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Business	
  Models	
  
                           The	
  Thought	
  Process	
  Behind	
  Building	
  Your	
  Business	
  M...
In	
  the	
  first	
  2	
  lectures,	
  we	
  have	
  
    covered	
  the	
  basics	
  of	
  what	
  
    entrepreneurship	...
While	
  building	
  on	
  the	
  right	
  idea	
  is	
  
    essential	
  to	
  the	
  success	
  of	
  your	
  
    vent...
Did	
  you	
  know	
  that	
  80%	
  of	
  
    businesses	
  are	
  started	
  without	
  a	
  
    business	
  plan?	
  ...
Without	
  a	
  business	
  plan,	
  you	
  don’t	
  
    have	
  a	
  guidebook	
  that	
  will	
  show	
  
    you	
  –	...
A	
  business	
  plan	
  is	
  essential,	
  but	
  
    how	
  do	
  you	
  write	
  a	
  business	
  plan	
  
    that	
...
Business	
  Model	
  Canvas	
  
                                                                       Mapping	
  Your	
  ...
At	
  emagine,	
  we	
  like	
  to	
  use	
  a	
  tool	
  
    called	
  the	
  Business	
  Model	
  Canvas.	
  




http:...
Develop	
  a	
  simple	
  1	
  page	
  document	
  
    that	
  could	
  be	
  used	
  by	
  
    entrepreneurs	
  to	
  d...
http://emagine-­‐group.com	
     Brand	
  Focused,	
  Socially	
  Active,	
  Digitally	
  Enabled	
  
The	
  Canvas	
  is	
  comprehensive.	
  It	
  
    highlights	
  all	
  the	
  key	
  areas	
  that	
  
    matter	
  to	...
We	
  are	
  going	
  to	
  dig	
  deep	
  into	
  this	
  
    canvas	
  so	
  that	
  you	
  can	
  effectively	
  
    u...
The	
  Business	
  Model	
  &	
  It’s	
  Importance	
  




http://emagine-­‐group.com	
     Brand	
  Focused,	
  Socially...
The	
  first	
  question	
  you	
  are	
  going	
  to	
  ask	
  
    is	
  –	
  	
  
    	
  
    What	
  is	
  a	
  busine...
Now,	
  there	
  are	
  multiple	
  definitions	
  
   of	
  what	
  makes	
  up	
  a	
  business	
  
   model	
  depending...
But	
  essentially,	
  a	
  business	
  model:	
  
    	
  
    Describes	
  the	
  rationale	
  of	
  how	
  an	
  
    o...
Confused?	
  




http://emagine-­‐group.com	
         Brand	
  Focused,	
  Socially	
  Active,	
  Digitally	
  Enabled	
  
A	
  business	
  model	
  is	
  the	
  reason	
  that	
  
    you	
  do	
  what	
  you	
  do,	
  why	
  you	
  do	
  it,	
...
When	
  you	
  get	
  this	
  wrong,	
  your	
  
   entire	
  business	
  plan	
  is	
  weak	
  and	
  
   can	
  easily	
...
So	
  let’s	
  break	
  this	
  down…	
  




http://emagine-­‐group.com	
      Brand	
  Focused,	
  Socially	
  Active,	
...
The	
  9	
  Building	
  Blocks	
  
                                 The	
  Logic	
  of	
  How	
  a	
  Company	
  Makes	
  ...
To	
  build	
  an	
  effective	
  business	
  
    model,	
  we	
  believe	
  that	
  there	
  are	
  9	
  
    basic	
  bu...
These	
  9	
  building	
  blocks	
  cover	
  4	
  
    main	
  areas:	
  
    	
  
    Customers 	
   	
   	
  Offer	
  
  ...
These	
  9	
  building	
  blocks	
  give	
  us	
  the	
  
          blueprint	
  for	
  our	
  strategy	
  




http://ema...
So	
  what	
  are	
  the	
  9	
  building	
  
                                blocks?	
  



http://emagine-­‐group.com	
 ...
http://emagine-­‐group.com	
     Brand	
  Focused,	
  Socially	
  Active,	
  Digitally	
  Enabled	
  
And	
  they	
  all	
  fit	
  together	
  like	
  this…	
  




http://emagine-­‐group.com	
     Brand	
  Focused,	
  Social...
http://emagine-­‐group.com	
     Brand	
  Focused,	
  Socially	
  Active,	
  Digitally	
  Enabled	
  
http://emagine-­‐group.com	
     Brand	
  Focused,	
  Socially	
  Active,	
  Digitally	
  Enabled	
  
http://emagine-­‐group.com	
     Brand	
  Focused,	
  Socially	
  Active,	
  Digitally	
  Enabled	
  
