Making the business case Based on recent presentation to airbus
Questions you need to ask?
Platform Application - product What else does it need?
The Triple Chasm Model – where do you think your idea sits?
Chasm 2
Target Market
Typical Business Stage
Early Adopters
Classical “Moore” chasm 3 Fast Followers
Mainstream
Start-ups Idea Development
Est. Businesses Corporate Ventures
Likely Business Objective
Idea generation & Filtering
Proof of concept, Demonstrator & Business Planning
Building the Beachhead, prototype
Reaching mass markets
Business Value
Chasm 1
What do you think you need to prove at each stage? Markets Risks Team Funding Product performance
Value Chain Analysis and Innovation
Porter (1985)
Understanding your position in the value chain
Example: Value Chain for Mobile Services Content creation, packaging and publishing Content creators and developers
Content packagers and publishers
Metacontent creators, developers and packagers
• Commission creation of rich media content • Localisation of international content • Packaging content for 3G mobile
Content distribution and access provision
Advertising
Advertisers
Media planners and buyers
Ad networks
• Advertising deals for revenue generation through portal • Participation in Ad networks, interfaces • Affiliate relationships with owners of mobile assets
Distribution Distribution networks eg servers/ ISPs, Mobile pumps Operators
Airtime, Bandwidth, Purchase credits
• Licensing of technology for building server infrastructure • Relationships with suppliers for infrastructure related services • Develop/acquire billing engines for tracking, analytics
Devices, software and applications
Delivery devices
Transactions, user experience, management
Operating Application System s/w s/w
• Developer relationships with O/S vendors • Agreements with manufacturers for pre-loading 3G VAS apps • Partnerships/ copromotion deals with application S/W vendors
User Transactions management End users tools
• Integration deals with payment gateways, app exchanges • Affiliate deals to generate traffic and promotions • End user management, service customisation
Example – Semiconductor industry value chain
Example – Pharma industry value chain
New Technology
Target Identification
Lead Identification & Optimisation
Drug Development
Scale up & Launch
Sales, Manufacturing & Supply
Marketing & Distribution Pharmaceuticals Product-focused Biotech Technology-focused Biotech
Defining your Go-to-Market Strategy Customer Targeting •
Segmentation
•
Volumes
Direct vs In-direct Models •
Speed, scale & control trade-offs
•
Channel Complexity
•
Channel Costs and impact on Margins
Market segmentation of customers Increasing ‘footprint’
Customers
Knowledge Workers
Corporate
Consumer
Narrower ‘audiences’ (size, geography, demographics)
Business
Consumer
Increasing customer focus
Brand ‘focus’
Go-to-Market Models
Direct •
Costs
•
Timescales
Indirect •
Agents
•
Distributors
•
Franchisees
Commercial Models Types of Revenue Models •
Components
•
Products
•
Services
•
‘Lifetime’ Revenues
Cost & Margin Implications •
Time to Profit
•
Funding Requirements
Sensitivity Analysis •
Key Variables
•
Assessment of Risk
Typical Business Models •
Buy and sell
•
Make and sell
•
Design – outsource – manufacture and sell
•
Licence:
•
the IP to industry
•
Components
•
Core technology and provide Know-how and
•
consulting services
•
Create and sell products
•
Create and sell products and provide additional consulting and know-how
•
Razor and blade
•
Apple model
•
Low cost airlines
Defining the Business Model Key partners Who are your key partners – consider strategic alliances, coopetitors, joint ventures and key suppliers.
Key processes What are your key processes – consider product development, revenue generation, order fulfillment and after-sales support.
Value proposition What is your value proposition? Why will customers buy from you?
Customer relationships
Customer segments
What relationships are you building with your customers – acquisition, retention and crossselling or upselling?
Which customer segments are you going to deal with – mass market, niche market, segmented?
Key resources
Channels
What are your key resources – consider physical, financial, intellectual, human and information based resources.
What are your channels to market? Direct or indirect – stores and offices or web based?
Cost structure
Revenue streams
What are the major drivers for your cost structure? What scope for economies of scope and scale? Can fixed costs be converted to variable?
What are the revenue streams – sale of assets, usage fees, subscription fees, leasing or rental fees, licensing, brokerage, advertising?
Osterwalder, A. and Pugneur, Y. (2010) Business Model Generation, John Wiley & Sons.