Business Model Creation: Get the Most Out of Your Idea with the Business Model Canvas | Inge De Dreu | Skillshare

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Business Model Creation: Get the Most Out of Your Idea with the Business Model Canvas

teacher avatar Inge De Dreu, Playground for Entrepreneurs

Watch this class and thousands more

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

5 Lessons (49m)
    • 1. Intro Skillshare BM creation

      2:00
    • 2. 1. About Business Models

      3:27
    • 3. 2. The Business Model Canvas

      16:16
    • 4. 3. The Value Proposition

      11:55
    • 5. 4. Innovation in the Business Model

      15:24
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About This Class

Do you want to create a solid structure for your business idea or project, making sure you have all strategic decisions covered? Do you want to set up a solid and innovative business model, using the Business Model Canvas?

Business models allow you to sketch out all your strategic decisions for a business idea or project, on one page. This makes it very manageable and flexible, so that it is very easy for your to find clarity, applying lessons learned directly to your business model whilst you are working on your project. 

So if you are ambitious, passionate and have potentially great ideas... this course is for you!

In this course you will learn how to sketch out your business model canvas, how to innovate in your business model, the main trends on business model and how to get your idea ready for market validation.

The business model canvas is applicable to all kinds of business ideas or projects, as well as NGO ideas, social entrepreneurship, intrapreneurship and innovation projects. 

