ENTREPRENUARIAL MINDSET

CHAPTER 4: BUILDING BUSINESS MODEL

INTRODUCTION 2. COMPETITION
 good product and/or service does not automatically turn into a  agreement between competitors to help share the risk
commercial success  to gain new users
 business model makes the difference between success in the 3. JOINT-VENTURE
laboratory and success in the marketplace  two businesses because of their mutual interest
 business model involves:  for a completely different company
1. the product or service offering 4. BUYER-SUPPLIER RELATIONSHIP
2. the targeted customers  the most usual type of partnerships
3. the economic engine for profitability and growth objectives  dependable spring of supplies coming in

WHAT IS BUSINESS MODEL? KEY ACTIVITIES – are the most essential activities in achieving a company’s
 “how does it plan to generate money” value proposition
 who your customer is  a bridge between the value proposition and the customer segment
 what value you can create/add for customer  consider channels and customer relationships
 how you can do that at reasonable costs  reliant on business model type

TRADITIONAL BUSINESS MODELS CATEGORIES OF KEY ACTIVITIES

 Marketing
 Sales
 Design
 Development
 Operations
 Distribution
 Customer Experience

KEY RESOURCES - describes the most important assets required to make a

business model work
 resources that allow an enterprise to create and offer a value
proposition
 resources to reach target markets
 resources that can maintain good relationships with customer
segments, and gain revenues
MODERN BUSINESS MODELS
4 CATEGORIES RESOURCES
1. PHYSICAL - tangible resources that a company make use of to form
its value proposition
2. INTELLECTUAL – these are non- physical, intangible resources
3. HUMAN – employees are the biggest and most vital resources
4. FINANCIAL – all businesses have key resources in finance

CUSTOMER VALUE PROPOSITION

 is a business’s way of generating value in their product or service
when targeting potential customers
 is a description of the user’s experiences

VALUE PROPOSITION
 is a statement consisting of the reason/s someone should do
business with the company
 computed through adding all the benefits that the product

THE BUSINESS MODEL CANVAS FACTORS CONSIDERED IN THE DEVELOPMENT OF THE CVP
“BUSINESS MODEL ONTOLOGY” Alexander Osterwalder, the Business Model 1. FUNCTIONAL VALUE - product and or service offers the solution to a
Canvas consisting of nine segments for its building blocks particular problem (phone competence offered by an iPhone)
 business model can be written in a one-page canvas 2. EMOTIONAL VALUE - sentimental reasons (purchasing locally
 focus on every segment or blocks of the business model produced or organic brands
systematically until the gaps close 3. ECONOMMICAL VALUE – offers a financial advantage
 a block describes the factor that a startup business needs to study 4. SYMBOLIC VALUE – a certain type of status given to the customer
 modify each block as the need arises (Italian Ducati motorcycle or a cup of Starbucks coffee)
 When one block is change, the other blocks are required to be
revisited and changed DIFFERENT TYPES OF CVP

TEMPLATE OF THE BUSINESS MODEL CANVAS OF OSTERWALDER

KEY PARTNERS – are the network of suppliers and partners
 Partner with other business, governmental, or non- consumer entities
 Partnerships could be a tool to a business success
 Partnering can be for optimizing the use of resources, forming new
resource streams or lessening risks

