- 1. Management2.0:Competitive Advantage through Business Model
Design & Innovation Guadalajara, June 2007 Alexander
Osterwalder, PhD [email protected]
2. change is the process bywhich the future invades our lives
-> Alvin Toffler 3. first of all: what are YOUR concerns?(buzz
groups) 4. what are YOUR biggest issues andfears you face in
strategic managementtoday? 5. where do YOU see the
largestopportunities to improve strategicmanagement today? 6. your
expectations fortoday? 7. what isinnovation? 8. tell me about the
mostimportant innovations in yourcompany 9. types ofinnovation? 10.
technology innovation 11. processinnovation 12. product
&serviceinnovation 13. business modelinnovation 14. four rings
of innovation business model innovationproduct & service
innovationprocess innovation technology innovation 15. which one of
yourexamples qualify asbusiness model innovation? 16. Business
model innovation matters and it is a top priority of CEOs 17.
Operating Margin Growth in Excess ofCompetitive Peerscompound
annual growth rate over five years[Source: IBM, CEOs are expanding
the innovation horizon: important implications for CIOs] 18.
Benefits Cited by Business Model Innovators percent of
respondents[Source: IBM, Global CEO Study 2006] 19. some examples
20. NetJets: FractionalOwnership 21. Zopa.com: Peer-to-Peerlending
22. Bellum Concepts 23. why talk aboutbusiness models? 24. how do
you describe abusiness model? 25. without a common language 26. how
do you communicate abusiness model? 27. 1%18%Strategy300%Lorem
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sodales. Aenean non justo nec magna lobortis volutpat. means 28.
Here Ok HereCEOs 10Managers60Staff360 29. how do you implement a
businessmodel? 30. with outdated methods 31. how do you measure
thesuccess of a business model? 32. we dont 33. how do you change
abusiness model andinnovate? 34. we re-invent thewheel 35. what is
a business model? 36. business model frameworkINFRASTRUCTURE
OFFERCUSTOMER PARTNER CUSTOMER NETWORK RELATIONSHIPS COREVALUE
CUSTOMERCAPABILITIESPROPOSITIONSEGMENTSACTIVITYDISTRIBUTION
CONFIGURATION CHANNELS COST FINANCEREVENUESTRUCTURESTREAMSa
business model describes the value an organization offers tovarious
customers and portrays the capabilities and partners required for
creating, marketing, and delivering this value andrelationship
capital with the goal of generating profitable andsustainable
revenue streams[Osterwalder (2004) The Business Model Ontology] 37.
case study 38. you become the new owner of asoccer club 39.
describe YOURclubs business model 40. what value proposition do you
offer,to which customer segments?describing how a wealth management
bank acquires its clients 41. what value proposition do you
offer,to which customer segments?(model)OFFER CUSTOMERVALUE
CUSTOMER PROPOSITIONSEGMENTSvalue proposition 1 target customer
1value proposition 2 target customer 2 42. what value proposition
do you offer,to which customer segments?(example)
OFFERCUSTOMERspectacularfans offensive footballadvertising space
& advertisers high visibility 43. how do you reach your
customers? 44. how do you reach your
customers?(model)OFFERCUSTOMERCOMMUNICATIONVALUE CUSTOMER &
DISTRIBUTION PROPOSITIONSEGMENTS CHANNELSvalue proposition 1channel
1 target customer 1value proposition 2channel 2 target customer 2
45. how do you reach your customers?(example) OFFERCUSTOMERstadium
& box officespectacular club owned TVfans offensive
footballchannel mobile phone TVadvertising space &sales
forceadvertisers high visibility 46. how do you build
relationships? 47. how do you buildrelationships with
yourcustomers? (model) OFFERCUSTOMER VALUECUSTOMER
CUSTOMERPROPOSITIONRELATIONSHIPSEGMENTS value proposition
1mechanism 1 target customer 1 value proposition 2mechanism 2
target customer 2 48. how do you buildrelationships with
yourcustomers? (example)OFFER CUSTOMER personalized
website(ticketing) spectacular team blog (RSS) fansoffensive
football 49. how do you earn your moneywith this business model?
