Agile Business Model Canvas by Assentire Jan 2018 by Rod Willis

AGILE Business Model Canvas Assentire Jan 2018 FORMSinWORD.docx

Integrating Business Intelligences

Navigating & Supporting Agile Strategy Design

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Critical Success Factors What are yours?

Key Performance Indicators Do they stand-up?

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Contents

1.0 Member/Customer Segments........................................................................................................... 4 2.0 Value Propositions ................................................................................................................................ 5 3.0 Channels.................................................................................................................................................... 6 4.0 Customer Relationships ...................................................................................................................... 7 5.0 Revenue Streams ................................................................................................................................... 8 6.0 Key Resources ........................................................................................................................................ 9 7.0 Key Activities ....................................................................................................................................... 10 8.0 Key Partners ......................................................................................................................................... 11 9.0 Cost Structure ...................................................................................................................................... 12 10.0 Organisational Eco-Cycle ............................................................................................................. 13 11.0 The Holistic View ............................................................................................................................. 15 12.0 Leadership Roles .............................................................................................................................. 17 13.0 Bringing it all together ................................................................................................................... 18 Appendix ....................................................................................................................................................... 19

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1.0 Member/Customer Segments These can be defined as the different groups of people or organisations an enterprise aims to reach and serve. Customers comprise the heart of any business model. Without (profitable) customers, no company can survive for long. In order to better satisfy customers, a company may group them into distinct segments with common needs, common behaviours, and other attributes. A business model may define one or several large or small Customer Segments. An organisation must take a conscious decision about which segments to serve and which segments to ignore. Once this decision is carefully designed around a strong understanding of specific customer needs. Customers groups represent separate segments if: • • • • •

Their needs require and justify a distinct offer They are reached through different Distribution Channels They require different types of relationships They have substantially different profitabilities They are willing to pay for different aspects of the offer

Identifying Customer Segments • •

For whom are we creating value? Who are our most important customers?

Different types of Customer Segments • • •

Mass Market Niche Market Segmented

Less Predictable

• •

Diversified Multi-sided platforms (or multisided markets)

More Predictable

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2.0 Value Propositions These are the bundle of products and services that create value for a specific Customer Segment. The Value Proposition is the reason why customers turn to one company over another. It solves a customer problem or satisfies a customer need. Each Value Proposition consists of a selected bundle of products and/or services that caters for the requirements of a Customer Segment. In this sense, the Value Proposition is an aggregation, or bundle, of benefits that a company offers customers. Identifying Value Propositions • • • •

What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? Which customer needs are we satisfying? What bundles of products and services are we offering to each Customer Segment ?

Value Propositions can describe as follows:. A Value Proposition creates value for a Customer Segment through a distinct mix of elements catering to the segment needs. Values may be quantitative (e.g. price, speed of service) or qualitative (e.g. Design, customer experience). Element from the following non-exhaustive list can contribute to customer value creation. • • • • • •

Newness Performance Customization “Getting the job done” Design Brand/status

Less Predictable

• • • • •

Price Cost Reduction Risk Reduction Accessibility Convenience/Usability

More Predictable

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3.0 Channels The Channels are how a company communicates with and reaches its Customer Segments to deliver a Value Proposition. Communication, distribution, and sales Channels comprise a company’s interface with customers. Channels are customer touch points that play an important role in the customer experience. • Channels serve several functions, including: • Raising awareness among customers about a company’s products and services • Helping customers evaluate a company’s Value Proposition • Allowing customers to purchase specific products and services • Delivering a Value Proposition to customers • Providing post-purchase customer support Identifying Channels • • • • • •

Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which one’s work best? Which ones are the most cost-efficient? How are we integrating them with our customer routines?

Channels have 5 distinct phases Each channel can cover some or all of these phases. We can distinguish between direct Channels and indirect ones, as well as between owned Channels and partner Channels: Channel Types Channel Phases Own Partner

Direct Direct Indirect Indirect Indirect

Less Predictable

Web sales Sales Force Own stores Partner stores Wholesaler

1. Awareness

2. Evaluation

3. Purchase

4. Delivery

5. After Sales

More Predictable

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4.0 Customer Relationships The Customer Relationships describe the types of relationship a company establishes with specific Customer Segments A company should clarify the type of relationship it wants to establish with each Customer Segment. Relationships can range from personal to automated. Customer Relationships may be driven by the following motivations: • Customer acquisition • Customer retention • Boosting sales (upselling) In the early days, for example, mobile network operator Customer Relationships were driven with aggressive acquisition strategies involving free mobile phones. When the market became saturated, operators switched to focussing on customer retention and increasing average revenue per customer. The Customer Relationships called for by a company’s business model deeply influence the overall customer experience. Identifying Customer Relationships • • • •

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?

