1. Page 1 © Arvetica How to Describe and Improve your Business Model Openinnovation, Dublin, 24 Oct 2007 © Arvetica, September 2007

2. Page 2 © Arvetica photos are from flickr under a « creative commons » license - authors are referenced in the comment section

3. Page 3 © Arvetica “Business model innovation matters” and it is a top priority of CEOs IBM Global CEO Survey

4. Page 4 © Arvetica How Do We Describe Business Models Today?

5. Page 5 © Arvetica Going to War without a Map… Karl von Clausewitz (~1800)

6. Page 6 © Arvetica Here CEOs 10° Managers 60° Here Staff 360° Ok Insufficiently Well

7. Page 7 © Arvetica The Result

8. Page 8 © Arvetica Could it Be Different?

9. Page 9 © Arvetica It Exists in Business Process Modeling

10. Page 10 © Arvetica A Management Toolbox for Business Model Design and Innovation

11. Page 11 © Arvetica A Template to Describe Business Models 42’941 downloads

12. Page 12 © Arvetica CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS Describe a Business Model: 9 Building Blocks OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT RELATIONSHIPS CLIENT SEGMENTS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE

13. Page 13 © Arvetica CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS Example: Bizner Bank OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT RELATIONSHIPS CLIENT SEGMENTS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS REVENUE FLOWS entrepreneurs automatized relationship BizBallance (integrated banking and accounting) monthly fee Reeleezee IT infra mgmt account mgmt, transactions, etc. IT infrastructure, marketing, partnership costs DISTRIBUTION CHANNELS Web KEY ISSUES TO SOLVE IT, accounting, banking

14. Page 14 © Arvetica CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS Xerox 914 Business Model OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT RELATIONSHIPS CLIENT SEGMENTS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE large companies transactional sales team 1 time sales fee photocopiers R&D manufacturing regular large companies lease high-end photocopiers sales teams lease & 4ct per copy (2k+) financing & billing

15. Page 15 © Arvetica REVENUES COSTS KEY ISSUES TO SOLVE ACTIVITIES PARTNERS RELATIONS OFFER CLIENTS CHANNELS total remanufacturing solutions of high end IT platforms manufacturing long term deep integration brand manufacturers customers base manufacturing IT brand manufacturers sales commission re-marketing inventory management systems knowledge manage secondary supply chain reverse logistics manufacturing inventory « sales » team brand manufacturers of high end IT platforms flat fee Multis Example

16. Page 16 © Arvetica The Process

17. Page 17 © Arvetica find a way to play poker to unlock these models Prof Henry Chesbrough, Berkeley “ ”

18. Page 18 © Arvetica 5 Steps to Business Model Design & Renewal → describe existing business model → assess strengths and weaknesses → brainstorm on improvements & opportunities → turn new model into a project roadmap 1 1 2 2 4 4 3 3 VISUALIZEASSESSRENEWPLAN 5 5 IMPLEMENT → implement project roadmap

19. Page 19 © Arvetica Visualize

20. Page 20 © Arvetica

21. Page 21 © Arvetica Visualizing

22. Page 22 © Arvetica Visualizing Amazon.com

23. Page 23 © Arvetica REVENUES COSTS KEY ISSUES TO SOLVE ACTIVITIES PARTNERS RELATIONS OFFER CLIENTS CHANNELS selling stuff on the Web selling stuff on the Web IT infra automatized relationships mass customer data services Amazon.com data grid partners selling stuff Amazon.com warehousing & distribution distribution content management product selection product search marketing affiliates

24. Page 24 © Arvetica Assess, Design & Renew

25. Page 25 © Arvetica good ideas are widely distributed, nobody has a monopoly on innovation Prof Henry Chesbrough, Berkeley “ ”

26. Page 26 © Arvetica Assessing Amazon.com where are some of Amazon.com‘s highest costs located? what are some of Amazon.com‘s core competencies? how could they leverage these competencies? how could they leverage investments?