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Inge De Dreu

Playground for Entrepreneurs

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Transcripts

1. Intro Skillshare BM creation: Hi and welcome to this course about business model creation. So in this course we're going to talk about a business model canvas, which is a very powerful and very practical tool in order to represent visually oldest strategic decisions that you need to make about your business model. So this is a tool that can be applied both by entrepreneurs who are just starting out with the idea that there are bunch work on as well as by companies who have an established business model already and might want to innovate or try new things in order to get to a better product market fit more on your originality, more innovation, and for different reasons, but might want to work on their business model. So in this course, we're going to discuss, once you can use it for, we're going to also discuss how to use it, how to get to the right business model for your business, and how to formulate to refine your business model in an innovative way. We're also going to talk about trends in business models and how you can innovate your business model. So now, why would you take this for me exactly. So I went to entrepreneurship and innovation coach and professor in the University of Utah and let her own these topics. And I've been coaching over 500 entrepreneurial teams in their journey to product market fit using the Business Model Canvas. So I've been experiencing firsthand the power that this tool can have only innovation and on the development of your company, of your business model in the way you implement your business into real-world. So I'm looking forward to transmitting oldest knowledge and experience to you in this course. 2. 1. About Business Models: So now that we've done the playground for entrepreneurs, it's time to start looking at little bit more complex business models. So first, what sexually a business model? A business model is a model that contains all the decisions that you need to make for your business to work. All the strategic decisions that you can make that have to do something with your business. So for example, you decide your market segment. So for example, you decide which product or service you're going to offer and the value proposition of that servers, service or product. These are all strategic decisions. So what you do with the business model is that all of these decisions, you put them on the same sheet, right? Which is something that we use in intrepreneurship. Now, a couple of years ago, we use a lot of business plans. But a business plan is a very large dork document that takes you a lot of time and effort to write. And it might not be true because until you talk to customers, you are not sure about it. So a business model, and we use the Canvas, the Business Model Canvas usually for that, there's some other models, but the canvas is most, most used, is a way of sketching things out very quickly and then starting to test them just until you find a business model that works in the market, that you have a customer segment for, that you have a value proposition and that all strategic decisions are coherent amongst each other. And once you have the evidence that that's working, then you make it operative, then you make it work, then you start making money with that. So what you do with the business model is you sketch out your hypothesis quite quickly. You can do it within an hour, maybe two hours, and then you start validating. So the first hypothesis we've been working on that leg round for entrepreneurs already. Now, there's some other decisions, some other hypotheses that you can sketch. We're going to talk about the Canvas in the next video. So sketch out your business model, your first business model, and then start gaining evidence about how this would work in the real world. The important thing is to, not to be afraid of pivoting. So if you need to iterate, if you need to change something, if you have taken something into account, something that you didn't know before, then work it out in your business model. And then you can have a better chance of success. Maybe even better markets or more value, more opportunities available in these markets. So sketch it out quickly and start validating. That's what a business model is for. And it's a very much more agile and they're very much more enterpreneurs aisle way of proving how your business would work in the real world. 3. 2. The Business Model Canvas: So after talking about some general aspects of business models, now let's take a closer look at the Business Model Canvas. Business Model Canvas is a model developed by Aleksandr Osterwalder and Yves Pigneur in their book, business model generation. And it's freely usable under a Creative Commons license. So it's become really the most used tool for entrepreneurs and also for, for bigger companies to sketch out their business model. This was developed for all sorts of organizations, so you can apply it in any sort of organization. So first, I would like you to go to the resource section and to find strategize video about the business model canvas. It's a very short explanation of all the fields that are in the business model canvas. It will explain to you what each boxes about. So please let's go to Resource section and return to this video when you've seen strategizes video by the canvas. So as you've seen, the business model canvas is a very easy to sketch out hypotheses about your business model and to test them out really quite quickly. Before the canvas we use the business plan. And the business plan is very fuzzy. Takes a long time. You're really not sure about any, any suppositions yet. So it, it's not a really practical tool as an entrepreneur when you're building your first business model and when you're building your startup. So that's why we started to use the business model canvas. As you've seen, it's both, both used as in big corporations and in entrepreneurship. And as an entrepreneur, the important part, the part where you usually start is the right part. So value propositions, customer segments, there's customer relations, channels, there's revenue streams. And this is the one, the part that you want to test out. First, as you see, you can divide the business model canvas in several pieces, like the right half and a left half. So the right half is everything from the value proposition outward. So outside of your company towards your customer. And then left part is everything that you need to do to comply, which will promise of your value proposition to your customers segment. So as we've said, the market is most important first, because without customers you don't have a company. So it's very important first to test out customers. And that's why we start usually a derived part. Now maybe you have a business model where key partners are very important as well. So you need an