Business Model Canvas 101 - Masterclass

1. 1.0 Business Model Canvas 101 Masterclass Promo: starting a business can be very challenging. So instead of running a business plan, we should start with creating a business model canvas. A business model. Cannabis is a tool that has helped thousands of people on companies across the world and coming up on analyzing business models. Mining is I'm at safe. I'm on educator on entrepreneur, I hope people with business models I have extensive experience on this topic. I have delivered many workshops, and also he's a tool every day. This course is perfect for you if you are an entrepreneur and innovator or just someone with a business idea. The business model canvas is our one page tool that breaks down any business idea it to nine essential building blocks. These line building blocks make it much easier for you to understand your business and come up with solutions for it. Instead of starting with a complicated business plan, you can easily sketch out your ideas in a fun, visual way with your team and have a language that is common that anybody can understand. It's a perfect tool for teamwork and visual thinking. In this course, we will answer questions like what is a business model. What is a business moral canvas? And from there we will dive deep into the nine building blocks and explain how to use them step by step. For your business idea, I will share with you several examples of real companies and their business models. This will help you have an idea off how your own business model canvas may look like. At the end of the scores, you'll know how to create your own business model canvas as well. Us analysing existing ones. You'll have a tool that you can take to your team and be able to work right away on crafting the business model canvas for you. You will have a lifetime access to all the resources you need to get started on the business model canvas. Today, I have also added quizzes just to knowledge and keep you engaged. You can also leave me a question and the question section of the course on Interact With Me . Finally, I've included many additional resource is recommended books and things that will help you along in the border section, so I look forward to helping you and seeing you inside the course 2. 1.1 Introduction: way everything off successful companies or startups usually actually do the success to the products or services. The offer apples great because of the iPhones or the Mac and Uber's Amazing because of a smartphone application. But that's the case. Why did so many great companies with outstanding products like Kodak disappear? It turns out companies need to innovate not only their products and services to survive the competition, but must also innovate their business models. There are increasingly new business models emerging every day that allows early start ups to grow exponentially and in some cases take on the big players in the market. So what is a business model? And if we have our own idea, are we able to make a business model? Can we examined business models off existing organizations toe, analyze them and improve them? Well, in this course will address these questions on I'll put you on the path of becoming a business model pro, so let's get started 3. 2.1 Business Models: Welcome back. Now that you know more about business models in this lecture, I'll introduce to you a wonderful tool called the business model Candice. This tool has been adopted by universities, accelerators and even top corporations worldwide. I personally have been using the business model canvas ever since it came out, and I think it's really a wonderful tool that every entrepreneur should be using. So what is a business model Canvas? The business model canvas is a tool to create and analyse business models. So if you're a startup and you're looking forward to start working on your business model, this tools excellent to kind of brainstorm and come up with a business model that is suitable for your business. Also, if you're a company or already have a business and you would like to analyze and update the business model in order to keep up with the changes in the competition, this tools works just as well. So this towards for you, whether you are a startup or an existing company, the business model canvas is a one page that helps you deliver ideas quickly, easily to anybody by that. Imagine if you're in a company where people come from different departments there, people from finance for marketing, technical people, business people if one speaks a different language and they're only concerned with these segments that concern themselves in that business. However, when you have the business model canvas, all of a sudden you have a shirt language for describing, visualizing, assessing and changing business models. Currently, a lot of people think when we get started, we have to use a business plan. In fact, that was the way for a very long time. Business plans by nature are rigid. There's so many pages, it has a lot of research, a lot of details in it. It's very time consuming, have to use and build on. Also, it's not collaborative, so it is not really a lot of people sit together and discuss and based on the idea. Actually, this lot of documents, lot of pages that are just really, really, really full of information. Now the business model canvas is another tool that makes it much easier for us to get started instead of looking at business plants. So what? The business model canvas? It is flexible. It allows people to come and change things right the way, it's not really static and rigid, like the business plan. Also, it's quick and easy. You can learn it very, very quickly and start applying it right the way. And the most beautiful thing about the canvas is that it's collaborative. It allows it to bring over team, whether you're a company or your startup team. And it could start slowly brainstorming, shifting things and mapping out, sketching out how the business model will look like. Something important to note here is that the business model can. This is not a replacement for a business plan. Again, it's not a replacement for a business plan because each tool has their benefits. A business model. Cannabis is great when you're in the early phase of your business, when you're just brainstorming and testing. This is excellent for that thing, because I need something quickly to kind of test out and see what happens. Whereas business plans are more suitable if you're in a more advanced stage, we have already validated your assumption. You spoke your customers on. Now there was a spine is based on facts, not just guesses on often enough business plans are always you still asked by investors angel investors to kind of look at and see they've done the work. So the business model Candice might seem a very early stage. You have not done a lot of work just to kind of explain the concept, whereas business plans can be very intensive and show that you have done a lot of work and went in great depths to understand your business. So remember these tools are not competing, but they are really complimenting each other. The business model canvas is composed of nine building blocks. This building blocks can describe any organizations or business, so let's briefly describe first customer segments. These are the people on organizations in which you are creating value. This includes simple users and paying customers second value propositions. These are the parts on services that create value to your customers. Channels describe how you interact with customers and deliver value. Customer relationships outline the type of relationship you are establishing with your customers. Revenue streams make it clear how and through which crossing mechanism your business model is capturing value. He resources show which assets you need in your business model. He activities show which things you need to perform in your business model, he partners show who can help you leverage your resources since you own all the key resources and perform all the key activities yourself. Finally, the cost structure represents all the costs you incur or for running your business model. So, as you can see with the business model canvas, you can map out your entire business model in just one page. How awesome is that? And the next lecture will discuss each of the building blocks in more detail, starting with our customer segments. See you in the next lecture. 4. 