4. This presentation
• Not about a specific business idea
• About business processes
• About business model innovation
• It is pretty long
• Feel free to fall asleep, interrupt
or leave
• I hope you know all this already.
• If not, I really think it can give you
a lot
Serdar Temiz temiz@kth.se 2013
5. Why should I listen to you?
• Do not listen me!
IT IS YOUR RESPONSIBILITY TO
QUESTION ALL ASSUMPTIONS. MINE,
YOURS, EXPERTS.
Serdar Temiz temiz@kth.se 2013
6. Recap: What is Entepreneurship?
The process of coordinating resources to
exploit or take advantage of opportunities
that exists in the market or are created by
innovation in an attempt to create value.
(Brown, 1994)
Serdar Temiz temiz@kth.se 2013
7. Where Entepreneur Jumps in?
product /
service
need/
expectation
Serdar Temiz temiz@kth.se 2013
8. Some Questions
• Who is your customer?
• What is Innovation
• Why it matters
Serdar Temiz temiz@kth.se 2013
10. There are many inventions, but far fewer
innovations.
An invention is a novel idea
Innovation is the commercialization of that
novel idea
Serdar Temiz temiz@kth.se 2013
11. FORTUNE 500
• “Two thirds of the original 1955 list was gone
within three decades” William Shanklin*
• The rate at which large American companies left
the Fortune 500 increased four times between
1970 and 1990 a change of almost 50% from the
1999 Fortune 500 to the 2009 Fortune 500
John Micklethwait & Adrian* Wooldridge,
• *(cited in Dane Stangler and Sam Arbesman WHAT DOES FORTUNE 500
TURNOVER MEAN
)
Serdar Temiz temiz@kth.se 2013
12. Turnover Rate in Fortuna 500
• Dane Stangler and Sam Arbesman WHAT DOES FORTUNE 500 TURNOVER MEAN
Serdar Temiz temiz@kth.se 2013
13. Types of Innovation
1. Technology innovation
2. Process innovation
3. Product & service innovation
4. Business Model innovation
Serdar Temiz temiz@kth.se 2013
14. Process innovation
• Implementation of a new or significantly improved
production or delivery method
• Ford Car Production
• Dell Computers
Serdar Temiz temiz@kth.se 2013
18. Why business models matter?
Joan Magretta
• Who is the customer and what does the customer
value?
• How do we make money from the business?
• How can we deliver value to the customer at an
appropriate cost?
• Writing a new story
• A better way than existing alternatives
• Making the number add up
• Tweaking on the fly based on feedback
Serdar Temiz temiz@kth.se 2013
19. Business Model Warfare
Langdon Morris
• Business mortality is high
• Technology innovation by itself has rarely
been sufficient to ensure the future.
• Similar products and services
• Advantages resulting from a successful
business models are fleeting. Models need to
be continuously reviewed and updated when
necessary
Serdar Temiz temiz@kth.se 2013
20. Operating Margin Growth in Excess of
Competitive Peers
[Source: IBM, CEOs are expanding the innovation horizon: important implications for CIOs]
Compound annual growth rate over five years
Serdar Temiz temiz@kth.se 2013
21. Benefits Cited by Business Model Innovators
% of responders
Source: IBM, Global CEDO Study 2006
Serdar Temiz temiz@kth.se 2013
22. How Business Models Emerge
(1 of 3)
– The value chain is the string of activities that moves a
product from the raw material stage, through manufacturing
and distribution, and ultimately to the end user.
• Primary activities are directly concerned with the
creation or delivery of a product or service.
• Support activities help to improve the effectiveness or
efficiency of primary activities
Raw Material
Value Chain
Primary &
Secondary
Activities +
Margin
Product /
Service
Serdar Temiz temiz@kth.se 2013
23. How Business Models Emerge
(2 of 3)
The Value Chain (again)
"Competitive Advan tage: Creating andSustaining superior Performance" (1985).
Serdar Temiz temiz@kth.se 2013
24. How Business Models Emerge
(3 of 3)
• The Value Chain (continued)
– Entrepreneurs look at the value chain of a product or a
service to pinpoint where the value chain can be made
more effective or to spot where additional “value” can be
added.
• This type of analysis may focus on (1) a single primary activity of
the value chain (such as marketing and sales), (2) the interface
between one stage of the value chain and another (such as the
interface between operations and outgoing logistics), or (3) one of
the support activities (such as human resource management).
