02 - Business model and USP - IES

What is a business model?

business model

Possible definitions of a Business Model

The logic that connects technical potential eith the realization of economic value (Chesbrough and Rosenbloom, 2002)

It describes the rationale of how an organization creates, delivers, and capture value (Forbes)

It describes the rationale of how an organization creates, delivers and capture value starting from an idea (Osterwalder)

It delivers to customers and captures value starting from an idea (Filippas)

There is a difference between customer and beneficiary:
ex:

books for kids have a colorful cover and a back explaining parents what books is for

Health products: beneficiary is the patient, but customer is insurance

In these examples, we have to find a value proposition for both sides.

From technical domain (feasbility, performance) leads to economic domain (Value, price, profit). The business model is connecting these two domains.

A BM assumes how a firm will create, capture and delivers value to customers connnecting technology and economic value.

BM is focused predomintely on value proposition.

For whom we are doing this, affects the solution or the product.

Value Network: there are more stakeholders than the main beneficiary. Who are all the stakeholders.

How to craft a BM

Customer segment:
- Whose pain do we address?
- for whom do we create value?
- who is our customer?
Value proposition:
- what do we deliver to the customer?
- which problems are we helping to address?
- No pain no gain
Channels:
- How do we reach the customer?
- How is our value delivered?
- How are distribution and sales channels organized?
Customer relationship:
- How do I get the customers feedback?
- What are customer expectations in interacting with us?
- What interaction are needed?
  Customers need to be profiled as accuratly as possible.
Revenue Stream: For what value are our customer willing to pay? For what are they paying? How are they willing to pay?

A way to do this, is to see how much are others doing this for and for what price.

Key resources:
- What are necessary resources to realize and distribute value to customers and collect revenue?
- People, companies, raw materials...
Key activities:
- what are the activities required for our value proposition? Customer? Distribution Channels?
Key partnerships:
- Who are key partners to conduct activities?
- What key resources/activities do they perform?
Cost structure:
- What are the most inherent costs in our BM?
- Who are the most expensive resources and partners?

Remember the transaction cost. the cost of changing a service, product or whatever, for the customer. Ex: When switching phone provider, I'm not doing it if I have to change my phone number

TOOLS:

Business model canvas (Lean Canvas)
Context map canvas

How important is a business model?

A mediocre technology pursued within a great business model may be more valuable than a great technology exploited ...???

Contextualization thanks to Business Model

We need to go from the conceptual to the concrete.

We need to get closer and closer to a precise segment where we can address the problem.

To do this, we need a Unique Selling Propositions

We need to know:

Who are your competitors?
How do you differentiate from them?
Are you able to be specific, precise and meaningful when explaining USP?
Are you able to get interest? In touching to what's valuable to the customer?
Can you create emotion with your product/service?
How fast can yuo be imitated? What are the entry barriers?
- Legal
- Social

Validation

It's the process of gathering evidence/learnings around problems/solutions through user testing, to make faster, informed, risked-less decision

Define what process, assumption or step you will validate (problem,solution, end-user feasibility)
With whom are you going to validate and why are them the most appropriate persons or groups to validate?
Start from the most critical validations as they would act as a go-no-go for the upcoming stages (no pain no gain)
Make sure that you frame the validation not as a marketing message (be open for different or more pressing problems). Don't try to convince people that something is a problem
Do not launch survey. People do not respond to them.
Don't ask about your idea, focus on their problems
Avoid 3 Fs: Family, Friends, Fools
Ask about behavior, not opinions.
Who are we starting with? Why are they more critical?

Validation process:

Assumption (see first what else similar has failed and why)
Hypothesis/well educated guess (existing data/interviews)
Validation outside the building (problem)
Validate conceptualized solution (bare-bones MVP)
Validation of solution (MVP, mock-ups of service or product)
Validation of end-user opinion on the usability (simulation)
Consider the appropriate early-adopters