50. how do you earn your moneywith this business model?(model)
OFFERFINANCE VALUEREVENUE CUSTOMERPROPOSITION STREAMS SEGMENTS
value proposition 1 revenue stream 1 target customer 1 value
proposition 2 revenue stream 2 target customer 2 51. how do you
earn your moneywith this business model?(example) OFFER
FINANCEticket salesspectacular TV channelfans offensive football
subscriber fees mobile phone TV subscriber feesadvertising space
&advertising revenues advertisers high visibility 52. the
businessmodels place in a company 53. STRATEGYBUSINESS
MODELORGANIZATION TECHNOLOGYthe business models place in thecompany
54. external forces 55. 5 forcescustomer technological needschange
BUSINES S MODEL legal socialenvironment environment competition 56.
the big picture (businessmodel) 57. the bigpicture Partner Network
Customer Relationship food & beverages personalized web profile
ticketing services newsletter promoters team blog (RSS) ad
placement VIP events with team telecom operator TV operator Core
CapabilityActivity ConfigurationValue Proposition Distribution
Channel Target Customer play attractive & win team management
attractive soccer stadium fans (families, etc.)games event
management 360 event (match, POS networks fan groups brand
management venue management dining, shopping) club website (+online
TV) companies video images ticketing exclusive VIP lounges club
cable TV channel event/concert organizers channel management VIP
relationship merchandising mobile phone TV channel
advertisersmanagement renting out stadium video crew Cost
StructureRevenue Model team & maintenance Ticket fees &
season tickets infrastructure management online TV subscription
revenues marketing revenue sharing cable & mobile phone TV
video renting out stadium for events advertising revenues
merchandising revenues 58. value createsrevenues Partner Network
Customer Relationship food & beverages personalized web profile
ticketing services newsletter promoters team blog (RSS) ad
placement VIP events with team telecom operator TV operator Core
CapabilityActivity ConfigurationValue Proposition Distribution
Channel Target Customer play attractive & win team management
attractive soccer stadium fans (families, etc.)games event
management 360 event (match, POS networks fan groups brand
management venue management dining, shopping) club website (+online
TV) companies video images ticketing exclusive VIP lounges club
cable TV channel event/concert organizers channel management VIP
relationship merchandising mobile phone TV channel
advertisersmanagement renting out stadium video crew Cost
StructureRevenue Model team & maintenance Ticket fees &
season tickets infrastructure management online TV subscription
revenues marketing revenue sharing cable & mobile phone TV
video renting out stadium for events advertising revenues
merchandising revenues 59. creating value requiresinfrastructure
Partner Network Customer Relationship food & beverages
personalized web profile ticketing services newsletter promoters
team blog (RSS) ad placement VIP events with team telecom operator
TV operator Core CapabilityActivity ConfigurationValue Proposition
Distribution Channel Target Customer play attractive & win team
management attractive soccer stadium fans (families, etc.)games
event management 360 event (match, POS networks fan groups brand
management venue management dining, shopping) club website (+online
TV) companies video images ticketing exclusive VIP lounges club
cable TV channel event/concert organizers channel management VIP
relationship merchandising mobile phone TV channel
advertisersmanagement renting out stadium video crew Cost
StructureRevenue Model team & maintenance Ticket fees &
season tickets infrastructure management online TV subscription
revenues marketing revenue sharing cable & mobile phone TV
video renting out stadium for events advertising revenues
merchandising revenues 60. infrastructure generatescosts Partner
Network Customer Relationship food & beverages personalized web
profile ticketing services newsletter promoters team blog (RSS) ad
placement VIP events with team telecom operator TV operator Core
CapabilityActivity ConfigurationValue Proposition Distribution
Channel Target Customer play attractive & win team management
attractive soccer stadium fans (families, etc.)games event
management 360 event (match, POS networks fan groups brand
management venue management dining, shopping) club website (+online
TV) companies video images ticketing exclusive VIP lounges club
cable TV channel event/concert organizers channel management VIP