Serdar Temiz temiz@kth.se 2013
25. Business Models Generation
Alexander Osterwalder
• “A business model describes the rationale of
how anorganization creates, delivers,and
captures value.”
Serdar Temiz temiz@kth.se 2013
26. A business Model is..
• The business model is a strategic plan to be
implemented through organizational
structures, processes, and systems in order to
need customer needs.
Serdar Temiz temiz@kth.se 2013
29. Forces affecting the business model
• Customer needs
• Competition
• Technological change
• Social change
• Legal environment
Serdar Temiz temiz@kth.se 2013
30. Pivoting
• Changing important part of business model
• - can be simple: chancing pricing
• -can be complex: target customer, user needs
change, feature set changes, new distribution
channel
Serdar Temiz temiz@kth.se 2013
31. Basic Business Model Map
Product/Service
Ecosytem
Customer
EcoSystem
Finance
Value
Serdar Temiz temiz@kth.se 2013
32. • Who is customer
• How do you reach customer
• What is your value proposition /USP
• How to you communicate customer
• What are your resources
• What is your enviromental costs/benefits
• What are your key activities
• What are your key partners
• How do you make money?
Serdar Temiz temiz@kth.se 2013
33. There are different type of Business Model Maps
Serdar Temiz temiz@kth.se 2013
39. The 9 building blocks for Business Model Canvas
1. Customer Segments
2. Value proposition
3. Channels
4. Customer Relationships
5. Revenue Streams
6. Key Resource
7. Key Activities
8. Key Partnerships
9. Cost Structure
Serdar Temiz temiz@kth.se 2013
40. 1. Customer Segment
• For whom are we creating value?
• Who are our most important customers?
• Customer Segments
– Mass Market
– Niche market
– Segmented - related customer segments: frequent
flier program, bank customers with big assets
– Diversified: Unrelated customer segments: Amazon
– Multi sided: free newspaper-readers and advertisers
Serdar Temiz temiz@kth.se 2013
41. Find a Customer-I
• Why?
• Who is your customer?
Grave, School, hospital, apotek, free
newspaper
• Can everyone be your customer?
• "people who want to buy a flat,"
• "anyone needs job"
• “Everyone who goes to university”
Serdar Temiz temiz@kth.se 2013
42. Find a Customer-II
• Find a customer for solving a pain
• Use the Customer Profile
• Describe who is making purchasing decision?
IT ? Operations Group? Management?
• Make sure they are happy
• Market is important but
-do not only think market
• Billion dollar market does not start in few
minutes
Serdar Temiz temiz@kth.se 2013
43. Q’s for Customer
IDENTIFIABLE – what distinguishes them?
MEASURABLE – how many belong to your target
segment?
REACHABLE – how to reach, communicate with each
segment
WILLING– do they want it?
ABLE– they want but can they afford it?
Serdar Temiz temiz@kth.se 2013
44. Q’s for Customer - Macro Level
• Population size
• Population character
• Disposable income levels
• Educational background
• Primary languages
• Infrastructure
• Regulations
• Political affiliation
• And so on…
Serdar Temiz temiz@kth.se 2013
45. Keep In Mind -Paradox
• Customer is important but you can not give all
they want
• Learn to stay No,
• Learn to focus
• Learn to ”change and adopt”
• They may not know what they want: buying
process is mysterious
Serdar Temiz temiz@kth.se 2013
46. 2.Value Proposition
• a bundle that meets that meets a customer's
needs or solve his/her problem.
• benefits can be tangible and intangible
• Reason why customers pick one business or
another.
• can be
– innovative, new disruptive offer
– similar to existing offers but just added feature or
attribute in some sort of way
Serdar Temiz temiz@kth.se 2013
47. Q’s to answer – Value Proposition
• What pain do we solve for customer?
• What do we deliver for customer?
• What value do we develop for customer
• Which need of customer do we satisfy?
Serdar Temiz temiz@kth.se 2013
48. Some Elements that may add to value
• newness
• customization
• getting job done
• support
• price
• design
• status/ brand
• Accessibility
• risk deduction
• usability
Serdar Temiz temiz@kth.se 2013
49. 2. Value Proposition - Q’s to answer –
• What pain do we solve for customer?
• What do we deliver for customer?
