BPM og Business Model Management Part 2 S ession 5 12 Oktober 2011

1. BPM og Business Model Management Part 2Session 512 Oktober 2011

2. Agenda • Business Model Generation • Case: Flügger: Marketing- og Reklamechef Flügger Merete Skov Kristensen  • Group Exercise • Session 6

3. Overview of all sessions

4. Business Model Generation

5. BPM Framework

6. Business Model Framework A Business Model is the rationale of how an organization creates, delivers, and captures value > • A business model is about the following: • An Organization serves one or several Customer Segments. • It seeks to solve customer problems and satisfy customer needs with Value Propositions • Value propositions are delivered to customers through communication, distribution, and sales Channels • Customer Relationships are established and maintained with each customer segment • Revenue Streams results from value propositions successfully offered to customers • Key Resources are the assets required to offer and deliver the previously described elements… • …by performing a number of Key Activities • Key Partnerships are formed to outsource and acquire some activities outside of the organization. • The business model elements results in the Cost Structure. * See www.businessmodelgeneration.com

7. Business Model Building BlocksWhich is the building block where you see more potential for generating innovative ideas? • Customer Segments • Value Propositions • Channels • Customer Relationships • Revenue Streams • Key Resources • Key Activities • Key Partnerships • Cost Structure 7 4 1 6 2 8 3 9 5

8. The Business Model Canvas

9. Building Block – Customer Segments (CS) • The Customer Segments Building Block defines the different group of peoples or organizations and enterprise aims to reach. • Customer Groups represent separate segments if: • Their needs require & justify a distinct offer • They are reached through different Distribution Channels • They require different types of relationships • They have substantially different profitability's • They are willing to pay for different aspects of the offer Sample Types: • Mass Market • Niche Market • Segmented • Diversified Page20

10. Building Block – Value Propositions (VP) • The Value Propositions Building Block describes the bundle of products and services that create the value for a specific Customer Segment • Questions to ask: • What value do we deliver to the customer? • Which one of our customer’s problems are we helping • Which customers needs are we satisfying? • What bundles of products and services are we offering to each customer segment ? Sample Types: • Newness • Risk Reduction • Customization • Price Page22

11. Building Block – Channels (CH) • The Channels Building Block describes how a company communicates with and reaches its Customer Segments to deliver a Value Propositions • Questions to ask: • 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? • How are we integrating them with our customer routines ? Sample Types: • Direct • Indirect Page26

12. Building Block – Customer Relationships (CR) • The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments. • Questions to ask: • 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 ? Sample Types: • Co-Creation • Communities • Personal Assistance Page28

13. Building Block – Revenue Streams • The Revenue Streams Building Block represents the cash a company generates from each Customer Segment • Questions to ask: • For what value are our customers really willing to pay ? • For what do the currently pay ? • How are they currently paying? • How would they prefer to pay ? • How much does each Revenue Stream contribute to overall revenues ? • What Pricing Models – dynamic vs. fixed ? Sample Types: • Licensing • Asset Sale • Usage Fee • Subscription Fee Page30

14. Building Block – Key Resources (KR) • The Key Resources Building Block describes the most important assets required to make the business model work. • Questions to ask: • What Key Activities do our: • Value Propositions require? • Distribution Channels require? • Customer Relationships require? • Revenue Streams require? Sample Types: • Production • Problem Solving • Platform / Network Page34

15. Building Block – Key Activities (KA) • The Key Activities Building Block describes the most important things a company must do to make the business model work. • Questions to ask: • What Key Activities do our: • Value Propositions require? • Distribution Channels require? • Customer Relationships require? • Revenue Streams require? Sample Types: • Production • Problem Solving • Platform / Network Page36

16. Building Block – Key Partnership (KP) • The Key partnership Building Block describes the network of suppliers and partners that make the business model work. • Questions to ask: • Who are our Key Partners? • Who are our Key Suppliers? • Which Key resources are we acquiring from partners? • Which Key Activities do partners perform • Type of Costs / Advantages: • Variable • Fixed • Economies of Scale / Scope Sample Types: • Optimization and Economies of Scale • Reduction of risk and uncertainty • Acquisition of particular resources and activates Page38

17. Building Block – Cost Structure (CS) • The Cost Structure Building Block describes the most important costs incurred while operating under a particular business model • Questions to ask: • What are the most important cost inherent in our business model? • Which key resources are most expensive? • Which Key Activities are most expensive? • Type of Costs / Advantages: • Variable • Fixed • Economies of Scale / Scope Sample Types: • Cost Driven • Value Driven Page40

18. Skype 2003 Business model: gain customer base

19. 2004 – 2010: Freemium Model & Partnerships

20. 2011 – Freemium, B2B, HW Partners, acquisition by MSFT • Skype Facts: • 13 % of all international calls • Valuation 8.5B USD • Investment 2.5B USD • 100 Million active User per month

21. Innovating Business Models • Combining the Blue Ocean Strategy with the Business Model Canvas • Porters Five Forces

22. Business Model Canvas Cost-Side Value-Side

23. Value Innovation - COSTS + VALUE

24. Blue Ocean Strategy and the BM-Canvas - COSTS + VALUE

25. Relating the Business Model to Porters Five Forces Model Competitive Rivalry within an Industry Threat of new Entrants Bargaining Power of the Customer Bargaining Power of the Suppliers Threat of Substitute Products

26. Case: FlüggerMarketing- og Reklamechef Flügger Merete Skov Kristensen

27. Group Exercise

28. Session 5Business Model Framework – Breakout Sessions • Tasks: • Select a company (Netflix, Pandora…. or your own) • Model the Business Model for your selected company • Discuss based on Porters Five-Forces the Challenges and Opportunities the company has • Questions: • What are the strengths ? • What are the weaknesses ? • What are threats? • Opportunities to change? • Tools : Brown paper, Flip Chart, Post-Its, 90 min

29. Session 6BPM Governance 1: BPM Strategi

30. Session 6