relationship merchandising mobile phone TV channel
advertisersmanagement renting out stadium video crew Cost
StructureRevenue Model team & maintenance Ticket fees &
season tickets infrastructure management online TV subscription
revenues marketing revenue sharing cable & mobile phone TV
video renting out stadium for events advertising revenues
merchandising revenues 61. the profitzone Partner Network Customer
Relationship food & beverages personalized web profile
ticketing services newsletter promoters team blog (RSS) ad
placement VIP events with team telecom operator TV operator Core
CapabilityActivity ConfigurationValue Proposition Distribution
Channel Target Customer play attractive & win team management
attractive soccer stadium fans (families, etc.)games event
management 360 event (match, POS networks fan groups brand
management venue management dining, shopping) club website (+online
TV) companies video images ticketing exclusive VIP lounges club
cable TV channel event/concert organizers channel management VIP
relationship merchandising mobile phone TV channel
advertisersmanagement renting out stadium video crew Cost
StructureRevenue Model team & maintenance Ticket fees &
season tickets infrastructure management online TV subscription
revenues marketing revenue sharing cable & mobile phone TV
video< renting out stadium for events advertising revenues
merchandising revenues 62. the process ofdesigning innovative
business models 63. the focus of thebusiness modelinnovator
&designer 64. user-centered 65. PARTNER CUSTOMER NETWORK
RELATIONSHIPS CORE VALUECUSTOMERCAPABILITIES PROPOSITION
SEGMENTSACTIVITY DISTRIBUTION CONFIGURATIONCHANNELS
COSTREVENUESTRUCTURESTREAMS 66. Nokia: JanChipchase 67. creativity
& exploration 68. Googleplex 69. 70:20:10 70. API 71. PARTNER
CUSTOMER NETWORK RELATIONSHIPS CORE VALUECUSTOMERCAPABILITIES
PROPOSITION SEGMENTSACTIVITY DISTRIBUTION CONFIGURATIONCHANNELS
COSTREVENUESTRUCTURESTREAMS 72. continuousinnovation 73.
interdisciplinaryapproach 74. Grameen PhoneBangladesh 75. Grameen
Bankcustomerrelationships telecomoperatorsmicro-creditvillagephone
ladies villagertelephony mobile activity telephony
configurationsource ofGrameen phone ladies revenueBank (billing)
billingtelecom mobile phone infrastructurerevenues 76.
holisticdesign 77. Apple iTunes &iPod 78. content
producerslifestyle brandhardwaresuppliershardware &prod. &
softw.softw. dev.designiPodApple
storese-commercebrandmanagementdealerhigh-end iBook networkconsumer
multimedia hardwarerights mgmtdistributionmultimedia iTunes
downloads contentcontent distributionhardwarerevenuescost structure
multimedia revenues 79. strategic fit 80. the Amazon.com youknow
81. Amazon Simple Storage Services(S3) 82. customerpartners
relationships productselectioncontentselling stuff mass
Amazon.commanagement on the Webcustomer
distributionwarehousingWeb2.0 Amazon S3Internet API&
distributioncompaniesproductsearch A9 product e-commercedata
services InternetsearchsitesAmazon.com data gridselling stuff IT
infra data storage fees marketing search engine revenues 83. the
businessmodelers toolbox 84. co-creation 85. ideation 86.
visualization 87. prototyping 88. the designprocess 89. 1. identify
interdisciplinary stakeholders -> set-up team 90. do you have to
get the ITteam out of their cubicles? 91. 2. understand (business)
environment > frame problem 92. various starting points /
depending on context PARTNERCUSTOMER NETWORKRELATIONSHIPS CORE
VALUE CUSTOMERCAPABILITIES PROPOSITIONSEGMENTSACTIVITY DISTRIBUTION
CONFIGURATIONCHANNELS COST REVENUESTRUCTURE STREAMS [Osterwalder
(2004) The Business Model Ontology] 93. 3. suspend reality ->
ideate 94. 4. bring back reality -> prototype 95. 5. chose
suitable design -> decide 96. 6. sketch out projects &
workload-> draw implementation plan 97. ProjectEstimatedArea
name workload10 Project V1Value man/daysProposition 120 Project
V2man/daysDistribution38 Project C1Channelsman/days 98. 7. outline
key indicators to follow -> choose measures 99. ProjectEstimated
KPI TargetArea name workload(measure) level10 Project V1Value
man/daysProposition 120 Project V2man/daysDistribution38 Project
C1Channelsman/days 100. 8. select the right teams and people ->
make responsible 101. ProjectEstimated KPI TargetArea leader name
workload(measure) level10 Project V1Mr. JanValue
man/daysProposition 120 Project V2Ms. Teeman/daysDistribution38
Project C1Channelsman/days 102. 9. execute the plan -> manage
implementation & change 103. 10. evaluate, learn
andredesign-> manage improvement 104. designing blue oceans 105.