2.2 Business Model Canvas: welcome, and this lecture will be talking about business models a turn that you have probably heard many times before, but it sometimes challenging to explain to others. So in this lecture, I will help you form a deeper understanding of business models, and you'll be able to explain your business model who? Absolutely anybody with great ease. In addition, you'll be able to recognize the business models off various existing organizations that you are familiar with. So let's get started. What is a business model? According to the top seller, Business Model, Generation at Business Model describes the rationale off how an organization creates, delivers and captures value. So what value does your organization create for your customer? How does that value rich the customer on? How do you capture value in return for your product or service? Let's look together at an example to really understand the meaning of the business model. Imagine we are in a busy park on. We observe people walking on running, passing a certain point. We noticed that they are thirsty, and there is a no year by source of water for refreshment, so our entrepreneurial mind kicks in as we think we have spotted a business opportunity. These people could be our customer segments on the share, a common problem being they have no access for refreshments to quench their first. So what if we could offer them a tasty, refreshing, eliminate the quench their thirst when that be awesome? This could be our stuff of business now, going back to our previous definition off business models. Let's see what we need to do. First, we need to create value. So in this example, it will be eliminated cups that we so the thirsty park visitors. Second, we need to deliver these eliminated cups of the customers. I know it seems obvious here, but we will be giving it by hand to the customers when the purchase lemonade at our stand. Finally, we capture value in this example by clicking cash money in exchange for each lemonade cup salt. Everything we described here is our business model for eliminate. So now if someone asked you to explain the business model, you can simply say, for example, our startup is eliminates. Then that sells refreshing, eliminated cups, so park visitors customers receive limited cups at the stand and the fast cash stoically for our service. I hope by now you find business models much easier to understand. Now let's look at some business models off some existing companies that you probably recognize. Try to guess. How did he creates, delivers and captures value to its customers? Feel free to pause the video if you need time to think about it. All right, let's see how you did. You didn't creates value but offering a wide range of online courses that you can access on your computer tablet or mobile device. Some of these courses are free and some are paid. Now who do we delivers them to? You use an online platform so you can visit the rope side and start taking any course that you like. Finally, you didn t captures value by obtaining a cut from all the course cells that are paid using credit card or PayPal. That's really simply how the business model of Udine works. How about we look at one more example? Ups try also to guess how UPS creates, delivers and captures value to its customers. Feel free to positivity you as well. Okay, UPS creates value by providing a delivery service to your home or office. The Value Year is the convenience off. Obtaining your shipment from virtually anywhere, right? Your footsteps UPS delivers your shipment through a complex supply chain off planes, trains, trucks on delivery workers. So you provide ups for the shipment address, and they do all the hard work and delivery for you. Finally, UPS captures value by charging you for their service. You may pay for it using credit card on an online account, or we can simply pay by cash once you're seeing a shipment again, that's the business model of UPS. Now it's important to know that business models can be quite complex. Organizations may have multiple customer segments, various products and various complex city and their business model. That's why these examples were just a simple way to explain the concept. But by now you're probably ready to drive in little deeper and learn more about business models. In the next lecture, we will talk about the business model canvas on how it can help you with your business idea 5. 3.01 Customer Segments: the first building block a special segments, which is really the heart of any business model. Customer segments describe the different groups of people or organizations, and enterprise ends to reach and serve. So think well. Who are the customers you want to reach in your business model? What other attributes? What is their behavior and what is it exactly that you need at this point? You are doing your best to guess what is really the right customer segment for your business model. Your customer segment is a group of people who share a common problem that you are looking for sold for them. There are different types of customer segments, so let's look at a few examples. The mass market is not focused on a specific customer segment, but rather on a large group off customers with broadly similar needs and problems. For example, you see mass market and consumer electron ICS as well as smartphone applications. Niche market, on the other hand, is focused on a specialized customer segment. The value proposition channels and customer relationships are tailored to the requirements off that niche market. This is generally a list rescue market for young Star Cups. Wish to avoid being undercut by the big players in the market. For example, wheelchairs users aged 60 and over in a city is Anish Market. These wheelchair users will share key attributes on may share the problems that you're trying to solve segmented markets. The friend, she eight groups of customers with slightly different needs and problems. For example, a bank may differentiate its customers based on the size of their assets. Another example would be an airline offering first class for their passengers with special privileges for more expensive tickets. Compared to economy, class diversified markets is somewhat similar segmented markets, except that diversified markets served two unrelated customer segments with different needs and problems. For example, in 2000 and six, amazon dot com decided to diversify its retail business by selling online storage space. Even though it's retail business and online story services are not related at all, and a zones powerful I T infrastructure allows it to do so. Finally, multi sided platforms served two or more independent customer segments by connected them to create value. For example, a current card company like these are needs a large base off credit holders as well as large base off merchants who accept their visa cards. Both segments are needed to make the business model work now reflect on all these different types of customer segments to see which one off these is most suitable for your business model. I would like to finish with one of my favorite stories related to customer segments. And that's how we save Nintendo and changed the gaming industry forever. The Japanese company Nintendo. It's famous for its Mario game and have long competed with its rivals Sony and Microsoft. They all serve the same customer segment off gamers. Usually young males will have to play high quality graphic games at high speeds. But by 2000 and six, Nintendo was last in its sales, falling behind Sony's PlayStation two and Microsoft's X Box. It was unable to compete due to its limited resources. Compared to these other two giants, what happened next was a game changer. Nintendo attract unserved customer segments to the gaming industry from the young to the old weather and tend the we gaining Council. So they understood the needs of different customer segments that was not based on fast and sleek graphics. They designed the Intend a week with sensor features that made it easy for a family from the young to the old to play together. Now this state, the we has sold nearly 97 million units worldwide compared with the X Box three sixties, which was sexy. 67 million on the position three that sold only 64 million. And the next lecture will be talking about the second building block value proposition. 6. 3.02 Value Proposition: way spoken the last lecture about customer segments that is, the different groups off people or organizations that you would like to reach. Answer in This lecture will talk about the second building block value proposition, So value proposition is the bundle of products and services that create value for a specific customer segment. It solves a customer problem or satisfies a customer need. So think of the value proposition as the reason why a customer segment would be interested in your solution. If you're customer was a home owner concerned with a home robbery, the value props in here is not gonna be the home security system that he's gonna purchase, but rather what's inside this Park service. The safety on low risk off having a robbery. So that's the value proposition that lies with in the park and service. Another example would be at businessman who was stuck in traffic and always late for work. The value proposition is up the fast train that he takes, but what it provides. The fast train provides the value proposition off time savings that will allow him to reach his work on time. As you can see, the value proposition is the hidden value in parts and services, which solves the customer problem. Remember, if you have more than one customer segment, then you need design a specific value proposition for each customer segments. So now let's look at some cuts off value propositions, newness. Newness is a new value that the customer experiences for the first time because there were no similar offerings. This is common in new technologies. For example, think or the first more bile with a camera or a Bluetooth or WiFi. All these are examples of technology that has knew something new that you saw for the first time. Performance performance is about improving that performance over parts or service known to the users. For example, a computer gamer will perceive a more value in a faster rental processor compared to a store one, because that will be able to meet his needs and regards to playing games, which requires a faster processor. Customization can be off tremendous value for customer segments who like killer products and services for their own tastes. For example, Dell computers allows customers to pick and customise the computer parts when purchasing a computer, instead of choosing ready assembled computers like most companies. This made the company they'll stand out from its competitors. Due to this, customization design can make products stand out because of superior design. In the