• What value do we develop for customer
• Which need of customer do we satisfy?
Serdar Temiz temiz@kth.se 2013
50. 3. Channels
• Awareness of products
and services,
Evaluation of value
proposition, Purchase,
Delivery, After sales
• Direct: Brick and
mortal stores,
websales, sales force
• Indirect: wholesales
partner stores,
Value
Proposition
Customer
Segment
Serdar Temiz temiz@kth.se 2013
51. 3. Channels- Qs
• Through which Channels do our Customer
Segments want to be reached?
• How are we reaching them now?
• How are our Channels integrated?
• Which ones work best?
• Which ones are most cost-efficient?
Serdar Temiz temiz@kth.se 2013
52. 4. Customer Relations
• Customer
acquisition
• Customer
retention
• Boosting
sales
(upselling)
Value
Proposition
Customer
Segment
Serdar Temiz temiz@kth.se 2013
53. Example Customer Services
Can you give some example companies?
• (Dedicated)Personal assistance
• Self Service
• Community
• Co-creation
• Automated
Serdar Temiz temiz@kth.se 2013
54. 4. Customer Relationships
• What type of relationship does each of
our Customer Segments expect us to
establish and maintain with them?
• Which ones have we established?
• How costly are they?
• How are they integrated with the rest of
our business model?
Serdar Temiz temiz@kth.se 2013
55. 5. Revenue Streams
• For what value are our customers really willing
to pay?
• One time/ recurring?
• For what do they currently pay?
• How are they currently paying?
• How would they prefer to pay?
• How much does each Revenue Stream
contribute to overall revenues?
Serdar Temiz temiz@kth.se 2013
56. 5.Revenue Streams
•ChannelsValue
Proposition
Customer
Segment
• Asset sale
• Usage fee: use more, pay more
• Subscription: monthly, yearly
• Leasing/Lending/Renting
• Licensing: patents, license fee
• Brokerage fees
• Advertising
Fixed
pricing
Dynamic
pricing
Serdar Temiz temiz@kth.se 2013
57. 5.Revenue Streams
Fixed
pricingDynamic
pricing
• List price
• Product feature
dependent
• Customer segment
dependent
• Volume dependent
• Yield management : hotels,
airlines
• Real-time-market :supply
and demand
• Auctions Price
• Negotiation
Serdar Temiz temiz@kth.se 2013
59. 6. Key Resources
• What Key Resources do our Value
Propositions require?
• Our Distribution Channels?
• Customer Relationships?
• Revenue Streams?
• What physical resources, intellectual,
human, financial resources do we have?
Serdar Temiz temiz@kth.se 2013
60. 7. Key Activities
• What Key Activities do our Value Propositions
require?
• Our Distribution Channels?
• Customer Relationships?
• Revenue streams?
• Production- Microsoft
• Problem Solving: Mc Kinsey
• Network/Platform: Facebook, ebay, Visa
Serdar Temiz temiz@kth.se 2013
61. 8. Key Partnerships
Why Partnership?
– reduce cost,
– Reduction of risk and uncertainty: Blu Ray Tech.
– Acquisition of particular resources and activities:
Nokia Windows, HTC phones
• Strategic alliances between non-competitors
• Coopetition: strategic partnerships between
competitors
• Joint ventures to develop new businesses
• Buyer-supplier relationships to assure reliable
supplies
Serdar Temiz temiz@kth.se 2013
62. 8. Key Partnerships -II
• Who are our Key Partners?
• Who are our Key suppliers?
• Which Key Resources are we acquiring from
partners?
• Which Key Activities do partners perform?
Serdar Temiz temiz@kth.se 2013
63. 9. Cost Structure-I
• Business model Cost Structures:
cost-driven
minimizing
costs
wherever
possible value-driven
Premium
Value
Propositions
and a high
degree of
personalized
service
Serdar Temiz temiz@kth.se 2013
64. 9. Cost Structure-II
• Cost Structure Characteristics:
• minimizing costs wherever possibleFixed costs
• Premium Value Propositions and a high
degree of personalized serviceVariable costs
• average cost per unit to fall as output
risesThe same Distribution
Economies of
scale
• Channels for different products and
servicesmay support multiple products.
Economy of
Scope
Serdar Temiz temiz@kth.se 2013
65. 9. Cost Structure
• What are the most important costs inherent in
our business model?