> market boundaries arenot given> they are reconstructedby
the actions & beliefsof industry players 106. RED OCEANBLUE
OCEAN compete in existing markets create uncontested markets beat
the competition make competition irrelevant explore existing demand
create & capture new demand make the value/cost trad-off break
value/cost trad-off align with differentiation OR align with
differentiationlow costAND low cost 107. differentiate your
valueproposition 108. working definition valueproposition a
customer value proposition gives an overall view of acompanys
bundle of products, services and clientadvice. it is the sum of the
total benefits a customer ispromised to receive in return for a
payment (or othervalue transfer) 109. group warm-up what are the 5
most important competitive attributes that characterize a game
consoles offer? (e.g. price, performance, design) attribute 1
attribute 2 e.g. performance e.g. price 110. 5 attributes121. most
important attribute2. second most important3. 3 4. 4 -- 111. 1. 2.
3. 4. 5. 112. draw a value proposition 5 - high banks performance3
- medium1 - low 12345 ut e te teute ut eib ibuiburibribattr attr
attr at tatt [Kim & Mauborgne (2002) Charting Your Companys
Future] 113. liveExcel 114. eliminate raise reduce create 115.
strong & valuable approach, but limitedview 116. PARTNER
CUSTOMER NETWORK RELATIONSHIPS CORE VALUECUSTOMERCAPABILITIES
PROPOSITION SEGMENTSACTIVITY DISTRIBUTION CONFIGURATIONCHANNELS
COSTREVENUESTRUCTURESTREAMS 117. examples 118. Goldcorpgeology
prize CUSTOMER 500000 $USRELATIONSHIPSexploitingCUSTOMER
miningmines SEGMENTSDISTRIBUTION research CHANNELS low costs
throughREVENUEopen explorationSTREAMS Goldcorp publicly shared all
of its geological data and offered US$ 500000 in prizes for
determining where theymight find the next 6 million ounces of gold
119. from copyright to creativecommons 120. Skype eBay website
deliver voice & free VoIP & valueglobalvideo quality added
services (non segmented) softwareinternet development softwarelarge
scale development low margin free voice-over-IP VoIP telephony
& value-added services 121. 1291 Cityhomes low-cost
hotel/rental in New York City youngcurious Swiss CUSTOMER
RELATIONSHIPS apartmentowners keep downlow cost costs renting out
DISTRIBUTIONthe cost accommodation roomsCHANNELS sensibleNew York
find demandlow cost rents 122. Tecnovate import young
curiousCUSTOMEREuropeans toRELATIONSHIPSIndia to worklow-cost
multi-keep downACTIVITY lingual callDISTRIBUTIONEuropeancosts
CONFIGURATIONcenterCHANNELScorporationsoutsourcingREVENUElow
costSTREAMSbusiness process outsourcing up-side down in India 123.
Netflixindependentprofilefilmslarge movie (niche)
moviesspecializeddatabaseover the clientele ACTIVITY Internet
WebCONFIGURATION COSTREVENUESTRUCTURESTREAMSonline movie rental
(with large niche movie database) 124. from bloated head to the
longtail 125. Alexander Osterwalder, [email protected]
www.arvetica.com 126. all photos from Flickrunder a creative
commons licenseauthors indicated in comment page of ppt 127. Nobody
knows your business environment better than yourself. We co-design
your strategic vision by buildingwe co-create on your knowledge.
