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DESIGNING &TESTING

BUSINESS MODELSAlexOsterwalder.com

@business_design

SteveBlank.com

@sgblank

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?where do I comefrom, what do I do?

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:-

)my workplace

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:-

)my current MVP

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,,,...:..

BusinessModelGeneration.com/toolbox

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BusinessModelGeneration.com SteveBlank.com/books.html

+

this workshop day combines two global bestsellers

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Swiss TimeMachine

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1958

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[sources: Henry Chesbrough, photo: life.com]

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[sources: Henry Chesbrough, photo: xerox.com]

revenue growth of 41%compounded for the next 20 years

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Swiss TimeMachine

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2009

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BusinessModelGeneration.com

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1,000,000new book titles were

published in the U.S. in 10

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11,000new business books

appear every year

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12%decline of sales in major

bookstore chains (07-09)

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?so what didwe do?

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we changed the product...

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?would a big publishinghouse have taken us onwith this book?

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No!

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we changed the business model...

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you cant write about

business model innovationwithout an innovative

business model

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$24.-

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$36.-

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$54.-

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$81.-

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$250.-

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Results

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in the top 10 of softcoverbusiness books in the US#

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170000+ English #bmgen

copies in print (June 2011)#

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18 #bmgen translationsupcoming in 2011#

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more importantly...

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business models

enable (new) products

and technologies andhelp solve(entirely

new)customerproblems

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the 100

Million dollarquestion

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how do you search for the

right business model?

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understanding

business models

12

prototyping alternatives

of what could be

3evaluating your

business model design

testing business models

with customer development4

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but hey,what is a

businessmodel

anyways?

1

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?whats abusinessmodel?

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? ?

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BusinessModel Canvas

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to describe, challenge,design, and inventbusiness models moresystematically

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buildingblocks9

CUSTOMER SEGMENTS

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CUSTOMER SEGMENTS

images by JAM

VA UE PROPOSITIONS

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VALUE PROPOSITIONS

images by JAM

CHANNE S

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CHANNELS

images by JAM

CUSTOMER RE ATIONSHIPS

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CUSTOMER RELATIONSHIPS

images by JAM

REVENUE STREAMS

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REVENUE STREAMS

images by JAM

KEY RESOURCES

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KEY RESOURCES

images by JAM

KEY ACTIVITIES

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KEY ACTIVITIES

images by JAM

KEY PARTNERS

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KEY PARTNERS

images by JAM

COST STRUCTURE

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COST STRUCTURE

images by JAM

customerkey value

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images by JAM

customersegments

keypartners

coststructure

revenuestreams

channels

relationshipsy

activities

keyresources

proposition

The Business Model Canvas

customerkey value

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KEYPARTNERS

COST STRUCTURE

KEYACTIVITIES

KEYRESOURCES

OFFER

CHANNELS

CUSTOMERRELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS

building

block

buildingblock

building

block

buildingblockbuilding

block

building

block

buildingblock

buildingblock

building

block

building

block

buildingblock

buildingblock

The Business Model Canvas

images by JAM

customersegments

keypartners

coststructure

revenuestreams

channels

relationshipsy

activities

keyresources

proposition

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BusinessModelGeneration.com/canvas

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illustration

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how much less or more dothe Swiss pay per gram ofcoffee consumed at home

compared to a decade ago?

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Nespresso

changed the

business model

for espresso

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RESULTS

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own

recycling

containers

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one of the fastest-

growing businesses inthe Nestl group

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average growth of30% p.a. since 2000

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global sales of

3.8+ billion USD

Nespressos business Model

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KEYPARTNERS

ValueProposition

CHANNELS

CUSTOMERRELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYRESOURCES

households(espressofans)

****retail

outlets

salesofNespresso

pods

mailorder

Nespressostores

NespressoClub

coffeemachine

manufacturers businesses

salesofNespressomachines

Nespresso

pods

patents

marketing

podproduction

B2C

distribution

production

call

center

Nespresso.com

*** Nespressomachines

marketing

B2Cdistribution

distributionchannels

coffee

coffee

growers

podproductionfacilities

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but Nespresso almost failed in

1987 due to a nonperformingbusiness model

Nespressos 1987 Model

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KEYPARTNERS

ValueProposition

CHANNELS

CUSTOMERRELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYRESOURCES

r 9

officesNespresso

system

jointventurewithmachinemanufacturer

machine

manufacturer

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now Nestl is building a

portfolio of business modelsin their coffee business

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BusinessModelGeneration.com/canvas

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prototypealternatives

and askyourself what

could be

2

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?lets take some time towork on a really, really bigissue in the world?