• Which Key Resources are most expensive?
• Which Key Activities are most expensive?
Serdar Temiz temiz@kth.se 2013
70. Business Model Canvas – Spotify- September 2013
Key Partners Key Activities Value Propositions
• .
Customer
Relationships
Customer Segments
Key Resources Channels
Cost Structure Revenue Streams
Serdar Temiz Stockholm-Sweden
Listeners• Legal music for free or
minimum payment
• Be social when you listen
• Music based on mood
• Automated service
• self service (FAQ)
• Community forum
• Customer Service
• Awareness at social media
• Mobile application
• Desktop application
• Spotify.com
Advertisers
• self service : on learning
how ads are located in
the spotify etc.
• personal assistance: to
put ad, advertisers
should get in touch
directly
• Targeted advertisement-
• commercials between
songs: make listeners sure
to listen
• Awareness with social media
partners (fb, msn)
• Customer center representative
• Keep technology up and
running
• Adding more music,
label, artists to Spotify
offering
• Launching Spotify in
different countries
• Music,
• Server,
• Brand
• Employees
• Labels,
• aggregators (e.g merlin
network )
• Facebook
• License fee
• Salaries
• Technology cost
• Subscription of unlimited and premium customers,
• Advertisement revenue
Serdar Temiz temiz@kth.se 2013
72. Business Model Canvas – Spotify- September 2013
Key Partners Key Activities Value Propositions
• .
Customer
Relationships
Customer Segments
Key Resources Channels
Cost Structure Revenue Streams
Serdar Temiz Stockholm-Sweden
Listeners• Legal music for free or
minimum payment
• Be social when you listen
• Music based on mood
• Automated service
• self service (FAQ)
• Community forum
• Customer Service
• Awareness at social media
• Mobile application
• Desktop application
• Spotify.com
Advertisers
• self service : on learning
how ads are located in
the spotify etc.
• personal assistance: to
put ad, advertisers
should get in touch
directly
• Targeted advertisement-
• commercials between
songs: make listeners sure
to listen
• Awareness with social media
partners (fb, msn)
• Customer center representative
• Keep technology up and
running
• Adding more music,
label, artists to Spotify
offering
• Launching Spotify in
different countries
• Music,
• Server,
• Brand
• Employees
• Labels,
• aggregators (e.g merlin
network )
• Facebook
• License fee
• Salaries
• Technology cost
• Subscription of unlimited and premium customers,
• Advertisement revenue
Developers
• developer.spotify.com/
• physical meetups
Can add music to their code
????
Serdar Temiz temiz@kth.se 2013
73. Business Model Canvas – Spotify- September 2013
Key Partners
• Labels,
• aggregators (e.g
merlin network )
• Facebook
Key Activities
• Keep technology up and
running
• Adding more music,
label, artists to Spotify
offering
• Launching Spotify in
different countries
(currently only in
Sweden, Norway,
Finland, the UK, France,
Spain, the Netherlands
and the US )
Value Propositions
• Legal music for free or
minimum payment
• Be social when you listen
• Music based on mood
• Targeted
advertisement-
• commercials
between songs:
make listeners
sure to listen
• Can add music to their
code.
Customer
Relationships
• Automated
service
• self service (FAQ)
• Community forum
• Customer Service
• self service : on learning
how ads are located in the
spotify etc.
• personal assistance: to put
ad, advertisers should get
in touch directly
Customer Segments
Listeners
Advertisers
Developers
Key Resources
• Music,
• Server,
• Brand
• Employees
Channels
• Awareness at social media
• Mobile application
• Desktop application
• Spotify.com
• Awareness with social
media partners (fb, msn)
• Customer center
representative
• developer.spotify.com/
• physical meetups
Cost Structure
• License fee
• Salaries
• Technology cost
Revenue Streams
• Subscription of unlimited and premium customers,
• Advertisement revenue
StartupAcademy.se Stockholm-Sweden
Serdar Temiz temiz@kth.se 2013
A niche market is a focused, targetable portion of a market.By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. You can think of a niche market as a narrowly defined group of potential customers. In other words, a very specific market segment within a broader segment.A niche market involves specialist goods or services with relatively few or no competitors.
Why Swedish start ups are global?Number of Old people increasing..Which language do you provide service, Customer support languageNo infrastructure for banking, telecom,