Through group thinking we find the right answers to the right
questions together Having a great vision is not sufficient -
implementation counts. We help you reconcile long term views with
shortwe operationalize term actions. We make strategy everyones job
by translating it into pragmatic and prioritized projects. Change
does not happen accidentally it has to be managed. We help you
align strategy, people andwe manage change processes with respect
to your organizational culture and values. When you stop learning,
you stop competing. We scan theknowledge universe for you, across
disciplines andwe build knowledgeindustries. We transfer the best
methods, tools andtheory in business to your organization. Specific
problems require specific skills that you do not necessarily
dispose of in-house. Through ourwe connect interdisciplinary
network we connect you with leading domain experts. 128. annexes
129. annex Ibusiness model template 130. INFRASTRUCTURE
OFFERCUSTOMER PARTNERCUSTOMER NETWORK RELATIONSHIPCORE VALUE TARGET
CAPABILITIES PROPOSITION CUSTOMER VALUEDISTRIBUTION
CONFIGURATIONCHANNEL COST FINANCE REVENUESTRUCTURE STREAMSa
business model describes the value an organization offers tovarious
customers and portrays the capabilities and partners required for
creating, marketing, and delivering this value andrelationship
capital with the goal of generating profitable andsustainable
revenue streams 131. describing a companys business
modelINFRASTRUCTUREPARTNERCUSTOMERCUSTOMERNETWORK RELATIONSHIP
OFFER CORE TARGETportrays the network ofexplains
theCAPABILITIEScooperativerelationships a CUSTOMERagreements with
otherVALUE company establishescompanies with its customersoutlines
the capabilities PROPOSITIONdescribes therequired to run acustomers
a company companys businesswants to offer value to
modelDISTRIBUTIONVALUE gives an overall view ofCONFIGURATION a
companys bundle of CHANNELproducts and services describes the
channelsdescribes the to communicate and arrangement of get in
touch withactivities and resources customerssums up the
monetarydescribes the revenueconsequences to run a COST FINANCE
REVENUEstreams through which business modelSTRUCTURE STREAMS money
is earned 132. describing a companys offer OFFERVALUE
PROPOSITIONvalue proposition 1value proposition 2 133. describing
who a company offers value to OFFERCUSTOMERVALUETARGET
PROPOSITIONCUSTOMERvalue proposition 1 target customer 1value
proposition 2 target customer 2 134. describing how a company
reaches its customers OFFER CUSTOMERVALUE DISTRIBUTION TARGET
PROPOSITIONCHANNEL CUSTOMERvalue proposition 1 distribution channel
1 target customer 1value proposition 2 distribution channel 2
target customer 2 135. describing the relationships a company
builds OFFER CUSTOMERVALUE CUSTOMER TARGET PROPOSITION RELATIONSHIP
CUSTOMERvalue proposition 1 relationship type 1 target customer
1value proposition 2 relationship type 2 target customer 2 136.
describing how a company makes money OFFER
FINANCECUSTOMERVALUEREVENUETARGET PROPOSITION STREAMCUSTOMERvalue
proposition 1 revenue stream 1 target customer 1value proposition 2
revenue stream 2 target customer 2 137. describing what
capabilities are requiredINFRASTRUCTURE OFFERCOREVALUE
CAPABILITIESPROPOSITION core capability 1value proposition 1 core
capability 2value proposition 2 138. describing what activities are
requiredINFRASTRUCTURE OFFER COREVALUEVALUECAPABILITIES
CONFIGURATION PROPOSITIONcore capability 1activity 1 value
proposition 1core capability 2activity 2 value proposition 2 139.
describing the partners that leverage the business
modelINFRASTRUCTURE OFFER CORE PARTNERVALUECAPABILITIESNETWORK
PROPOSITIONcore capability 1partner 1value proposition 1core
capability 2partner 2value proposition 2 140. describing the costs
of a business modelINFRASTRUCTUREFINANCEOFFERCORECOST VALUE
CAPABILITIESSTRUCTUREPROPOSITION core capability 1cost account
1value proposition 1 core capability 2cost account 2value
proposition 2 141. annex ii other