important alliance or something like that, an important partner. Because otherwise your business model wouldn't work well in that case. That's that's an exception and you should validate that part as well. But most business models, most intrapreneurs, we start out with the right part because the right part is really what goes out to the market. And there's more companies dying because of lack of customers then of lack of product or a lack of capacity to make that product. So let's first focus on the right part. Now I shall remember the playground for entrepreneurs. You can see that the brain part fits perfectly in there. So value propositions is about what, what value, what benefits are you offering? Who is your customer segment? So that's where you work on product, product market fit. All right. So we call product-market fit if your value proposition is in-sync, what your customer segment, if you have a coherence, It's always a very easy example to use if you would sell Ferrari's low working class neighborhood. Well, it's not going to work. You're not going to find your customer there. So you might have a good value proposition, you might have a good customer segment. But if there's no coherence, then your business model is going to be broken anyway. So it's very important to get those two right. And you start out right there. And its value proposition, customer segments and also revenue stream. So you need to make sure from the start that somebody's willing to pay or somebody's willing to finance for whatever you going to do. When you set out your Business Model Canvas, please be sure that whenever you have a revenue, even if you have an NGO or a foundation or anything that's, that's not for profit. You should set up a customer segment and a value proposition for that. So there might be a free segments, there might be something that you are, you're giving away. But you should have, for every revenue stream, you should have a customer segment and a value proposition. So if you would receive donations, then your customer segments is the, is that people that give you your donations as well and you should give them a value proposition. So maybe it's about the impact that they make or the good feeling that they get when they they donate to your foundation or something like that. Now, as you see, there's another mirror effect in the business model canvas. That upper part is about things and about strategic decisions. And the lower part is about the economics. So you don't really need to plug in numbers right, right from the start. But it might be a very interesting exercise just to see if the revenue stream turn up, turns out to be bigger than the cross structure, because of course, you can't substantially and sustainably have a cost structure that's bigger than your revenue streams. You need to, to take that into account and be aware of it. So let's take a look at an example. So you could sketch it out on paper, which is always the best way to start with the Business Model Canvas. This one I made in, in a computer. So that's why it's it's like this, but I would recommend you to sketch it out on paper. Always use Post-its to sketch out everything that's related with your business model because it allows you to change really fast without having to draw it up all over again. So let's, let's take a look at this business model canvas. This is Business Model Canvas that I made for the Google search engine, which is a company that we all know and we've all used probably. So business, the business model canvas of Google. If we look at a customer segment, is people searching for information? What do we know the value proposition, as you've seen, I've used a color-coding. So this is all information available. Well, that was the mission of Google. All information available. Of course, it's disputable whether it's old, but they have a very wary, wider range of information available that exists on the Internet and it's just a click away, that's their value proposition. Now, when you formulate your value proposition, take a good look at the benefits. So it's not just what you're offering, but it's what benefit do you bring? What value do you really bring to your customers? And how is it worthwhile for them? And that's a very important difference because you might think that you have a value proposition with very detailed features of your product in, in detailed things, information available that put all be useful for them. But they might see a different benefit. So that's why it's very important to test all this, all of these hypotheses, because the benefits are available might not be your features and your product characteristics of focus on the benefit. Keep it simple here. Don't make a list of all characteristics, but just focus on the main benefits for customers. This is about. General image and not so much about detailed, very specific information. Now, this, this customer segment people for searching for information. As we all know, it's a signal that's free. So in revenue streams, we have a little post-it note in yellow That's hats says free. And of course, we know we all know that there's a different customer segments. There's advertisers as well. Because as soon as we look something up in Google, there's advertisements appearing. And the value propositions to these advertisers aren't relevant potential customers to advertise to. So if I go for a holiday to New York and I tried to find hotels or New York. I get all sorts of advertising. So hotels and things to do in New York because that's relevant both to the person searching for information and also to the advertiser because their chances of success, their chances of selling something, is really raised by, by advertising to the relevant customer segment. So people who are overly looking for a hotel Art in New York are more likely to react on advertisements of hotels and things to do in New York. And of course, these people in revenue streams, they do pay, they do pay advertisement fees. Now, customer relationships, as we all know, if we search in Google, it's automated. There is a customer relations in a relationship that's really ready, standardized. And also for the advertisers. It's mostly standardized, but you do have a customer service. You can write to a certain email address, you get a response. But mostly they tried to standardize everything channels. Well, google is in the very luxury position of just having this search engine website. They don't really do any marketing because people know them, people know what to expect of them. So their website is their main channel the way day they deliver their service, and also how people find out. So I beat this canvas the right side on purpose because this is what you would focus on as an entrepreneur. And once you have sketched out like this, then you can start testing. So testing with your customer segment, whether the problem that you think is, the problem really is, is a headache for these people. And