Business Model Design

- Introduction

four rings of innovation

business model innovation

product & service innovation
process innovation
technology innovation

1
 NetJets:
Fractional Ownership

Zopa.com:
Peer-to-Peer lending

2
 Business Model Framework

INFRASTRUCTURE OFFER CUSTOMER

PARTNER CUSTOMER
NETWORK RELATIONSHIPS
CORE VALUE CUSTOMER
CAPABILITIES PROPOSITION SEGMENTS
ACTIVITY DISTRIBUTION
CONFIGURATION CHANNELS

COST FINANCE REVENUE

STRUCTURE STREAMS

A business model describes

the value an organization offers to various customers,
and portrays the capabilities and partners required
for creating, marketing, and delivering this value and relationship capital
with the goal of generating profitable and sustainable revenue streams.

[Author: Alexander Osterwalder (2010)

Revenue and Cost

Franchisee: Sources of income Franchisee: Distribution of income

 Share in revenue from broadcast
rights (equal share for all franchisee
after IPL’s share)
 Share in sponsorship money (60% of
the amount distributed equally)
 Share in revenue from sale of tickets
 Revenue from in-stadium advertising
 Sale of players to other franchisee
 Revenue from own sponsorship and
corporate sponsorship
 Franchisee fees – 10% of total
franchisee costs every year to IPL
 Players’ cost ($4-6 million per year)
 Match fees and Inauguration expenses
 Rent of stadium (expense Rs. 2.5mn per
match)
 Marketing and promotional cost ($34mn
per team)
 Fee for coaches, physiotherapists and
other members + administrative cost

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 IPL: The Big Picture
Partner Network Customer Relationship

• food & beverages • personalized web

• ticketing services profile
• promoters • newsletter
• ad placement • team blog (RSS)
• telecom operator • VIP events with
• TV operator team
•… •…

Core Capability Activity Configuration Value Proposition Distribution Channel Target Customer
• team management • spectacular • stadium • fans (families, etc.)
• play attractive & • event management offensive cricket • VIP lounges • fan groups
win games • venue • advertising space • POS networks • companies
• brand management management & high visibility • club website • event/concert
• video images • ticketing • 360º event (match, (+online TV) organizers
• channel • VIP relations mgmt dining, shopping) • club cable/mobile • advertisers
management • video crew … TV channel •…
•… •…

Cost Structure Revenue Model

• team & maintenance • ticket fees & season tickets

• infrastructure management • online TV subscription revenues
• marketing • revenue sharing cable & mobile phone TV
• video • renting out stadium for events
• advertising revenues
• merchandising revenues

Netflix
Biz Model @ Launch

4
 Biz Model Changes

CH: Channels
CoS: Cost Structure
CR: Customer Relationships
CS: Customer Segments
KA: Key Activities
KP: Key Partners
KR: Key Resources
RS: Revenue Streams
VP: Value Proposition

Biz Model @ Present

Grey:
aspects that
did not
undergo major
changes

5
 Biz Model @ Launch

Biz Model Changes

6
 Biz Model @ Present

Developing, Electric, high Intention: Direct High-end sports

designing, performance and consistent cars enthusiasts
Supplier alliance manufacturing and Sports vehicle, customer wanting
for the chassis optimizing the which redefines relationships to make a statement
production with employed electric mobility about the
Lotus Engineering technologies for the environment
Roadster model
Licensing of the
Powertrain
technology of AC License for the Intention of solely
Propulsion powertrain direct sales via own
technology Tesla Stores and
online, as opposed
to the established
dealership model

Highly value-driven cost structure No own revenues until 2008 (funded solely
through venture capital and additional investors)

7
 Serial production of the
Tesla Roadster KP
Partnership with
CH Toyota
Opening of the first
Company Tesla Stores and CS
foundation Service Centers Expansion to Asia

2003 2005 2008 2009 2010 2014

KP KP KP
Production Partnerships with End of the
contract with Daimler (OEM alliance) partnership with
Lotus and Panasonic (supplier Toyota
and R&D alliance)
CS
CS Expansion to
CH: Channels Expansion to Europe Australia
CS: Customer Segments
KP: Key Partners

Broad array of in-house

Electric, high- Direct and consistent Consumer market:
activities: R&D and
performance customer ecofriendly
R&D and supply design, sourcing and
Vehicles (including relationships with individuals
alliances, for instance production, sales
Limousines and extensive personal - High-end sports car
with Panasonic and and after-sales
a sports model), assistance market
Daimler Services
which redefine - Luxury vehicle
electric mobility limousine market
Built-to-order, on
- Mass market
demand vehicle
Worldwide largest consumers
production
fast charging
network, offering B2B market: OEMs
free charging
State of the art Direct sales approach
mfg facilities B2B: Electric vehicle via own Tesla Stores
powertrain and online,
Expertise and IP components as opposed to the
(however, open Established dealership
licenses) model

Highly value-driven cost structure (state of the art
R&D and manufacturing)
Minimized inventories through built-to-order
principle, yet rising manufacturing and R&D costs,
resulting from the rising demand for its Model S
Automotive sales (amounting to about 99.8 % of total
sales, including vehicle, options and related sales, as
well as powertrain components)
Development services (amounting to about 0.2 % of
total sales, including sales of powertrain components
and systems for partner OEMs)

8
Startup” Lean Canvas

Select the Best Canvas

9
 the business model’s place in the company

STRATEGY

BUSINESS
MODEL
ORGANIZATION TECHNOLOGY

5 Forces

customer technological
needs change

BUSINESS
MODEL
legal social
environment environment

competition

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