Block	
  1	
  –	
  Customer	
  Segments	
  




http://emagine-­‐group.com	
             Brand	
  Focused,	
  Socially	
  ...
Defines	
  the	
  different	
  
                                      groups	
  of	
  people	
  or	
  
                     ...
Customers	
  are	
  the	
  
                                      heart	
  of	
  the	
  business	
  
                     ...
A	
  company	
  may	
  
                                      group	
  them	
  into	
  
                                  ...
You	
  can	
  also	
  have	
  
                                      multiple	
  Customer	
  
                            ...
But	
  you	
  must	
  decide	
  
                                      on	
  who	
  your	
  
                             ...
Needs	
  require	
  and	
  justify	
  a	
  
                                 distinct	
  offer	
  
                        ...
Substantially	
  different	
  
                                 profitabilities	
  
                                 	
  
  ...
The	
  Different	
  Segments	
  of	
  Customers	
  
                       Businesses	
  focused	
  on	
  mass	
  markets	
...
Block	
  2	
  –	
  The	
  Value	
  Proposition	
  




http://emagine-­‐group.com	
          Brand	
  Focused,	
  Socially...
Describes	
  the	
  bundle	
  
                                       of	
  products	
  and	
  
                          ...
It’s	
  the	
  reason	
  why	
  
                                       customers	
  turn	
  to	
  
                      ...
The	
  Value	
  Proposition	
  
                                       is	
  an	
  aggregation,	
  or	
  
                ...
Some	
  can	
  be	
  
                                       innovative	
  
                                       represe...
Others	
  can	
  be	
  
                                       similar	
  to	
  existing	
  
                             ...
What	
  value	
  do	
  we	
  deliver	
  to	
  the	
  customer?	
  
   	
  
   Which	
  one	
  of	
  our	
  customer’s	
  p...
Value	
  can	
  be	
  created	
  by	
  simply	
  
     helping	
  a	
  customer	
  get	
  certain	
  jobs	
  
            ...
But	
  the	
  value	
  proposition	
  is	
  determined	
  
    through	
  specific	
  things:	
  
    	
  
    Design 	
   ...
We	
  will	
  continue	
  this	
  lecture	
  in	
  2	
  
    weeks	
  when	
  we	
  move	
  back	
  to	
  our	
  
    3	
 ...
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Lecture 3 - Business Model

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Lecture 3 of the New Venture Creation series.

