Course 5. Business Models Entrepreneurship and tehnological management

Transcription

1 Course 5 Business Models

2 Dragos Roua Entrepreneur Internet and Apps Development Owner Mirabilis Media NZ Limited ongoing Founder dragosroua@yahoo.com Board member Venture Connect Digital Nomad Owner Mirabilis Media masini.ro culinar.ro Speaker corner 2

3 Summary Summary Problem Solving vs Reputation Based Business What Is A Business Model? What Is A Business Model - Practical Examples Business Model Evaluations 3

4 What Is A Business A repeatable, predictable and manageable sum of processes which are constantly generating revenue A financially profitable business is one that generates more revenue than the running costs The processes must constantly create value 4

5 What Is A Business? Creating Value The problem you are solving Resources allocation Product / service Distribution Feed-back 5

6 Creating Value Produced Value vs Perceived Value Produced Value vs Perceived Value Produced: what you "know" and "think" you created Perceived: what the value consumer knows and think you created Twitter: initially an internal communication tool (produced value) turned into a global social network (perceived value) produced / perceived = constant challenge for the entrepreneur Morning question: what exactly am I doing here? 6

7 Creating Value Produced vs Perceived Modifiers Cultural bias (adult products in Muslim countries) Competition (price pressure, negative advertising) Promotion (a product which never reaches a consumer doesn't really exist) Opportunity (the Iridium satellites or webvan in 2000 internet bubble, too early) 7

8 Creating Value Value producers Entrepreneurs + partners Money is a resource, not a goal Partners Employees Value consumers (user generated content) Producing / selling = constant challenge for the entrepreneurs, focus on producing 8

9 Creating Value Value distributors Propagates the value you create Distribution channels are structured forms of propagating value Sometimes it modifies your products / services (distributing goods) Almost always creates extra costs Carrier cost negotiation Insurance cost - protecting value Opportunity cost - choosing the right distribution channel 9

10 Creating Value Value Consumers The "customer Value consumer is not always the one that pays for it If you're not solving a problem, they're not going to buy it in a sustainable way Example: the ifart app on the iphone, from / day to 3000 / month 10

11 Creating Value Core Values vs Residual Values Core value = the main output of your business processes Residual values = secondary or tertiary "waves" generated by your business process Online publishing example Core value: broadcasted information Value consumers: website readers Residual values: website readers loyalty and brand addiction (which may be sold to an advertising agency) Business model: organizing and monetizing all your values in a sustainable way 11

12 Problem Solving vs Reputation Based Made possible in the last years, by means of self-publishing "let me solve your problem" vs "could you please solve my problem Prominent in consulting Bloggers, now social media VIP's Examples Copyblogger.com / Brian Clark The GTD hype / David Allen Lifehacker.com / Gina Trapani 12

13 Problem Solving vs Reputation Based Key Differentiators Customer behavior Running costs Distribution channels Product / service price 13

14 Problem Solving vs Reputation Based Customers Problem solving Reputation based You have to convince them you are good They don't know about you (yet) They already know you are good They knew you before initiating an exchange 14

15 Problem Solving vs Reputation Based Running Costs Problem solving Reputation based Promotion (customers acquisition) Market analysis (product refinment) Reputation maintenance costs (just run the business as usual, keep your customers satisfied) 15

16 Problem Solving vs Reputation Based Distribution Channels Problem solving Reputation based They are usually distorting your message (advertising agencies, product placement, etc) They are already carrying your message for free (because they consumed it before and liked it) 16

17 Problem Solving vs Reputation Based Product / Service Price Problem solving Reputation based Usually dictated by market Usually dictated by customer value perception (much higher since he's already familiar with you) 17

18 Problem Solving vs Reputation Based After the "tipping point" any problem solving based business turns into a reputation based business Impact on Customer behavior Running costs Distribution channels Price / product prices 18

19 Business Model What Is A Business Model? 19

20 What Is A Business Model? A repeatable, predictable and manageable process in which you are constantly generating revenue sounds familiar, heh? A business is an implementation of a business model (running an app in the IDE - execution) Most businesses are implementing more than one business model OOP parallel Business model -> abstract class (NSObject) Business tools -> SDK (Cocoa Touch) Business processes -> using SDK to create apps (ifart?) 20

21 What Is A Business Model? The abstract class components Resources Distribution channels Created value Value consumers Paying entity 21

22 What Is A Business Model? The abstract class components: Resources Ideas Time Money People Tangibles (computers, office space) Intangibles (intellectual property rights, conduit codes) 22

23 What Is A Business Model? The abstract class components: Distribution Channels Web (online publishing) Logistic companies (retail) AppStore Word of mouth 23

24 What Is A Business Model? The abstract class components: Created Value A packaged product A sliced service Expertise User experience Emotion 24