27. Page 27 © Arvetica REVENUES COSTS KEY ISSUES TO SOLVE ACTIVITIES PARTNERS RELATIONS OFFER CLIENTS CHANNELS selling stuff on the Web selling stuff on the Web IT infra automatized relationships mass customer data services Amazon.com data grid partners selling stuff Amazon.com warehousing & distribution distribution content management product selection product search marketing affiliates

28. Page 28 © Arvetica Leveraging IT at Amazon.com

29. Page 29 © Arvetica REVENUES COSTS KEY ISSUES TO SOLVE ACTIVITIES PARTNERS RELATIONS OFFER CLIENTS CHANNELS selling stuff on the Web selling stuff on the Web IT infra automatized relationships mass customer data services Amazon.com data grid partners selling stuff Amazon S3 Amazon.com Internet API Web2.0 companies warehousing & distribution distribution content management product selection A9 product search data storage fees product search search engine revenues e-commerce sites Internet marketing affiliates

30. Page 30 © Arvetica Changing the Business Model: Examples

31. Page 31 © Arvetica CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS Building on Existing Customer Relationships: Walmart Clinics OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT RELATIONSHIPS CLIENT SEGMENTS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE shoppers frequent relationship Walmart Clinics Walmart Clinics health services medical knowledge and staff

32. Page 32 © Arvetica CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS Changing the Game: Cirque de Soleil OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT RELATIONSHIPS CLIENT SEGMENTS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE theater & opera visiitors artistic circus without lions stage & manage spectacle & logistics create art & atmosphere higher ticket prices

33. Page 33 © Arvetica CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS Demand-Creating Alliances: Intel Processor Platform OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT RELATIONSHIPS CLIENT SEGMENTS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES PARTNER NETWORK REVENUE FLOWS REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE end users speedy processors partners with ever “heavier” applications

34. Page 34 © Arvetica Planning & Implemention

35. Page 35 © Arvetica CLIENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS CLIENT SEGMENTS Introducing a Family Office Service through a Partnership OFFER COST STRUCTURE CLIENT RELATIONSHIPS CLIENT RELATIONSHIPS CLIENT SEGMENTS CLIENT SEGMENTS COMPETENCIES, ACTIVITIES, RESOURCES REVENUE FLOWS REVENUE FLOWS DISTRIBUTION CHANNELS KEY ISSUES TO SOLVE affluent clients (100k-1+mio) tight personal relationships branches & bankers local private banking mainly product revenues ultra high net worth individuals family office services revenue sharing agreement local branch of family office tight relationships with UHNWI PARTNER NETWORK independent multi-family office

36. Page 36 © Arvetica OFFER CLIENT RELATIONSHIPS CLIENT SEGMENT ACTIVITIES PARTNER REVNUE STREAMS ACQUISITION CHANNELS Project Roadmap family office services UHNWI relationships UHNWI client trust, internal cooperation mutli-family office partner revenue sharing relationship managers & new office design collaboration process training program develop marketing material internal concept presentation generate prioritized prospect list work out client presentation establish acquisition learning process relationship manager collaboration process team set-up client reception area profit center set-up set-up CRM tool

37. Page 37 © Arvetica the only thing that’s not designed is nature Dave Kelly, IDEO “ ”

38. Page 38 © Arvetica business people don’t just need to understand designers better; they need to become designers Roger Martin, Dean Rotman School “ ”

39. Page 39 © Arvetica Thank You

40. Page 40 © Arvetica www.arvetica.com business-model-design.blogspot.com

41. Page 41 © Arvetica Alexander Osterwalder Before joining Arvetica Alex founded Business Model Design, a consulting boutique specialized in business model innovation. Besides consulting the private sector he was also involved in building up a globally active NGO based in Thailand in the field of knowledge management, HIV/AIDS and malaria. Prior to consulting, Alex worked at the University of Lausanne, as an entrepreneur in the banking sector and as an online journalist for the major Swiss business magazine BILANZ. He holds a PhD and Masters degree of the HEC Business School of the University of Lausanne, Switzerland. Alex is an active member of the IMD based Open World Initiative (OWI).

42. Page 42 © Arvetica Waster Water Treatment Example

43. Page 43 © Arvetica offercustomer segment revenue stream distribution channel waste water treatment system Canadian mining sites one time sales fee sales force

44. Page 44 © Arvetica sell waste water treatment system Canadian mining sites one time sales fee sales force total waste water treatment management Canadian mining sites recurring service fee sales force

45. Page 45 © Arvetica sell waste water treatment system Canadian mining sites one time sales fee sales force core activitiescore capabilities costs partner network client relationship build treatment systems water treatment knowledge production costs suppliers follow-up

46. Page 46 © Arvetica build treatment systems water treatment knowledge production costs suppliers follow-up total waste water treatment management Canadian mining sites recurring service fee sales force dispatch repair teams error free systems development call center variable costs of repair services