
DollarShaveClub disrupted the whole industry by introducing
subscription instead of irregular purchases
Acquisition
Activation
Retention
Revenue
Referral
FMCG
From lump sump to subscription
From retail chain sales to direct-
to-consumer distribution
3 subscription plans
Free handle (no entry barriers)
You can manage the plan
(frequency, when to receive}

281
Canva contrary to majority SaaS in this space is shying away from
subscription and you can buy specific elements
Acquisition
Activation
Retention
Revenue
Referral
SaaS
Freemium
Fixed fee per element
SaaS

282
Turn failure into success /
Recycle

Business Idea Generation for Management Consultants & Managers

Business Idea Generation for Management Consultants & Managers

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