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Lecture 3 - Business Model

  1. 1. Business  Models   The  Thought  Process  Behind  Building  Your  Business  Model   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  2. 2. In  the  first  2  lectures,  we  have   covered  the  basics  of  what   entrepreneurship  is  like  in  Pakistan   and  how  to  idea  proof  your   venture.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  3. 3. While  building  on  the  right  idea  is   essential  to  the  success  of  your   venture,  getting  the  model  right  is   critical.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  4. 4. Did  you  know  that  80%  of   businesses  are  started  without  a   business  plan?   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  5. 5. Without  a  business  plan,  you  don’t   have  a  guidebook  that  will  show   you  –  or  anyone  else  –  what  your   business  is  about  to  do  and  why  it’s   important.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  6. 6. A  business  plan  is  essential,  but   how  do  you  write  a  business  plan   that  works?   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  7. 7. Business  Model  Canvas   Mapping  Your  Business   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  8. 8. At  emagine,  we  like  to  use  a  tool   called  the  Business  Model  Canvas.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  9. 9. Develop  a  simple  1  page  document   that  could  be  used  by   entrepreneurs  to  develop  their   business  models  accurately  and   efficiently.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  10. 10. http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  11. 11. The  Canvas  is  comprehensive.  It   highlights  all  the  key  areas  that   matter  to  successful  business   model  generation  and  eliminates   everything  else.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  12. 12. We  are  going  to  dig  deep  into  this   canvas  so  that  you  can  effectively   use  it  to  develop  your  business   model  and  then  use  it  to  write  your   business  plan.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  13. 13. The  Business  Model  &  It’s  Importance   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  14. 14. The  first  question  you  are  going  to  ask   is  –       What  is  a  business  model?   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  15. 15. Now,  there  are  multiple  definitions   of  what  makes  up  a  business   model  depending  on  who  you  talk   to,  their  level  of  education/ experience  and  what  they  do  for  a   living.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  16. 16. But  essentially,  a  business  model:     Describes  the  rationale  of  how  an   organization  creates,  delivers,  and   captures  value.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  17. 17. Confused?   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  18. 18. A  business  model  is  the  reason  that   you  do  what  you  do,  why  you  do  it,   and  how  you  expect  to  make   money  from  it.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  19. 19. When  you  get  this  wrong,  your   entire  business  plan  is  weak  and   can  easily  be  turned  down  by   investors,  but  more  importantly  –  it   won’t  give  you  the  guidance  you   need  to  run  your  business.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  20. 20. So  let’s  break  this  down…   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  21. 21. The  9  Building  Blocks   The  Logic  of  How  a  Company  Makes  Money   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  22. 22. To  build  an  effective  business   model,  we  believe  that  there  are  9   basic  building  blocks  that  must  be   addressed.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  23. 23. These  9  building  blocks  cover  4   main  areas:     Customers      Offer   Infrastructure    Financial  Viability   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  24. 24. These  9  building  blocks  give  us  the   blueprint  for  our  strategy   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  25. 25. So  what  are  the  9  building   blocks?   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  26. 26. http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  27. 27. And  they  all  fit  together  like  this…   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  28. 28. http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  29. 29. http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  30. 30. http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  31. 31. Block  1  –  Customer  Segments   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  32. 32. Defines  the  different   groups  of  people  or   organizations  a   venture  aims  to  reach   and  serve.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  33. 33. Customers  are  the   heart  of  the  business   model  and  without   them,  no  business   can  survive.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  34. 34. A  company  may   group  them  into   different  segments:     Common  Needs   Common  Behaviors   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  35. 35. You  can  also  have   multiple  Customer   Segments  within  1   business  model   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  36. 36. But  you  must  decide   on  who  your   customers  are  when   developing  the   business  model.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  37. 37. Needs  require  and  justify  a   distinct  offer     Reached  through  different   distribution  channels     Require  different  types  of   relationships   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  38. 38. Substantially  different   profitabilities     Willing  to  pay  for  different   aspects  of  an  offer   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  39. 39. The  Different  Segments  of  Customers   Businesses  focused  on  mass  markets  don’t  distinguish  between  different   Mass   Customer  Segments  –  they  focus  on  one  large  group  with  broadly  similar   Market   needs  and  problems.   Businesses  targeting  niche  markets  cater  to  very  specific,  specialized   Niche   Customer  Segments.  Value  Propositions,  Distribution  Channels  and   Market   Customer  Relationships  are  all  tailored  to  the  specific  requirements  of   the  market   Some  businesses  distinguish  between  market  segments  with  slightly   different  needs  and  problems.  The  segments  have  similar  but  varying   Segmented   needs  and  problems  which  affect  Value  Proposition,  Distribution   Channels,  Customer  Relationships  and  Revenue  Streams.   Businesses  with  diversified  customers  serve  two  or  more  unrelated   Diversified   Customer  Segments  with  very  different  needs  and  problems.   Multi-­‐sided   Businesses  that  serve  two  or  more  independent  Customer  Segments.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  40. 40. Block  2  –  The  Value  Proposition   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  41. 41. Describes  the  bundle   of  products  and   services  that  create   value  for  a  specific   Customer  Segment   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  42. 42. It’s  the  reason  why   customers  turn  to   one  company  over   another  –  because  it   solves  the  problem  or   satisfies  the  need.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  43. 43. The  Value  Proposition   is  an  aggregation,  or   bundle,  of  benefits   that  a  company   offers  customers.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  44. 44. Some  can  be   innovative   representing  a  new   or  disruptive  offer.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  45. 45. Others  can  be   similar  to  existing   market  offers,  with   added  features   and  attributes.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  46. 46. What  value  do  we  deliver  to  the  customer?     Which  one  of  our  customer’s  problems  are   we  helping  to  solve?     Which  customer  needs  are  we  satisfying?     What  bundles  of  products/services  are  we   offering  each  Customer  Segment?   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  47. 47. Value  can  be  created  by  simply   helping  a  customer  get  certain  jobs   done.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  48. 48. But  the  value  proposition  is  determined   through  specific  things:     Design              Brand/Status   Price                Cost  Reduction   Accessibility          Ease  of  Use   Convenience   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  49. 49. We  will  continue  this  lecture  in  2   weeks  when  we  move  back  to  our   3  hour  format.   http://emagine-­‐group.com   Brand  Focused,  Socially  Active,  Digitally  Enabled  
  • kronoseye

    Mar. 7, 2014

Lecture 3 of the New Venture Creation series.

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