fashion and consumer electron, ICS design can be a very powerful value proposition. Customers may find value when using a specific brand. For example, Rolex Watch signifies wolf and status helping customers. Reducing costs can create significant value. Southwest, Ryan Air and Fly Dubai are all examples of airlines who stripped down the ticket cost to extreme lows in comparison to standard airlines, which allowed lots of people with limited budget to be able to travel and afford these tickets. Risk reduction is another powerful value proposition where customers risk is reduced when using the product or service. Insurance companies like Geico is an excellent example of that. The final value proposition that I will discuss with you now is convenience. Usability convinces abilities about improving the users experience when using a given product or service with iPod and iTunes, Apple offer customers unprecedented convenience and searching, buying, downloading and listening to music. This help apple dominate that market for a long time. Now that you have seen many ways in which you can offer value your customers try to design the value proposition that fits the customer segment you're trying to serve. This is what is referred to as the product market fit, and it can be the toughest part of your business model. But for now, it's guessing so important about it. In the next lecture, we will talk about channels, the third building, block off the business model canvas. 7. 3.03 Channels: channels described how a company communicates with and reaches its customer segment to deliver a value proposition. Communication, distribution and sales channels comprise a company's interface with customers. Channels is where the interaction occurs with customers and is that's very important and shaping the customer experience. So finding the right mix off channels who satisfy how customers want to be reaches crucial and bringing a value proposition to the market. So organization can choose between reaching its customers through its own channels or through partner channels or actually a through a mix of both. So own channels can be direct, such as in house sale Force for upside. Or they can be indirect, such as retail stores owned or operated by the organization. Partner channels are direct and span a whole range of options, such as a wholesale distribution retail or a partner or owned website. Parker channels lead to a lower margin, but they allow an organization to expand its reach and benefit for partner string. Older channels on a particular direct ones have a higher margin, but they can be costly to put in place and operate, so the trick is to find the right balance between different types of channels who integrate them in a way that really create a customer experience that is great and maximizes revenues . Now for every time of channel, there are five distinctive faces. First awareness. How do we waste awareness about our company's products and services? How did the customer see or notice per product with an ad or a sale was an online? Was it offline? What is the mechanism in which didn't rate awareness of the customer seconds evaluation? How do we help customers evaluate our organizations? Value proposition? Did you check other competitors? Do make your product really, really stand out in order to make the customer easily choose your product over others? Precious. How do we allow customers the purchase, specific products and services? So now that they have been aware of our product and they have evaluated and came to the conclusion that our product is great if they reach these two points than likely they're going to purchase on, go ahead and try our product or service four after the purchase made its delivery. So how do we deliver the value proposition to the customer? How does that value after the naked purchase? How does it, reach them? Has it reached him Onley in a physical state? Or is it online? What is the form in which it is delivered to the customer on Finally, after it's been delivered, the after sales. So how do you provide a post purchase customer support? So, in other words, did the customer like it? Are they gonna buy it? Are they recommend it for someone else? This is the whole thing about after sales. Amazon is a giant innovator when it comes to delivering its products to customers. Believe it or not, they patented by now with one click button belongs to Amazon, which enables our customers to make purchases quickly and easily without the need to refill the same delivery and payment information every time. Another innovative program is the free same delivery service called Amazon Prime. Amazon Prime allows it's members to have a free two day delivery or exchanged for a monthly subscription. Finally, Amazon even experimented with futuristic project called Prime Air. Prime Air is where the use flying drones to deliver products to customers. How neat is that? Now that you have a deeper understanding all the channels building block, I will show you how to create a suitable customer relationship in the next lecture 8. 3.04 Customer Relationships: customer relationships described the types of relationships ah company establishes with specific customer segments. After you deliver the value proposition, your customer segment, he was in the right channels. Then you need to think about the right relationship with the customer to ensure the satisfaction and to help you grow your business. Let's look at some different categories off customer relationships. Personal assistance is a relationship based on human interaction. The customer can interact with a really customer service rep. You're in the sales process or after the purchase. This may happen at the point of sale, like in retail stores or through a call center, by email, online shot or through other means. Seconds. A dedicated personal assistance and bows. Dedicated customer service rep specifically to one individual client. It represents the most intimate type of relationships there is. A normally develops over a long period of time. An example would be an account manager maintaining relationships with important customers. In addition, this is also seen and businesses offering the I P services third so service and this type of relationship ah company maintains no direct relationship with the customers. It provides all the necessary means for customers who help themselves, so this could be seen in 88 machines. Vending machines on what? No for automated services, This type of relationship mixes a more sophisticated form off customer self service with ultimate crosses. For example, a person online profile. He was the customer access to customize services related to the orders and transactions done So. For example, if you're using Amazon, it might suggest to you some books to read based on previous books that you have read or purchase on the system. Herfi. Increasingly, companies are utilizing user communities to become more involved with customers on to facilitate correction between community members, Many companies maintain only communities that allow users to exchange knowledge and solve each other's problems. Communities can help companies, but they understand their customers. For example, online and or community allows developers who collectively develop the bud and launch applications much faster as a community rather than individually finally co creation. More companies are going beyond the traditional customer vendor relationship to co create value with customers. So, for example, you toe so sets customers to create content for public consumption. That was the online shoe retailer is reportedly among the best companies worldwide and customer service. There are just so many heartwarming customer service stories where Zappos custom reps go and the extra mile and offering outstanding customer service. Zappos management has given its reps a space to win over the customers and build a remarkable customer service brand for the company. Let me share with you one of its amazing stories. Xas was one of Zappa's customers. She needed to return some shoes from Zappos, but her mother just passed away and was still coping from the loss, and she did not have the time to do it. When that was emailed her to ask about the status of the shoes, she replied about what happened. Zack was took care off the shipping and had the courier pick up the shoes for her at no cost call. Examples didn't stop there Xas rights yesterday when I came home from town. Ah, florist delivery man was just leaving. It was a beautiful arrangement. In a basket with white lilies and roses and carnations big a lush and fragment. I opened the card and it was from Zappos. I burst into tears. I'm a sucker for kindness, and if that isn't one of the nicest things I have ever had happened to me. I don't know what is now. That is what you call going the extra mile. I hope now you have a deeper understanding off customer relationships and I will see you next lecture where we will discuss revenue streams. 9. 