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Business Model Generation Part1: Building Blocks

I Got an Awesome Idea


Business Model The corner of success and failure

“A business model describes the rationale of how an organization creates, delivers and captures value.�

The 9 Building blocks


Customer segments:

- Customer groups represent separate segments if ( they are interested by different offers, they are willing to pay for different aspect of the offer, they are reached thru different distribution channels, they need different types of relationships, they have substantial differences in profitability) - Types: mass market, niche market, segmented (credit lines...), diversified (amazon), multi-sided markets.

II- Value proposition


What value do we deliver to the customer? Which customer problem are we helping to solve? Which customer needs are we satisfying? Which bundles, products for each customer segment? - It can be qualitative or quantitative. - Values Types: Newness, performance, customization, getting the job done, design, brand status, price, cost reduction, risk reduction, accessibility, convenience-usability

III- Channels

- 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 is most cost –efficient? - How are we integrating them with customer routines? Channel phases: awareness, evaluation, purchase, delivery and after sales.

IV- Customer relationship

- What type of relationship does each of our customer segments expects us to establish? - Which ones have we established? - How costly are they? - How are they integrated with the rest of our business model Types: personal assistance, dedicated personal assistance, self-service, automated services, communities and co-creation


Revenue stream

- For what value are our customers really willing to pay? - For what do they actually pay? - How are they currently paying? - How much does each revenue stream contribute to overall revenues? - Ways to generate revenue streams: asset sale, usage fee, subscription fees, lending-rentingleasing, licensing, brokerage fees, advertising. Price mechanism: fixed, dynamic.

VI- Key resources

- What key resources do our value propositions require? Our distribution channels? Customer relationships? Revenue streams? Categories: physical/intellectual/human/ financial.

VII- Key activities

- What key activities do our value propositions require? Our distribution channels? Customer relationships? Revenue streams? Production, problem solving platform network

VIII- Key partnerships

Who are our key partners? Who are our key suppliers, key resources we acquiring, which key activities does our partners perform. Motivations: optimization and economy of scale. Reduction of risk and uncertainty, acquisition of particular resources and activities.

IX- Cost structure.

What are the most important costs inherent in our business model? Which key resources are most expensive/ which key activities are most expensive? Types: Cost driven, value driven Characteristics: fixed costs, variable costs, economies of scale, economies of scope.

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