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access toproper

sanitation

2 6 billi

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2.6 billionpeople lack

access

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4 out of 10 people in the world lack

even the most simple latrine to performtheir needs

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* single-use toilet bag

* self-sanitizing

* biodegradable

* turns into fertilizer

* low production cost

* (mainly) targeted at poor people

* people already pay for sanitation

The Business Model Canvas

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KEYPARTNERS

COST STRUCTURE

KEYACTIVITIES

KEYRESOURCES

OFFER

CHANNELS

CUSTOMERRELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS

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mini

brainstorming

session

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come up with as many business

model ideas as possible for thePeepoo bag (not full Canvases)

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* single-use toilet bag

* self-sanitizing

* biodegradable

* turns into fertilizer

* low production cost

* (mainly) targeted at poor people

* people already pay for sanitation

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[source: Sony Pictures]

Frank

Gehry

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[source: Sony Pictures]

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[source: Wikimedia Commons]

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?what does that have to do

with business models andmy organization?

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no architect wouldbuild something that

resembleshis firstsketch

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?what does thatmean for us?

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business model prototyping

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napkin sketch Canvas business case field test

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prototyping is theconversationyou

have with yourideas

Tom Wujec

l t

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evaluateyour

businessmodel

design

3

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buildingblock

buildingblock

buildingblock

buildingblockbuildingblock

buildingblock

buildingblock

buildingblock

building

block

buildingblock

buildingblock

buildingblock

SWITCHING

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SWITCHING

COSTS

Howeasyordifficultisitforcustomers

toswitchtoanothercompany?

with

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thisamazingdevice

youcanhavethousandsongsinapocket

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...and

yourscrewingus

becauseithasjust

becomemoredifficultto

switchdevices

RECURRING

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RECURRING

REVENUES

Iseverysalesaneweffortorwillitresult

infollow-uprevenuesandpurchases?

Howevenlydistributedareyourrevenuesthroughtheyear?

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EARN BEFORE

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EARNBEFORE

YOUPAY

Areyouearningmoneybefore

youarespendingit?

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GAME CHANGING

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GAMECHANGING

COSTSTRUCTURE

Isyourcoststructuresubstanally

differentandbeerthanthoseof

competors?

phone

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phone

callswillbetotally

freeinthefuture

GETTING OTHERS

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GETTINGOTHERS

TODOTHEWORK

Howmuchdoesyourbusiness

modelgetcustomersorthirdpares

tocreatevalueforyou?

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go

h d d h

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aheadandshare

onyourfacebookpage...

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...thatwillmakemy

plaormmore

valuable...

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...andraisemyplaorms

value(aon)...

SCALABILITY

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SCALABILITY

Howrapidlyandhoweasilycanyou

growyourbusinessmodelwithout

hi[ngroadblocks(e.g.infrastructure,customersupport,etc.)?

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VIRALITY/

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VIRALITY/

NETWORKEFFECT

Howviralisyourbusinessmodel?

Howsubstanalarethebenefitsto

sharewithothers?

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PROTECTION FROM

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PROTECTIONFROM

COMPETITION

Howmuchisyourbusinessmodel

protecngyoufromcompeon?

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break-outsession

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BusinessModelGeneration.com/canvas

KEY KEY OFFER CUSTOMER CUSTOMER

The Business Model Canvas

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PARTNERS

COST STRUCTURE

ACTIVITIES

KEYRESOURCES

CHANNELS

RELATIONSHIPS SEGMENTS

REVENUE STREAMS

testing

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testingbusiness

models withcustomer

development

4

a business model might look

t

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great on paper...

buildingblock

buildingblock

buildingblock

buildingblockbuilding

block

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

buildingblock

.. but after all

it is only a...

... a set of hypotheses

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guess guess

guess

guess

guess

guess

guess

guess

guess

guess

guess

guess

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StevenBlank.com/books.html

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,,,...:..