3.05 Revenue Streams: welcome and the last lecture. We spoke about customer relationships, and this lecture will be talking about revenue streams. The Revenue Stream Building book represents the cash a company generates from each customer segment. At this point, you want to ask yourself, What's value? Is each customer segment truly willing to pay for? What do they currently pay? How are they conflicting for it? How will they prefer to pay on How much does each revenue stream contribute to the overall revenue off the business model? Successfully answering these questions will allow you to generate one or more revenue streams from each customer Segments now remember, each revenue stream can be different, depending on your pricing mechanism. There are two different types of revenue streams. The first ISS A transaction revenues, which results from a one time customer payment. The second is recurring revenue, which results from an ongoing payment so either deliver a value proposition to the customer or provide a post purchase customer support. There are several ways to generate revenue streams. The first is acid sale. This is the most widely understood revenue stream. The rise from selling ownership right to a physical product. So, for example, buying a drill. Gifts, ownership. The buyer. The buyers are free to use a drill, sell it or even the story. The second is user fee. This revenue stream is generated by the usurp articular service. The more services being used, the more the customer pace. So, for example, ah, hotel charters a customer, depending on the number of nights he spent at a hotel. Subscription fees. This revenue stream is generated by selling continuous access to a service. A gym, for example, sells members monthly or yearly subscriptions in exchange for access to these facilities. Lending, renting or leasing. This revenue stream is created by temporarily granting someone the exclusive right use a particular asset for a fixed period of time in return for a fee. For the lender, this provides the advantage of recurring revenues. Renters, on the other hand, enjoy the benefit off, incurring expenses for only a limited time rather than bearing the full cost of ownership. One example of this would be leasing an apartment or renting a car. Another kind off revenue stream is licensing. This revenue stream is generated by giving customers permission to use protected intellectual property in exchange for licensing fees. licensing allows the owner off the intellectual property to generate revenues from their property without having to manufacture a product or commercialize the service. Once this thing is a common in the media industry, were content owners retain copyright while selling usage license to third parties. This is also similar and technology sectors where, for example, Microsoft Office will losses its software to each computer being used in a company. Finally, advertising this revenue stream results from fees for advertising, a particular product service or brand. Traditionally, the media industry and event organizers would like heavily on revenues from advertising. But in recent years, this expecto other sectors, including software and services, who relying more on advertising revenues. Facebook, for example, makes the bulk of its revenues using advertising. Airbnb is a famous website but allows people throwing out there. Empty apartments on has proved to be a very successful and profitable business model. The idea of people renting out things to each other has become a popular way to generate a new revenue stream. People now current out not only their spare bedrooms but also the under use car sitting in the driveway, power tools in the garage and even the Xbox sitting in the living room not being played with. And the next lecture will be talking about the building block. Key resources. See you then. 10. 3.06 Key Resources: Welcome back and the last lecture. We spoke about revenue streams, and this lecture will speak about key resources. He resources are the most important assets required to make a business model. Work These resources. Allow an enterprise to create on, offer a value proposition, reach markets, maintain relationships with customers and earn revenues. You will need different kinds. Off resource is depending on the type of business model that you have. For example, ah, car manufacturer would need capital intensive production facilities where, as AH, software development firm would need more focus on human resources. He resources can be owned or leased by the company or acquired from key partners. Now let's discuss different types off resources. The first is physical. This category includes physical assets such as manufacturing facilities, buildings, vehicles, machines, systems, point of sale systems on distribution networks. Retailers like Wal Mart and amazon dot com rely heavily on physical resources, which are often capital intensive. The second is human. Every enterprise requires human resources, but people are particularly prominent in certain business models more than others. For example, human resources are crucial in knowledge intensive and creative industries. The pharmaceutical company, such as Nevada Artists for example, relies heavily on human resources. Its business model is predicted on an army of experienced scientists on a large and skilled salesforce. The third is intellectual intellectual resources, such as brands proper, TERRY Technologies, patents, copyrights. Partnerships on customer databases are increasingly important components of a strong business model. Intellectual resource is are difficult to develop, but when successfully created may offer substantial value. Consumer companies such as Nike and Sony rely heavily on brands as a key resource. Microsoft and SFE depend on software and related intellectual property developed over many years. Qualcomm, a designer of supplier off chip sets for broadcasting mobile devices, built its business model around patented microchip designs that earned the company a substantial license fee. Finally, financial, some business models call for financial resources on the guarantee things like cash, line of credits or stock option pool for hiring key employees. Erickson, the Tilikum manufacturer, provides an example off financial resource leverage within a business model. Eric sent me up to borrow funds from banks and capital markets, then use a portion off the proceeds to provide vendor financing, thus ensuring that orders are placed with Ericsson rather than the competitors. Many startups struggle to afford renting on office or facility to test UNL on their products and services on innovative and a more affordable solution emerged called pop up shops. Pop up shops are temporarily stores at a designated venue, the purpose of which is to attract the consumer long enough with something exclusive, surprising and exciting. While the brand gets exposure to create an impact and communicate something specific to a large audience, pop up shops are rented for a much lower cost than traditional stores for a period ranging from one day to three months. These are typically located in high foot traffic areas such as moles, city centres and visit streets. Ultimately, pop up shops can be a lifesaver for companies with very limited resources, and at the same time it generates extra revenues to property owners who have temporarily unutilized spaces. It's a win win solution for everyone. By now, I hope you have a deeper understanding off the key resources that you may need for your start up, and the next lecture will talk about key activities. See you then 11. 3.07 Key Activities: in the last lecture, we spoke about key resources and this lecture will cover how we can think this resources and use them in our key activities. He acted. His are the most important things are company must do to make its business model work. Every business model needs a number of key activities, but are the most important actions are company must take in order to operate successfully, just like the key resources building block they are required to create on offer a value proposition, reach markets, maintain customer relationships on also earned revenues. All this depends on the type of business model that you are looking for. For software maker Microsoft. Key activities include software development for a PC manufacturer. Like though he activities include supply chain management on for a consultancy like McKinsey, the key activities here include problem solving. Now let's look at the general key activities you may have in a business model. The first is production. These activities really designing, making on delivering a product in substantial quantities on or superior quality production activity dominates the business models off many thatching firms. The second is problem solving. He activities off this type relate to coming up with new solutions to individual customer problems. The operations off consultancies, hospitals and other service organizations are typically dominated by problem solving activities the business models hold for activities such as knowledge management and continuous training. Finally, platform or network business models designed with a platform as a key resource are dominated by platform or a network of the key activities. Networks, matchmaking, platform software and even brand can function as a platform. For example, eBay's business model requires that the company continually develops and maintains its platform, which is the upside ebay dot com. This is Business model requires activities related to its Visa credit card transaction platform for merchants, customers and banks. Microsoft's business model. The quarters managing the interface between the vendors software and its Windows operating system platform. Sochi activities in this category related toe platform management service provisioning and platform promotion. I. Kia is the world's largest furniture retailer. It's innovated its business model by eliminating the Assembly if its products from its production key activity. So instead of I care selling products like all other competitors, they sell ready to assemble furniture such as beds shares on guests, so the customer purchases the furniture they like and they assemble themselves at home. The elimination off, the time and cost of assembly allowed I Kia to sell its products at competitively. Lower price in the market. And I can. Customers don't seem to mind the Payless and assemble the products themselves again. A smart 11 solution when it comes to key activities. In the next lecture, we will discuss the key partners building. Go See you then. 12. 