Title: Nuts and Bolts of New Ventures/Business Plans MIT Course 15.S21 Business Models
1Nuts and Bolts of New Ventures/Business PlansMIT
Course 15.S21 Business Models
- Richard Kivel
- Chairman Rhapsody Biologics
- Former Chairman MIT Enterprise Forum Senior
Manager Bridgewater Associates - kivel_at_mit.edu / Twitter _at_Kivel1
- January 23rd 2013
2The Business Model
- "A business model is nothing else than a
representation of how an organization makes (or
intends to make) money. - Peter Drucker
- A business model describes the rationale of how
an organization creates, delivers and captures
value - Business Model Generation
3Highly Complex
4Simplified
5Your Business Model is NOT your Business
Business Model Innovation is critical to
developing a quality business, attacking new
markets and driving profitability
6Components of the Business Model
7Components of the Business Model
- Value Proposition
- Market Segment
- Value Chain Structure
- Position in the Value Network
- Revenue Generation and Margins
- Competitive Strategy
- Stage of Development
8Value Proposition
- A description of the customer problem
- The solution that addresses the problem
- The value of this solution from the customer's
perspective (price, speed, design)
Market Segment
- The target audience
- Recognizing that different market segments have
different needs
9Value Chain Structure
- The firm's position in the value chain
- Activities in the value chain
- How the firm will capture part of the value that
it creates in the chain.
Position in the Value Network
- Identification of competitors
- Identify complementary companies and technology
- Identify network-effects that can be utilized to
deliver more value to the customer.
10Revenue Generation and Margins
- How revenue is generated
- (sales, leasing, subscription, support, etc.)
- The cost structure
- Target profit margins.
Competitive Strategy
- How will the company attempt to develop a
sustainable competitive advantage? - How will it use that advantage to improve the
competitive position in the market?
11Different types of Customer Segments
12Different Types of Customer Segments Different
Models to Evaluate
13Different Models to Evaluate
Direct Mass Media
Retail Telemarketing/ Phone Sales
Channels, Distributors and Partners Trade Shows and Conferences
OEM Channels Internet - Web
14Direct SalesConsumer or Business
- Negatives
- Free Consulting
- May not like rep or rep leaves firm
- High Cost
- Retention
- Positives
- High Contact
- Customer relations
- More Control
- Multi Purpose
- Experts in the field
15 Distributors Channel Partners
- Positives
- Cost of Sale is Low
- Hands-off Sales
- Exposure in new markets
- Credibility
- Competitive Edge
- Negatives
- Up-front fees
- No control
- Distant clients
- Performance
- Technical Pressure
- Require lots of attention and training
16OEM Channels(Original Equipment Manufacturer)
- Positives
- Prestige and Publicity
- List Sharing
- Royalties / steady revenue stream
- Increase Market Presence
- Technical Control
- Negatives
- Competitor envy
- Technical pressure
- Channel Conflict
- Your reputations are linked
17Other Examples
- Retail
- Internet
- Service Providers.
18What Business Model and Why?
19What Business Model and Why?
- Apple - Dell
- Citibank - American Express
- SouthWest - Virgin Air
- Patek Philippe - Swatch
- Cuisinart Nespresso
- Bentley Cadillac
- Vertu Nokia
- ATT vs. SKYPE
20Standard Coffee Maker vs. Keurig
21Nespresso
http//www.youtube.com/watch?vDfyeXrdZZ1o
22Swatch vs. Movado
23Super high-end
24Summary
- Value Proposition
- Market Segment
- Value Chain Structure
- Position in the Value Network
- Revenue Generation and Margins
- Competitive Strategy
- Stage of Development
25Thank youRichard Kivelkivel_at_mit.eduTwitter
_at_kivel1