it really is worthwhile resolving. And testing out if your value proposition would actually result the customer's segment because it needs to be coherent with the problem and coherent with the segment. Now, of course, for Google search engine, we do have a big, bigger business model because they have their biggest muddle all figured out. So there are some key activities, development and maintenance, customer service, There's some resources, human resources, websites. The algorithm of course, that they developed for the search engine. There are some partners as well, internet sites, technology providers. And please make sure that everything that you work on in, in the top part of the canvas is also represented in the bottom part of the canvas. So everything you have in your value proposition eventually in your activities resources, partners should be represented in the cost structure as well, just as the customer segments value propositions should be represented in your revenue streams. So in the cost structures, we have some salaries, infrastructure and equipment, servers, websites, and all the costs that Google has. So please notice that at the business model canvas should be very simple, should be very much about short phrases or words. You can use drawings as well, which is very, very good. It's stimulate your, your creativity quite a lot. But it shouldn't be about long sentences, long lists with bullet points of characteristics, about very detailed reports of resources or activities or something like that. It's very much about the strategic dimension. So it should be very simple, should be very easy to oversee. And it should be very easy to validate that way because it facilitates how you formulate your interviews or your experiments were your observations. So now the invitation is for you to sketch out your own business model canvas. You can start with what you discovered as the value proposition and customer segments in the playground for entrepreneurship. And take it from there. So sketch out your Business Model Canvas. Don't worry about filling in all the blanks. If some parts are still missing, that's perfectly fine. Just make sure that everything is really quite simple and that you can validate your hypothesis from there. So you sketch out the business model and you continue with your interviews, which your experiments, which are observations. And every time you are more sure about your business model. 4. 3. The Value Proposition: So now let's take a closer look at the value proposition, which is a particularly interesting part of your business model canvas. Sort of value proposition is all about a product or the service that you're going to offer to your clients. Now, many people focus on characteristics, but it's a way better to focus on benefits. So what kind of benefits will your customer experience? Is this going to be a faster or a better way for them to do something? Or what kind of benefit will they achieve? 5. 4. Innovation in the Business Model: So in the last video we've seen innovation and a value proposition. And the value proposition is probably the most used and maybe even the easiest way of innovating in your business model. So this is just one way, there's other ways you can innovate into business model, product leadership. So innovation in the value proposition is interesting. However, it is also interesting to explore all the other options that might be out there and it might be very, very useful for your business model. And Mike make a very big difference in the market that you're in. So in his book, Business Model Generation, Alexander Osterwalder talks about several ways, several trends of innovating in the business model. And these are different trends that you can see in the markets and business models that are coming up these days in, in new companies, mostly. So there's unbundling, which consists of product leadership, customer service, and the infrastructure. There's a long tail business model. So it's about making an infrastructure that works for a lot of customers in very big customers. But as you make it for very big customers, you could make it available for small customers as well. For example, Amazon with their server space. So Amazon has servers and they had some service space that they could they could sell to other people. So people can buy server space from Amazon. And this is a long tail business model because there's some very big customers and nerves, a lot of very small customers as well. There's multi-sided platforms. And I would take especially consumer to consumer platforms such as Uber, such as Airbnb. And there's three as a business model. So you need to get your money from somewhere. And you could, you could get a freemium business model or an advertisement, advertisement business model, or anything else that you could come up with. And there's open business model like for example, open source business models. So first let's take a look at unbundling. So unbundling, you could think about product leadership. You can think about customer service or infrastructure. Product leadership is basically what we've been talking about the last video. It's about value propositions. And you could take any example of any company that innovates in their product. Like Apple is a good example with their iPhones and put their iPads, they make new product, innovative products. That's innovation in the value proposition. So product leadership. Then we could also think about customer relationships. So there's also a lot of examples that we could take a look at. One of them is airlines. We all know that there's certain luxury airlines that really spoil their clients. They give them drinks. They have a nice seat with with some legs space. They have a very friendly attendant that you could talk to. Maybe you have a facility to change or flight when you need to. There's a lot of different services and things that you could use from these airlines. Now, there's also budget airlines. And budget airlines really make a difference in their customer relationship. So there's not really a friend, the attendant. You have very small seed space. You don't get a drink. This service is a lot different. However, the value proposition, you go from a to B, you get your transportation. So the value proposition is about the same, but the customer relation is very different and this attracts a very different customer segments. So luxury airlines, maybe it's business travelers are travelers who like to read like a good service and who are willing to pay for it. And budget airlines are people who basically just care about the transportation. And if they wanted to coffee day, they should pay for it. So this is really different in the customer relationship part of the business model canvas. And as you see, all the boxes around it develop with the coherence of the business model canvas. So everything should be coherent. A different customer relationship tracks different customer, even though