3.08 Key Partnerships: way. Welcome. In the last lecture, we spoke about key activities, the important tasks you must do in a company in order to make the business model work. And this lecture will speak about key partners, the key partners building Block describes in its work off suppliers and partners that make the business model work. Start ups typically have little resources, which limits their ability to operate and grow. Having the right partner enables startups to extend their capabilities beyond their limited key resources and activities. Companies force partnerships for so many reasons, John was speaking. Companies create alliances who optimize their business models, reduce risk and acquire resources. This look closely at these motivations in more detail. First, optimization and economy of skill. The most basic form off partnership or buyer supplier relationship is designed to optimize the allocation of resources and activities. It's illogical for a company toe own all resources and perform every activity by itself. Authorization and economy of scale partnerships are usually formed to reduce costs on often involve outsourcing or sharing the infrastructure. The second is reduction of risk and uncertainty. Partnerships can help reduce risk in a competitive environment characterized by uncertainty . It's not unusual for competitors for for a strategic alliance in one area while competing in another. Luria, for example, is an optical disc format. Don't they feel loved by a group of the world's leading consumer electron ICS, personal computers and maybe manufacturers the group co operated in but bringing the blue technology to the market. Yet they all individually compete and selling their own blue ray products. The 3rd 1 is acquisition off, particulary sources and activities. Few companies own all the resources to perform all the activities described by their business models. Rather, the extend their own capabilities by relying on other firms the furnish particular resources or perform certain activities. Such partnerships can be motivated by need to acquire knowledge, license or access to customers. A mobile phone manufacturer, for example, may license an operating system for its handsets rather than developing one in house. The famous TV show Shark Tank attracts real entrepreneurs seeking partnerships with self made billionaires. If you watch any of the episodes, a shark tank would recognize that entrepreneurs have one or more off the motivations we discussed earlier regarding seeking partnerships. Most of these entrepreneurs need fun thing to expand their operations on optimizing performance. Many ask for coaching from an experienced shark or an investor in order to eliminate risk and uncertainty. I would different to be more confident, having an experienced partner with the know how and experience in the market that I'm targeting. Finally, some entrepreneurs aren't focused on the money, but rather the resourcefulness and corrections these sharks bring to the table, acquiring some of their resources. Contacts or even the name of the shark can really be a game changer for most of these start ups. I love Shark tank on. I hardly recommend you watch this TV show. I promise you learn a lot, especially about partnerships. Think of what resources that you lack in your business model. Think of the activities you would like to perform who can be the right partner for you. Remember that partnerships must be beneficial and fair to both sides. In order to last, you need to be able to demonstrate the value you can bring toe a partner, not just the value the partner brings to you. In the next lecture, we will talk about the last building block off the business model, canvass the cost structure 13. 3.09 Cost Structure: Theo Welcome. In the last lecture, we spoke about key partners. Now it's time for the last building block cost structure. The cost structure building block describes all costs incurred to operate a business model . The building block describes the most important costs incurred while operating under a particular business model, creating on delivering value, maintain any customer relationships and generating revenue all in court costs. Such costs can be calculated relatively easy after defining key resources, he activities and key partnerships. Naturally, it's preferable to minimize costs in every business model. However, locus structures are more important to some business models, but not to others. Let's look at two different models. There are cost of and models and value different models cost. Several models focus on minimising costs. Whatever possible. This approach aims at creating and maintaining the llinas possible cost structure, using glow price value propositions maximizing automation on extensive outsourcing, for example, FlyDubai uses our cost driven business model. This airline, just like JetBlue on Ryan Air in Europe, provides the lowest prices by cutting costs from other things such as luggage, allowance, meals, see choices and other services. Some companies are less concerned with the cost implications of a particular business model design and instead focus on value creation. Premium value propositions on high degree off personalized service, usually characterized value. Different business models. Rolls Royce luxury cars are hand built on have fuel other seats, really trimming plenty of luxuries and plenty of special options. The company built its luxury brand as a value driven, not as costs, even as we saw in the case of Flight Away. Now that we explained all the nine building blocks off the business model canvas and the next lecture, we will summarize everything we learn and put it all together. See you them. 14. 3.10 Summary: Congratulations. If you are here, this means that you have completed all that. I am building blocks. Good job and this lecture we'll be summarizing that I'm building blocks very quickly and stitching them into a story. So let's get started. So we always thought, with the custom, the customer segment is a group of people that we would like to serve. These are our customers. And then what are we offering them? What's our value in our products and services that will solve their particular problem or need their needs? And how are we gonna deliver this value for the customer? How are we gonna maintain the relationship? No, to keep the customer happy with our service or product. How do we generate revenue? What does the money come from? How did you get it from the customer and what's form? What do we need to get started? What kind of properties or human capital or intellectual property that we need? What are the key activities we was do all time in orderto make this business model work? Who are the partners that we have to work with in order to overcome or limited resources and activities and finally What is the cost structure? What is the cost of all this business model? As you can see, this is like a story. So you'll start with the customer and then you build building block by block in order to create this simple story off what your company is gonna offer from this, we can extract our business model canvass the awesome cool that will be using shortly in the next section. So if you notice that on the right side the customer segment, the channels and the relationships is your your customer side, he said. The bowling blaster you attract with the customer, I don't understand their needs and formulate the right building blocks in or the right components in these building blocks. The value proposition is really the offering what we are really offering them. And on the left side, the infrastructure is really composed of the the things that we need to build our company. So my understanding that they're different sides to their business model canvas. You can focus your energy if you need more on the market development customer development. That's when you focus on the blocks on the right side. And if you like toe hopeless on how we're gonna execute. How you gonna build the infrastructure to make the company work? That's on the left side. And of course, the middle of the offering is what connects both. This is what has to be developed and from the customer side and the product side in order to have really a successful business model. How, Leslie, remember that were essentially guessing everything we put in these building blocks is a guess. We don't know for a fact. All trying to do here is formulate hypotheses that we can kiss later. So don't be afraid to just put your guest down. It could be wrong, but we'll see later in the next section. How are we going to create business model canvas and work on it? So in the next section, I will provide you with all the resources and instructions you need to create your business model Canvas in under one hour. That's right. Under one hour. See you then. 15. 