TYPES OF PARTNERSHIPS
1. STRATEGIC ALLIANCES
 between non- competitors to help each other do an equally
advantageous task
 but retaining their independence
CUSTOMER RELATIONSHIP CUSTOMER PROFILE
1. PEPRSONAL ASISTANCE – communicate with a real salesperson  all the expectations and needs of customers
2. DEDICATED PERSONAL ASSISTANCE – assigning a salesperson to an  things that may delight them and other stuffs that may intensify the
individual customer possibility of these customers embracing a value proposition
3. SELF-SERVICE – no direct relationship CUSTOMER POINTS
4. AUTOMATED SERVICES – a combination of customer self-service and  either avoid the customer from getting a job done or the negative
automated processes experiences
5. COMMUNITIES – online communities to exchange information  emotions and risks that the customer experiences before, during or
6. CO-CREATION - customers have the chance to co-create value after a job
with the company such as in designing and innovating products CUSTOMER JOBS/JOBS-TO-BE-DONE
 functional, social and emotional tasks customers are trying to do
CUSTOMER SEGMENTS - refers to demographics such as age, ethnicity,  challenges they are attempting to resolve and needs they desire to
profession and/or gender, etc. satisfy in their personal and professional lives
 shared needs, behaviors and other traits can be the bases for
customer segmentation CUSTOMER GAINS
 company may select a single group or several groups REQUIRED GAINS – the very basic expectations by the customers
(Smartphone to make and receive phone calls)
TYPES OF CUSTOMER SEGMENTS EXPECTED GAINS – beyond the basic ones (Smartphone expected to be
1. MASS – an unsegmented market visually attractive and fashionable)
2. NICHE – a customer segment with very distinct characteristics and DESIRED GAINS – sought-after and cherished gains by the customer
extremely specific needs (Smartphone, having no trouble in the synching the phone)
3. SEGMENTED-CUSTOMER - segments that have very small differences UNEXPECTED GAINS - potential benefits of the product and/or service for
in their need requirements which the customer is unaware (touch screen capability of a Smartphone)
4. DIVERSIFIED – differentiated customer segments
5. MUMLTI-SIDED PLATFORMS – customer segments are reliant with CUSTOMER PAINS
each other PRODUCTIVITY PAINS – include the inefficiency of the businesses that a
customer experiences
CHANNELS - are the touch points through which a company communicates SUPPORT PAINS - felt by a customer when he is not assisted when buying
with its target customers FINANCIAL PAINS – customer spends too much
 play a big role in defining the customer experience and providing PROCESS PAINS – creates fictions to buyers like substandard processes
value
 entrepreneur should understand which channel is appropriate to TYPES OF JOBS-TO-BE-DONE
reach his target consumers FUNCTIONAL JOBS – regular and particular jobs that a customer is trying to
do and is working towards
FIVE PHASES THAT A CHANNEL MAY PASS THROUGH SOCIAL JOBS - the manners a customer desires to reflect his image
1. AWARENESS – marketing and advertising phase in a social environment
2. EVALUATION – evaluates, read about or uses the product or avail of PERSONAL/ EMOTIONAL JOBS –how a customer works towards feeling a
the service certain way
3. PURCHASE – the actual sales process SUPPORTING JOBS – customers also purchase value, hence doing a
4. DELIVERY – when the promise value proposition has reached the supporting task
customers
5. AFTER SALES – giving customer care and support after purchase THREE ROLES OF CUSTOMERS THAT MAY ASSIST IN SUPPORTING JOBS
1. BUYER OF VALUE - from evaluating choices at hand up to paying for
CHANNEL TYPES the product
 DIRECT CHANNELS 2. CO-CREATOR OF VALUE - Has a direct hand in the manufacture of
o the entrepreneur owns or has control over the product with the company
o could mean added costs 3. TRASNFEROR OF VALUE - the end of the product use such as disposal
o provide a direct and strong relationship of product trash or giving the ownership of the product to another
 INDIRECT CHANNEL person
o use of intermediary
o wholesalers are considered VALUE PROPOSITION
o partner channels  GIAN CREATORS
o quick to reach the market and less investment in o how the products and services may create customer gains
infrastructure and offer customer added value
VALUE PROPOSITION CANVAS - aims is to guarantee proper fit of the o functional utility, social gains, positive emotions, and cost
product and the market-Alexander Osterwalder savings
 takes into consideration the values and needs of the customers  PAIN RELIEVES
 a detailed relationship of the customer segments and value o how the products and/or services lighten, avoid or solve the
propositions particular customer pains
 tool also to upgrade a product and/or service offering  PRODUCTS AND SERVICES
o products and/or services which create gain and relieve pain
TWO BUILDING BLOCKS-VALUE PROPOSITION CANVAS and built around the value proposition
CUSTOMER PROFILE - points to the customer segment that the company THE VALUE PROPOSITION CANVAS OF THE BAKERY
shall serve
 created for each customer segment, as each segment has distinct
gains, pains and jobs
 before making a customer profile, the various archetypes customers
typically fall into must be evaluated
VALUE PROPOSITION - is a statement consisting of the reason/s someone
should do business with the company
 reflect on the gain creators, pain relievers and the products and/or
services to offer them

THE LEAN CANVAS: A BUSINESS MODEL CANVAS ALTERNATIVE

 proposed by Ash Maurya
 a developed version of the Business Model
 more problem- focused approach and appropriate to use by small
entrepreneurs
 more on customers’ needs, on actionable metrics
 offer a fast idea-to- product transformation

ELEMENTS OF THE LEAN CANVAS MODEL

1. PROBLEMS – problems that require solving
2. SULOTION – for the effective solution by “getting out of the building”
3. VALUE PROPOSITION – a marketable promise that the business will
solve their problem
4. UNFAIR ADVANTAGE – the competitive advantage that cannot be
copied and cannot be bought
5. CUSTOMER SEGMENTS – problem and the customer segments must
be connected
6. CHANNELS – ways to reach the customer segments
7. REVENUE STREAMS – the money matter matter of the business
8. COST STRUCTURE – operational costs that the business needs to pay
9. KEY METRICS – the assortment of products and/or services the
business wants to deliver

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