the value proposition doesn't really change. So that's another, another way of unbundling. Now, that third way is focusing on infrastructure. So what you do basically with focusing on infrastructure, value proposition and the whole business model canvas to the right basically is the same as your competition, but you really, really make a difference in the left part. And therefore you can maybe offered for different price or what different characteristics. A good example would be Skype. So Skype is a telecom company, like all other telecom companies. But Skype offering the same value proposition. Making long distance phone calls, making international from goals is having really a difference in the resource section because they don't manage any infrastructure. So any other telecom company has an infrastructure, cables plus 50 maybe. And they need a lot of resources for that. And Skype. Uses the infrastructure that's already data infrastructure of the Internet. So that really makes a difference. Boring, I'm in resources and therefore in cost. You have different activities, different partners, and a different cost structure because of debt. And therefore, they can offer them their value proposition at the cost that is really a lot lower than any other telecom company. So much so that they can offer it for most of their customers for free. So most people, most customers hoops guide, never even pay. And if they pay, they pay very little. So their revenue stream is not that big, but also the cost structure is not that big because there's no infrastructure. And cables really cost a lot of money for telecom companies. So this way, focusing on the left side, you can really make a difference in your business model and you can get to innovation in your business model as well. So something else that could be relevant for intrapreneurs as yourself trying to figure out the business model that that's right for your business, multi-sided platforms. So I would say especially consumer to consumer. And of course we have a lot of example of ghost. The last few years like Airbnb, like Uber. This is a business model that I've made for fiber, which is a platform for freelancers and as a platform for freelancers, as you can see on the right side, freelancers or one of the customer segments, their value proposition response to income and new clients. For DOS freelance. So people who offer professional service can get some more pocket money or maybe even an income, a real income from platforms like fiber. On the other hand, those freelancers are the ones offering the service. And on the other hand, we have to people who need a professional service. So they might need the sign Service or any other professional service. And they get access to reasonably priced freelance professional and personal lives products and services. So an indirect revenue streams. Well, fiber takes a 20% commission on all sales. We have some customer relationships, completely automated and digital. We have channels, a webpage in digital marketing. And on the left side, well, of course there's some activities with customer service, development of the platform marketing, and some resources that platform in the domain hosting the servers, photo website did there. They are using there's offices and equipment and there's human resources. There are some partners, providers. Basically and promotion partners. And there's a cost structure that goes with those activities, partners, and resources, such as the cost of development of the platform, of his costs and salaries. Now, this is a platform because one customer segment needs the other customer segment. But just one customer segment. It wouldn't work. It wouldn't be a good business model. So you need both. And that's the trick of developing these kind of platforms. You need both segments and you need both value propositions in order to make it work. Now, let's take a look as well at the free business models. So the most common ways of monetizing could be freemium and advertisement models. As we see here, we've seen it already actually the business model canvas of Google, the search engine of Google. And this is of course, an example of both a multi-sided platform and also a free button business model. So there's people searching for information, they're not willing to pay for free. And Google makes money through advertisements, so there's advertisers. You could also think about a freemium model, which is some of the subscription applications. You could think of Skype as well with this free business model. And you, as an entrepreneur, you should take into account. These are usually really quite hard business models because it seems quite easy. If you have something for free, you offer something for free. So people should come in easily, but that's usually quite, quite hard to get that kind of traction. And also to find a way to monetize anyway. So if you had a freemium, you should be very, very sure about the percentage of people that you are going to convert into paying customers. So conversion is very important. It's very, very important to get to a point that you can say how much the customers will, will actually pay for it. Usually, most, by far most customers will never get to the paying part advertisement. You should also take into account that it's not an easy business model. So as you monetize through, through advertisements, you should get a lot of people to actually make it work and to get somewhat of a decent revenue and income from advertisements. So these are, these are business models that are definitely not easy. I usually get a lot of entrepreneurs who have some sort of platform that they want to offer for free. Like for example, offering bus schedules and those kind of applications. And it's really a lot of effort until they get to something that is worthwhile in terms of revenues. So now let's do an exercise. Let's take your business model canvas, the one that you made, which your main idea, and do some brainstorming around it. So brainstorming with all of these categories. So there's unbundling. There's unbundling on product leadership, customer relationships, and also an infrastructure. There's multi-sided platforms, and there's business-model spree. And let's do some brainstorming in each of those categories. Let's see if you can get ten variations of your business model in each category. So come up with 103 business models with your theme or which your main idea. Also, ten business models with multi-sided platforms and then business models of unbundling. So push your thinking a little bit into more original ideas. And let's see if we can get to something interesting. There might be some very crazy ideas coming out, but also there might be very interesting ideas are very inspiring ideas that you can use later on. So I challenge you to, to do some brainstorming and maybe you could share in the comments, some of your most interesting ideas to inspire the other participants of this course.