4.1 Using the Canvas: way are ready to get our hands wet and start using the business model canvas. First, we need to have three things. The business model canvas poster, Sticky notes on markers. First thing you need is a business model canvas poster. You can download the poster found in the resources. Then you can print on a sheet of paper off any size you like. However, I 100 command you print on a hard poster, and I'll tell you why. In a second, it's easier to work on a bigger size, especially when working in a group. The big size also allows you to easily read the small reminder questions on the canvas. Finally, having it as a heart poster allows you to move it around, hang it and easily reuse it. You can ask your local printing store to print it on a duplex board or form board. Dimensions are about 80 by 1 40 centimeters. Second, you need post it notes favourably two or three packs of different colors and the examples section. You will see that two or more colors have been used to create correspondence between different sticky notes, for example, connecting the customer segment with the corresponding value proposition and so on. This makes it with a smaller canvas, more visual and easier to understand. Finally, you need markers to write on the sticky notes. It's recommended. You get thick permanent markers toe forced you to write lists. Words on the sticky notes. You can have different colors if you like, as well. Now that you have all the required equipment, we can start sketching out our business model canvas. Use the markers to write on sticky notes and then place them on the canvas. Mr. Commanded, you go in the following order. Start with the customer segments, then value proposition. As we said, it's always important to start with the customer and then work your way around the canvas. After the value proposition. The channels, the customer relationships, revenue streams keep resources, key activities he partners on. Finally, the cost structure. If you are stuck in our building block, you can jump toe another one on return later. US keywords, not four sentences on. Try to keep each idea on a separate sticking up there, we can add it. Remove a chapel it the way you wish, and that makes it easily to modify the business model canvas. Remember, this is a group brainstorming activity, so don't think too much on write whatever comes to your mind. Once you are done, you can analyze and clean up the canvas as you see fit with your team. Finally, use your creativity and try to explore different scenarios. Take a picture of your business model canvas and keep it on record for future references. It will help you see the progress you have made regarding your business model. You can find a useful checklists in the resources to help you design great business models . In addition, you can see innovative ways to use the business model canvas, so make sure you check out these resources. Finally, get started with your business model canvas. I know you can do it, and I wish you good luck. 16. 4.2 Story Telling: When we put our ideas, they are usually scattered all over the place, which makes it really hard for others to understand us. Not to mention that we also tend to focus on some areas of the business idea and totally miss out other ones. You may have experienced this challenge whether you are a student preparing for a pitch competition or an entrepreneur tryingto seek an investment. Luckily for us, the business model canvas allows us to sketch out our ideas and lay them out visually in a holistic view. By filling every building block, we are sure to cover the crucial parts off any business idea in an organized matter. However, when it comes to pitching the idea, many over still struggle in explaining the business model canvas. This happens quite a bit with my students. After they fill the business model canvas, they still struggle to explain it properly. The magic solution for this challenge is storytelling. The following video from strategy as her academy will show you how to tell your idea like a story that is really engaging and easy to understand. You've done a lot of great work on your canvas, and the result is a business model that you're ready to pitch. Sharing your work with others for the first time can be intimidating. But remember, you know the model inside out, and I'll help you along the way. So go ahead, pitch it. I do not like that showing the model that once is cognitive murder. There's way too much info there to digest. You wrote it like a story. So tell it like a story seeing Bye. See you sticky notes to fill in the boxes. Wanted to time as you explain them. Go on, try it. We're going to match retiring baby boomers with overseas retirement communities run by franchisees. These air the to customer segments were targeting good now make it even more real for them . 10,000 boomers are retiring every day, like the Andersons, who can barely scrape by in Florida but can live like kings in Brazil. Okay, now continue the story with the next logical books For the retirees, our value proposition is affordable, high quality retirement. We've taken the guesswork out of finding an overseas location that will be comfortable, affordable and fun, and for our franchisees will offer customer acquisition through thousands of high quality leads. How will we monetize this by charging retirees a modest monthly fee and collecting Franchising fees they pay us for both leads and a trusted brand. We already have five letters of intent for potential franchisees valued at over $1 million . Now reinforce your case by explaining what you learn from your testing. Admitting your failures to investors and partners may seem unorthodox, but it shows your model is stronger for having bean riel World tested and adapted. We also learned from extensive research and some failed pilot offerings that many of our customers aren't just dissatisfied with their retirement options at home. They won't be able to keep up with medical costs, either. You're doing great. Now walk them through the rest of your model. Four out of five customers we spoke to don't trust overseas options. By applying all over communications technologies, they'll never feel too far away. Services like Skype and FaceTime make connecting with family as easy as press continue to grow. And though I revenue numbers may seem ambitious, they're based on over a $1,000,000 in pre sales to customers favoring human customer service over services provided through the Internet we become that much more accessible to boomers. Confusion. We've tested failed, adjusted, and we're now convinced the market potential of this model is enormous. And while our ideas compelling our business model is what makes us ready to compete on the largest stage. That is the story of how Bevan car to the great idea and created a great business. But their story doesn't end here. As their business begins to grow, canvas remains a valuable tool, growing and evolving with it with determination, hard work on the right business model. This could easily be your story, too. 17. 5.1 Example 1 - Lemonade Stand: we described earlier Ah, hypothetical example all a company that sells lemonade in a park. So let's try to construct a business model canvas, using the knowledge we gain about the nine building blocks that make up any with a small canvas. So we start with the customer segment. Who is our customer segment? In this case, it's gonna be park visitors. Anybody walking or running passed by that point on have the problem or being thirsty. So that's what we understand. What now? Or we are guessing about the customer segment, then the value proposition, the product or service that we're offering is, ah, cool, tasty, natural eliminated on the go. It's noticed, I put the key words here is for guessing here, but we're saying cold, tasty and natural, something really refreshing because the the visitor is really thirsty. So something like cold, tasty natural lemonade might be very appealing. I will quench their thirst, therefore, solving the problem on also, I said the word on the go, so that's gonna affect the understanding of the customer since the customers jogging. We're assuming that the customer wants something quickly, so most likely the lemonade will be offered in a paper cup. Not, for example, in a glass cup. So how is the limited gonna be delivered to the customer? Well, first, there's gonna be the used to be a website and social media to really market the business that we have. So everyone who comes to the park, at least with no video, tell the friends. So that's the channel in terms of online presence on, then we have both sales. So this is how the eliminate is actually getting to the customer physically. That's what the salesperson giving the eliminate cup, the customer, then the customer relationships. How do we maintain the relationship with the customer we assumed here? That's gonna be a personal relationship. So the sales people who are in this this eliminates stands are actually going to the customers. They're saying, Hi, Susan. Hi, Mike. They are waiting. The people passing by so they are developing relationship were soon. Hear also that these customers are coming to the park regular speaking. So then you were able to establish a relationship that makes them really feel special and want to buy eliminate uncle revenue streams here we assume that most of our money coming in a revenue will come from eliminate sales. But what is the price that we're gonna sell each eliminate cup or we'll make money by the number off lemonade cups sold? Another revenue stream could be minor or small. We don't know at this point, we are just guessing it could be the tips. Since customers are passing by again, maybe don't have time than a rush. So any extra coins they may have might go into a box for tests. Now the steps in this case where something is going for ourselves. It's like all for charity. But again, just to show you that we could be a different revenue stream coming in his business, not on Lee from eliminate sales. Now we look at the key resources. What do we need to really do this business off? Selling? Limited. First, we probably need the ingredients and equipment. What are the sugar, the lemon, the