Distinguishing between several categories of Customer Relationships, which may co-exist in a company’s relationship with a particular segment • • •

Personal assistance Dedicated personal assistance Self-service

Less Predictable

• • •

Automated services Communities Co-creation

More Predictable

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5.0 Revenue Streams The Revenue Streams represent the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings) If customers comprise the heart of a business model, Revenue Streams are the arteries. A company must ask itself, For what value is each Customer Segment truly willing to pay? Successfully answering that question allows the firm to generate one or more Revenue Streams from each Customer Segment. Each Revenue Stream may have different pricing mechanisms, such as fixed list prices, bargaining, auctioning, market dependent, or yield management. Identifying Revenue Streams • • • • •

For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues?

Generating Revenue Streams There are several ways to generate Revenue Streams • Asset sale • Licensing • Usage Fee • Brokerage Fees • Subscription Fees • Advertising • Lending/Renting/Leasing Each Revenue Stream might have different pricing mechanisms. The type of mechanism chosen can make a big difference in terms of revenues generated. They are two main pricing mechanisms: Fixed or Dynamic Pricing Mechanisms Fixed Price Menu Dynamic Pricing Menu Predefined prices are based on static Prices change based on market conditions variables Less Predictable

More Predictable

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6.0 Key Resources The Key Resources describe the most important assets required to make a business model work Every business model requires Key Resources. These resources allow an enterprise to create and offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues. Different Key Resources are needed depending on the typical business model. A microchip manufacturer requires capital-intensive production facilities, whereas a microchip designer focuses on human resources. Key Resources can be physical, financial, intellectual, or human. Key Resources can be owned or leased by the company or acquired from Key Partners. Identifying Key Resources • • • •

What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams?

Key activities can be categorised as follows: • • • •

Physical Intellectual Human Financial

Less Predictable

More Predictable

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7.0 Key Activities The Key Activities describe the most important thing a company must do to make its business model work. Every business model calls for a number of Key Activities. These are the most important actions a company must take to operate successfully. Like Key Resources, they are required to create and offer a Value Proposition, reach markets, maintain Customer Relationships, and earn revenues. And like Key Resources, Key Activities differ depending on business model type. For software maker Microsoft, Key Activities include software development. For PC manufacturer Dell, Key Activities include supply chain management. For Consultancy McKinsey, key Activities include problem solving. Identifying Key Activities • • • •

What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams?

Key Activities can be categorised as follows: • • •

Production Problem Solving Platform/Network

Less Predictable

More Predictable

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8.0 Key Partners Key Partnerships describes the network of suppliers and partners that make the business model work. Companies forge partnerships for many reasons, and partnerships are becoming a cornerstone of many business models. Companies create alliances to optimize their business, reduce their risk, or acquire resources. There are four different types of partnerships. • Strategic alliances between non-competitors • Cooperation: strategic partnerships between competitors • Joint ventures to develop new businesses • Buyer-supplier relationships to assure reliable supplies Identifying Key Partners • • • •

Who are our Key Partners? Who are our Key Suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform?

Distinguishing the three motivations for creating partnerships • • •

Optimization and economy of scale Reduction of risk and uncertainty Acquisition of particular resources and activities

Less Predictable

More Predictable

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9.0 Cost Structure This describes all cost incurred to operate a business model. These are the important costs incurred while operating under a particular business model. Creating and delivering value, maintaining Customer Relationships, and generating revenue all incur costs. Such costs can be calculated relatively easily after defining Key Resources, Key Activities, and Key Partnerships. Some business models, though, are more cost-driven than others. So-called “no frills” airlines, for instance, have built business models entirely around low Cost Structures. Identifying Costs Structures • • •

What are the most important costs inherent in our business model? What Key Resources are most expensive? Which Key Activities are most expensive?