25 What Is A Business Model? The abstract class components: Value Consumers Web page readers - value: information Paying customers - value: soap, air flight, carrots Advertisers - value: exposure to a potential market Shareholders - value: company shares 25

26 What Is A Business Model? The abstract class components: Paying Entity A buyer: products or services A middle man: an advertising agency, product integrator A shareholder 26

27 Business Models Practical Examples 27

28 Business Models - Practical Examples An online pusblishing business (niche websites and custom programming) Masini.ro (biggest car portal, new and used cars, automotive news, community) Culinar.ro (biggest recipes portal, contributed recipes, online food ordering, community) CONNEX - the biggest telecom on the market at that time, looking to expand its presence with content and services products 28

29 Business Models - Practical Examples Display advertising Services Co-branding Mixed packages Revenue sharing Subscriptions Lead generation / affiliate marketing One time sale / equity 29

30 Business Models - Practical Examples Display advertising Selling exposure space (square pixels) Attributes Paying entity Resources Created value Distribution channels Value consumers Special case Property Third party, the advertiser Ongoing Exposure of your core value consumers to the third party message Advertising agencies (expensive) The paying customers (companies) of the advertising agencies Selling directly to clients 30

31 Business Models - Practical Examples Services Selling actions attached to real things: online food orders in culinar.ro, used car ads in masini.ro Attributes Paying entity Resources Created value Distribution channels Value consumers Property The core value consumer directly Ongoing, extra costs (customer management) The consumer problem is solved or alleviated Own, initial high costs for promotion The paying entity 31

32 Business Models - Practical Examples Co-branding Exclusive display (with brand mix) combined with services (Petrom in masini.ro, Knorr in culinar.ro) Attributes Paying entity Resources Created value Distribution channels Value consumers Property A third party Ongoing, extra opportunity costs (exclusive = lose other clients) Exposure of your core value consumers to the third party message Low cost (already have a relationship with them, reputation involved) The paying entity 32

33 Business Models - Practical Examples Mixed packages Direct selling of exposure AND services to a third party (not exclusively and not involving brand mix) Attributes Paying entity Resources Created value Distribution channels Value consumers Property A third party Ongoing, small maintenance costs (you "get the client after an initial collaboration) Exposure of your core value consumers to the third party message / products / services Low cost (you already have it) The paying entity 33

34 Business Models - Practical Examples Revenue sharing Sharing revenue for a product created once, for a fixed duration (CONNEX wap portal) Attributes Paying entity Resources Created value Distribution channels Value consumers Property A partner Shared The shared product / service In this case very low cost (the partner distributed it) The partner core value consumers 34

35 Business Models - Practical Examples Subscriptions Charging for premium services (Yahoo premium mail) Attributes Paying entity Resources Created value Distribution channels Value consumers Property The core value consumer Ongoing, no extra costs The core value Zero costs Your core value consumers 35

36 Business Models - Practical Examples Lead generation / affiliate marketing "Lending" your core value consumer information and intentions to buy to a third party, getting paid a commission per action / transaction Attributes Paying entity Resources Created value Distribution channels Value consumers Property The third party Ongoing, no extra costs Your core value consumers information and intention to buy (or the buying action in affiliate marketing) Zero costs The third party 36

37 Business Models - Practical Examples One time sale / equity "Lending" your core value consumer information and intentions to buy to a third party, getting paid a commission per action / transaction Attributes Paying entity Property The new owner Resources No more ;-) Created value Distribution channels Value consumers Your entire company value including intelectual property, customers, emplyees, internal culture. Everything Not applicable The new owner 37

38 Business Model Variations Software As A Service Renting a product instead of selling it Attributes? Freemium (or the hidden column) Selling subscriptions based on incentives Attributes? 38

39 Business Models Evaluations 39

40 Business Models Evaluations Costs versus Revenue resource availability Perceived value (impact on price) Recurring revenue versus one time payment Customer service (returns, warranties) Core value consumption versus residual value consumption Keep the company brand identity -> perceived value will grow in time, shifting towards a reputation based business 40

41 Business Models Evaluations Product / core value life expectancy Fashion -> only a season, forced iteration The business model will have a high pressure on resources and distribution channels Automotive -> 3 years social "norm" then iterate The business model will have to include residual values service industry, warranty costs used cars market creation 41

42 Exercises What is the business model of Romania? Emphasize on core values, paying entities, resources What is the business model of United States? Emphaisze on core values, paying entities, resources 42

43 Questions, Rants and Trivia twitter.com/dragosroua facebook.com/dragosroua linkedin.com/in/dragosroua 43

44 Bogdan Secara Internet Development beliverable Web Optimiser at Strategic Shift Internet Development Director at MediaPro Marketing Director at Project Management Institute - New Zealand Country Manager at netbridge Speaker corner 44