older stuff, the water, everything that makes up the eliminated and then the booth equipment, the actual eliminate stand the spoons. We usedto create the lemonade, the jugs, anything we need in order to sell. Eliminated on. Finally, we need salespeople, he said. The people who were gonna be setting at the booth. Interacting with the customers and sewing eliminates the key activity is willing to do are making dominate. That's obviously the salespeople job. So are going toe know the right proportions and they know how we're making really cold, tasty, natural, eliminated on, then marketing the efforts in terms of we discussed earlier. How we gonna market using social media on the upside. That's all part of marketing. And perhaps we even have some flyers or some physical handouts to get people passing by about are eliminated. And finally we have selling. So we always have to sell the lemonade. That's something that, you know, includes talking to the customer directly, as well as doing the actual transaction of the sale. Now this model will not be possible unless we have authority from the park. That is really, you know, runs the park and has all the final say and who comes in who sells in the park. So if we're able to have them on as a partner, then we can possibly, you know, have this business model. Otherwise, that would not be possible. No, Chocola partners again think that there must be a benefit for both sides, as we discussed earlier, it's not only one side that has to benefit. So when you, for example, approach the partner, you can claim that your business model here selling lemonade will promote healthy living and added exercise service in the park. So in return for a small fee that you pay the park authorities, or perhaps it's for free that they support you are We don't know at this point, but it's obviously there's a value for both. You have to demonstrate the value for the park authorities as well as yourself. The final thing is the cost structure. So here we look at the cost of the ingredients and the Cupid. We have to purchase the celeb salaries or commission that would pay for our salespeople plans on and off course. As I said for the partners that maybe a fee for the you know, the partner. Maybe not at this point, I don't assume it's something that we're going to charge us. We're gonna be really nice people on. They're going to give us a free location at this park. As you can see, we just describe the business model and really no time were able to express a very complicated concept that usually it's hard to explain to people where you go. But by doing this business, model canvas were able to just focus on each building block and build a story, and now we can easily tell the story to anybody and maybe just one or two minutes. 18. 5.2 Example 2 - Flickr Freemium: Flicker is a famous photo sharing website that was acquired by Yahoo in 2000 and five. It provides an excellent example of a premium business model. Freemium models are mainly what based. They blend a free basic service with a paid premium service. The Freemium model is characterized by a large user base benefiting from a free no strings attached service. And most of these users never become paying customers on Lius more portion. Usually less than 10% of all users subscribed to the paid premium service. This small base off paying users subsidise the free users. There are two different customer segments. There's a casual users and the high volume users. The casual users are the free users. They don't pay anything for the service, and they just want to upload and share images. The high volume users require a premium photo sharing service that allows them to have unlimited uploading, storage and other functionalities. The both access flicker dot com and you hope that com, which draws lots of traffic to the service. The relationship form here is an online community off photo lovers, people who have to share other images. The revenue streams is where it gets really interesting. The casual users have a free, limited basic account, whereas the high volume users pay an annual subscription fee toe with a pro account. So in this model, the paying customers who are the minority compared to the total numbers of customers are paying for the free customers. So in this case, the high volume users who are paying for the pro account are allowing the business model toe offer the free account to the casual users. As you can tell by now, that's where the name Freemium comes from. It combines the word free and premium. There are some free users, and there are some premium users in a freemium model. The key metric here is the cost for a free user. How much it cost you to provide this free basic service of the free user, and the second is the conversion rate. What is the rate in which you can switch a free user into a premium user? That's obviously your goal. In order to make more money, the key resources needed is a flicker platform, no upside, in which you allow users to upload and share images. The human resources are the developers or the people supporting this business model. The key activities are platform development and management, marketing and selling. These are crucial activities to make the business model work. The key partners is Yahoo. Since Yahoo acquired Flicker in 2005 it allowed it to grow exponentially, leveraging its own connections. Finally, the cost structure consists off the salaries you pay for human resources as well as a storage cost, too. Store all these photos. So as we saw Freemium models blend in a free basic service as well as a premium paid service. There are many companies that have adapted this model. For example, Dropbox offers online storage. They have a free basic service as well as premium paid services could be pro or business, depending on what the customer wants. In addition, you'll find many software companies like Microsoft Office offering a free 30 day trial version off their software in which, after you must purchase the full one and also gaming. Many gaming companies provide games in a trial version, so it's not. The full version has perhaps one or two levels or limit levels, but if you want to enjoy the full game, you must purchase the full game 19. 5.3 Example 3 - Airbnb Multisided Platform: Airbnb is upside that creates a trusted community marketplace for people to list, discover and book unique accommodations all across the world. So if you are looking travel for a new location on Airbnb, you can find listings off great places by actual people who owned the place is so There are two segments here. There are the people searching for a place to rent on. There are the hosts, the people offering the place to rent. So let's look at how this interesting and innovative business model works. Airbnb has two distinctive customer segments. These are budget travelers and local hosts, but the travelers are The people who are traveling on looking for listings on local hosts are the one will providing these listings? Both customer segments must have unique value propositions. So for the budget travelers, the value Airbnb provides them that they're able to find great trusted places to stay worldwide for affordable prices. And the value provided for the local hosts is that they're able to make money from extra places available to them, and they confronted out effortlessly for a worldwide audience. The channels in which the value is delivered to the to customer segments it's primarily through the website Airbnb that come. That's where budget travelers are able to browse through over 800,000 listings in 100 countries worldwide, and they can really choose the listing that they like. They also may learn about Air B and B through hit advertising on Facebook, Twitter or other mediums. Also, they were learned about Airbnb the water furrow off a close friend who tried the service unloved it. Similarly, local hosts can access the Airbnb website, where they can create an account and start listings all the places they would like to rent out ask for the relationships. It's primarily I would self service each of the budget travelers and the hosts are able to self serve themselves on the upside and either search for listings or post a listing. There's an excellent customer service support but ensures both the travelers and the local hosts are happy with the Airbnb service. In addition, there's also reward programs where credit is given to whoever refers friends to use the Airbnb website. Air B and B generates revenue streams from each of the two customer segments. It takes from 6 to 12% booking fee from the budget travelers on also 3% of each successful booking from the local hosts. The key resources required by her B and B is the platform. The upside that connects both the budget travelers and the local hosts. The human resources who are really in other developed this platform on do all the supporting work that the base of places, all the locations worldwide the list things have to be gathered into a database on. Finally, there must be a community off travelers on hosts as we need both in order to make this platform works. And it both the travelers and the hosts. The key activities of air B and B R platform development and maintenance community management. Lots of lots of marketing online. An international payment. This is managing the payment systems using PayPal. These are MasterCard. In order to process the payments on finally photographs management Airbnb had to contract out. All the photographs were taken by professionals off each space for key partners. They had to partner with these photograph furs who take all the pictures. The investors who fund this really ambitious business model on