Considering Costs Structures Naturally enough, costs should be minimised in very business model, but low Cost Structures are more important to some business models than to others. Therefore it can be useful to distinguish between two broad classes of business model Cost Structures: cost driven and value-driven (any business models fall between the two extremes). • Cost-driven • Variable costs • Value-driven • Economies of scale • Fixed costs • Economies of scope

Less Predictable

More Predictable

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10.0 Organisational Eco-Cycle Identify where your organisation and Industry are on this cycle

Less Predictable

More Predictable

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Leadership Teamâ&#x20AC;&#x2122;s Experience

Emergent Action The process followed is almost random in nature, it unfolds over time, and rationality, goals, and purpose are emergent from the purpose.

Rational Action The process followed, managers thinking rationally, making clear choices before they act.

Constrained Action The process followed is externally constrained and determined by the current situation.

The connection between means and ends is very close, and their action can usually be justified technically as maximising some well-defined objectives such as profits.

Although individuals may believe they are acting with purpose, their actions are in fact constrained by circumstances in which they find themselves.

In this perspective, managers are free to act but do not know what to do. Their behaviour is not goal-directed; rather, it is goal-interpreted retrospectively. Score: 0 Score: 0 Score: 0 How to Score: As you think about the different type of ACTION, score a 10 if you and your leadership team are very familiar and have direct experience, a 5 if you have some understanding and limited experience or a 0 if very no experience

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11.0 The Holistic View Organisational Health Check

The Key Factors: Score from 0 to 10 where 10 is very confident in your knowledge & skill base for each area Leading and Managing Change a. Purpose: 0

Leading and Managing Individual and Group Transition e. Group Dynamics: 0

Enabling a safe environment to facilitate learning and change g. Culture or Character of the Organisation: 0

f. Personal Dynamics: 0

h. Motivation: 0

b. Leadership: 0 c. Communication needs: 0 d. Managing Change / Performance: 0

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Blind-spots Assessment

Know where to look: Score from 0 to 10 where 10 is confidence in your evidence-base, that the organisation is designed to support the 5 core ‘systems’ (Areas 1 to 5) Area 1 Groups and Teams: Score: 0 Decision making has been sufficiently delegated to operational Groups and Teams? Area 2 Collaboration & Coordination: Score: 0 There is clear communication (two way), which is understood by all with Monitoring for Control minimised? There is effective and efficient Inter-Group and Intra-Group Collaboration and Cooperation? Agile and Non-Agile practices are used deliberately and appropriately based on the multiple contexts you have across the organisation. Area 3 Management: Score: 0 The centralised Management role ONLY manage what is necessary (and not more) to enable an effective and efficient Environment for the Groups and Teams to thrive? Monitoring for Insight is NOT dependant on direct line reporting structures? Area 4 Strategy: Score: 0 The Strategy team fully understands VUCA and how to respond? Area 5 Governance: Score: 0 There is an effective and efficient governance function in operation, helping ensure the organisations overall purpose and the Strategy and Management functions remain aligned?

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12.0 Leadership Roles

Know how your individual Leadership profiles complement each other. How are you really doing & do you have any blind-spots? Less Predictable

More Predictable

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13.0 Bringing it all together Can you now answer these questions? 1. What are the basic goals of your organisation? 2. What is the strategy for achieving these goals? 3. What are the fundamental issues facing the organisation? 4. What is the preferred culture? 5. Is the organisation structured in a way to support the goals, issues and culture? 6. Where is the organisation and its portfolio on the organisational eco-cycle? 7. Where is the senior team in terms of your Organisational Health Check and insights from the ‘Blind-spots’ assessment? 8. How well does the Senior Team represent an effective and efficient diversified team in terms of Leadership Roles?

Detail your Key KPIs moving forward? 1: 2: 3: 4: 5: 6: 7: 8:

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What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams?

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For whom are we creating value? Who are our most important customers?

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This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.

Watch the 2-minute overview of the Business Model Canvas, a tool for visionaries, game changers, and challengers. YouTube Video http://youtu.be/QoAOzMTLP5s This method from the bestselling management book Business Model Generation is applied in leading organizations and start-ups worldwide. Download 72-page extract http://goo.gl/yPteoE Find out more at http://www.businessmodelgeneration.com Further resources Business Model Generation Written by Alexander Osterwalder & Yves Pigneur ISBN: 978-0-470-87641-1 http://www.businessmodelgeneration.com

If you have any questions, or would just like to know some more, please feel free to contact us. info@assentire.net +44 (0) 1628 632 340

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