making a business case
DESCRIPTION
Making a business caseTRANSCRIPT
Based on recent presentation to airbus
Making the business case
Questions you need to ask?
Platform
Application - product
What else does it need?
The Triple Chasm Model – where do you think your idea
sits?
Idea generation
& Filtering
Building the
Beachhead,
prototype
Proof of concept,
Demonstrator &
Business Planning
Reaching
mass markets
Target Market
Typical Business
Stage
Start-ups
Est. Businesses
Corporate Ventures
Idea Development Business Value
Likely Business
Objective
Early Adopters Fast Followers Mainstream
Classical “Moore” chasm 3Chasm 1 Chasm 2
What do you think you need to prove at
each stage?
Markets
Risks
Team
Funding
Product performance
Value Chain Analysis and Innovation
Porter (1985)
Understanding your position in the value chain
Transactions, user experience,
management
Content
creators
and
developers
Content
packagers
and
publishers
Meta-
content
creators,
developers
and
packagers
Ad
networks
Distribution
servers/
pumps
Distribution
networks eg
ISPs, Mobile
Operators
Delivery
devicesEnd usersAdvertisers
Content creation, packaging
and publishing
Advertising
Media
planners
and buyers
User
management
tools
Operating
System s/w
Content distribution and
access provision
Airtime,
Bandwidth,
Purchase
credits
TransactionsApplication
s/w
Devices, software and
applications
Example: Value Chain for Mobile Services
•Commission
creation of rich
media content
• Localisation of
international
content
• Packaging content
for 3G mobile
• Advertising deals
for revenue
generation
through portal
• Participation in Ad
networks,
interfaces
• Affiliate
relationships with
owners of mobile
assets
• Licensing of
technology for
building server
infrastructure
• Relationships with
suppliers for
infrastructure
related services
• Develop/acquire
billing engines for
tracking, analytics
• Developer
relationships with
O/S vendors
• Agreements with
manufacturers for
pre-loading 3G
VAS apps
• Partnerships/ co-
promotion deals
with application
S/W vendors
• Integration deals
with payment
gateways, app
exchanges
• Affiliate deals to
generate traffic
and promotions
• End user
management,
service
customisation
Example – Semiconductor industry value chain
Example – Pharma industry value chain
NewTechnology
Sales,Manufacturing& Supply
Lead Identification& Optimisation
Drug Development
TargetIdentification
Scale up &Launch
Pharmaceuticals
Technology-focused Biotech
Product-focused Biotech
Marketing & Distribution
Defining your Go-to-Market Strategy
Customer Targeting
• Segmentation
• Volumes
Direct vs In-direct Models
• Speed, scale & control trade-offs
• Channel Complexity
• Channel Costs and impact on Margins
Market segmentation of customers
Customers
Consumer
Corporate
Knowledge
Workers
Brand
‘focus’
Increasing
‘footprint’
Narrower
‘audiences’
(size, geography,
demographics)Increasing
customer focus
Business Consumer
Go-to-Market Models
Direct
• Costs
• Timescales
Indirect
• Agents
• Distributors
• Franchisees
Commercial Models
Types of Revenue Models
• Components
• Products
• Services
• ‘Lifetime’ Revenues
Cost & Margin Implications
• Time to Profit
• Funding Requirements
Sensitivity Analysis
• Key Variables
• Assessment of Risk
Typical Business Models
• Buy and sell
• Make and sell
• Design – outsource – manufacture and sell
• Licence:
• the IP to industry
• Components
• Core technology and provide Know-how and
• consulting services
• Create and sell products
• Create and sell products and provide additional consulting and know-how
• Razor and blade
• Apple model
• Low cost airlines
Defining the Business ModelDefining the Business Model
Osterwalder, A. and Pugneur, Y. (2010) Business Model Generation, John Wiley & Sons.
Key partners
Who are your key
partners – consider
strategic alliances, co-
opetitors, joint ventures
and key suppliers.
Key processes
What are your key
processes – consider
product development,
revenue generation,
order fulfillment and
after-sales support.
Key resources
What are your key
resources – consider
physical, financial,
intellectual, human and
information based
resources.
Value
proposition
What is your value
proposition? Why will
customers buy from
you?
Customer
relationships
What relationships are
you building with your
customers – acquisition,
retention and cross-
selling or upselling?
Customer
segments
Which customer
segments are you going
to deal with – mass
market, niche market,
segmented?
Channels
What are your channels
to market? Direct or
indirect – stores and
offices or web based?
Cost structure
What are the major drivers for your cost structure? What scope for
economies of scope and scale? Can fixed costs be converted to
variable?
Revenue streams
What are the revenue streams – sale of assets, usage fees,
subscription fees, leasing or rental fees, licensing, brokerage,
advertising?