finally also partner with the online international payments, the guys who would support the payments. Papal Western Union credit cars and others. The cost structure off Airbnb, according paying the photograph. Furs for taking pictures. The marketing efforts, which are really tremendous in orderto build a brand name for Airbnb, the insurance servers, the servers that the host older that air bases on paying all the human resources and finally, any fees regarding the online international payment. As you can see, we have just described the business model off Airbnb. Airbnb is a multi sided platform, and there's actually multiple examples off companies that carry the same model. So, for example, Visa Visa connects to different segments. They connect the credit card holders as well as the merchants accepting it in stores. E Bay also connects to customer segments that connects the people who want to sell an item and the people willing to buy it. Finally, more decided platforms could also be in a physical format. The shopping most, for example, connect both the shoppers and the merchants. It's important to keep in mind that each business model with a multi sided platform pattern have distinctive structure. They have two or more customer segments and each customer segment has its own value proposition on also revenue stream for the revenue streams. One or more segments may enjoy free offers or reduce prices subsidized by revenues from the other customer segments. So choosing which customer segment perceptive that ice can be crucial pricing decision that determines the success off a multi sided platform business model. 20. 5.4 Example 4 - Gillette Bait and Hook: Theo, 1904 King Gillette Ho commercialized. The first disposable razor blade system decided to sell razor handles at a steep discount or even give them away with other products in order to create the man for his disposable blades. Who they? Gillette is still the number one brand for shaving products in the world. The key to this model is the close link between the inexpensive or free initial product on the full of item, usually disposable when with the company earns. Ah, high margin. Controlling the luck in is crucial to this pattern. Success. Through blocking patents, Gillette ensured that competitors could not offer cheaper blades for the Gillette's razor handles. In fact, today, razors are among the world's most heavily patented consumer products, with more than 1000 patterns covering everything from lubricated strips the cartridge loading systems. Since razor blades are consumer products, our customer segment here is gonna be in mass customers. The value proposition consists of razor handles and high quality please. The razor handle holds the blades, and the blades are disposable so they can be used for a few times. Then you have to your place these razor handles and blades can be purchased through any retail store. Andi relationship established with the customer is built in Walk in, which means that the customer is first buying the razor and he is locked in to the blades. It's almost like an investment into the razor handle, and therefore he is locked on must keep purchasing the same blades made by Gillette. Now the interesting part also is the revenue streams here. The one handle purchase might be given for free or at the very, very low cost. And the frequent played replacements is what creates revenue in this particular business model. The key resources required is a brand. As we sold, Gillette has built its brand name through many, many years off innovation. At the same time, they have filed for lots of patterns to protect other competitors Teoh cell blades that can compete with their great model. The key activities are marketing in which there must be lots of marketing done to continue having the brand recognized as the number one for shaving products on all sorts of R and D . Jack has been innovating over and over again, improving their blades and there Carter assistance. In addition, there's logistics managing the production and getting all these bullets out the older retail shops. The key partners for Gillette will be the manufacturers who manufactured the razor handles and the blades. And also the retailers were these. So the razor handles and the blades. The cost structure of Gillette is marketing the cost for the heavy marketing done on the Gillette products, the logistics, the cost of transporting all the goods to the retail shops, as well as manufacturing off the blades and the handles themselves. Finally, perhaps one of the biggest cost for Gillette is the R and D. As we said, they rely heavily on patents in this particle business model toe prevent competitors who sell their blades instead, therefore, on the continuously. Improving on folly for patterns would be a key activity for, uh, Gillette's, the based on what model have been applied by many companies and selling their products and services. Companies like absent HP and Kevin have made their printers available for a relatively low cost. This is the bait that gets customers to buy the printers, and then they hoped them with the in coverages. These are sold at relatively high costs, and they have to keep replacing them because they've already invested in the printer. Therefore, they have been baited by the printer on hooked with the ink cartridges. The same model have been used also by an espresso where they made a very attractive espresso machine offered sometimes at a good price on, then will be hooked by buying the caps that contained coffee. There's no way you can use the machine without purchasing the caps made by espresso. Another example is still account companies were the attract you by offering you a free phone or perhaps for a low cost and return for signing a two or three year contract with them. So they locked you in into this contract and you'll be paying a very heavy cancellation, see if you know so that way they locked you in, and they make the book off their revenue from your monthly bills. Some key attributes of the bait on Hook model is that the customer is locked in, and the switching costs for them to go to another product or service would because the also the bait and hook model has lots of marketing and order to create a strong brand. And finally the bait on hook model has lots of investment in R and D. This is the way that you create patents and protect yourself from other competitors, copping you or selling cheaper replaceable of your product. 21. 6.1 Beyond the Canvas: Theo. So what exactly do you do after you completed several business model canvases and you chose the best one? What's really beyond the canvas, as we mentioned earlier in the course, the business model canvas in the system. Assumptions or guesses? It may look good on paper, but it's still guesses. You need to validate your model assumptions with customers until you get it right. Your goal is to validate your business model canvas hypothesis with customers and keep everything and updating it with what you learn. Eventually, you will have a solid business model based on facts, not assumptions. To learn more on how to validate your business model and reach a product market fit, I highly recommend you check out Alex Acosta Wilder's second book, Value Proposition Design. This book does a wonderful job explaining the product market development process on provides lots of examples and exploration. I have included the link to this book and the additional resources at the end of the course . We stated before that the business model canvas is not a replacement for a business plan. They are different tools that can complement each other's forwards. The common goal off having a successful business. In fact, having a valid it was a small canvas based on facts will make it so much easier to write a business plan. The insights you gained for each of the nine building blocks feeds directly into the main sections over business plan. For example, the customer segments provide the basis for the target market. The value proposition is the foundation for your product or service offering. The channel outlines the marketing strategy on the revenue streams and cost structure initiates the foundation off your financial sheets. The business model canvas helps you validate your assumptions. Who find your business model? Start your journey by trying the business model. Candice. You can download it printed on, start practicing and experimenting with your business ideas. Remember that it's a collaborative tool. So engage others in the process to find the best business model for you. And I'm sure you'll be able to discover many innovative business models that you never thought of 22. 6.2 Final Thoughts: Congratulations. If you are here, this means that you have completed the course. I hope you learned as much as I did on also had fun in the process. Now you know more about the business models and you know the business model canvas on this line building blocks. You have the ability to sketch out any idea that comes to your mind. You are now able to analyze existing business models on recognize patterns like the ones we discussed, such as bait and hook and premium business models. Not only this, now you have the power to engage your business partners, friends passes or anyone who you want to share your business idea with. Now we can all speak the same language and share ideas together. Please let me know if you have any questions in the discussion board. I would love to hear your comments on your feedback. You can follow me on Twitter or connect with me only. And if you like on finally, please leave a kind review of the scores on. I look forward to see you in future courses. Bye bye