PATTERN BUSINES MODEL

Yohanes Dicka Pratama, M.T.

Program Studi (Prodi)
Teknik Industri (Industrial Engineering)
Fak. Sains & Teknologi, Universitas Katolik Musi Charitas
UKMC Kampus Bangau, Jl. Bangau No. 60 Palembang 30113
Introduction

Pattern in architecture is the idea

of capturing architectural design
ideas as archetypal and reusable
descriptions.”
Christopher Alexander, Architect

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Unbundling Business Models

Def_Pattern No.1
•The concept of the “unbundling” corporation
holds that there are three fundamentally
different types of business: Customer
Relationship, Product Innovation, and
Infrastructure Business.
•Each type has different economic,
competitive, and cultural imperatives.

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 Un-bundling Business Models
Product Innovation Customer Infrastructure
Relationship Management
Management
Economics

Early market entry High cost of customer High fixed costs make
enables charging acquisition large volumes
premium prices and makes it imperative to essential to achieve low
acquiring large gain large wallet unit costs;
market share; speed is share; economies of scope economies of scale are
key are key key
Culture

Battle for talent; low Battle for scope; rapid Battle for scale; rapid
barriers to entry; consolidation; consolidation;
many small players a few big players a few big players
Competitions

thrive dominate dominate

Employee centered; Highly service oriented; Cost focused; stresses
coddling the customercomes- standardization,
creative stars first mentality predictability, and
efficiency

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Unbundling Business Models

Unbundling The Mobile Telco:

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Unbundling Business Models
• Traditionally they competed on network
quality, but now they are striking network
sharing deals with competitors or
outsourcing network operations altogether
to equipment manufacturers.
• Why? Because they realize that their key
asset is no longer the network—it is their
brand and their Customer Relationships.

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Unbundling Business Models

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Unbundling Business Models
Equipment Manufacturers
•Telcos such as France Telecom, KPN, and
Vodafone have outsourced operation and
maintenance of some of their networks to
equipment manufacturers such as Nokia Siemens
Networks, Alcatel-Lucent, and Ericsson.
•Equipment manufacturers can run the networks at
lower cost because they service several telcos at a
time and thus benefit from economies of scale

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Unbundling Business Models

Unbundled Telco
•After unbundling its infrastructure business, a
telco can sharpen its focus on branding and
segmenting customers and services.
•By concentrating on customers and increasing
share of wallet with current subscribers, it can
leverage investments made over the years
acquiring and retaining customers

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Unbundling Business Models

Content Providers
•For product and service innovation, the
unbundled telco can turn to smaller,
creative firms.
•Innovation requires creative talent, which
smaller and more dynamic organizations
typically do a better job of attracting.

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The Long Tail Business Models

Def_Pattern No.2
•The long tail business model are about
selling less of more.
•Focus on offering a large number of niche
product, each of which sells relatively
infrequent.

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The Long Tail Business Models

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The Long Tail Business Models
 The Transformation of the Book Publishing
Industry

1. Old model
The traditional book publishing model is built on a
process of selection whereby publishers screen
many authors and manuscripts and select those
that seem most likely to achieve minimum sales
targets.

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The Long Tail Business Models

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The Long Tail Business Models
2. A New Model

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The Long Tail Business Models
• Lulu.com turned the traditional bestseller-
centric publishing model on its head by
enabling anyone to publish.
• It eliminates traditional entry barriers by
providing authors the tools to craft, print, and
distribute their work through an online
marketplace.
• In fact, the more authors Lulu.com attracts, the
more it succeeds, because authors become
customers

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The Long Tail Business Models

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The Long Tail Business Models
 LEGO®’s New Long Tail

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The Long Tail Business Models


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The Long Tail Business Models

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The Long Tail Business Models

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Multi-sided Platforms

Def_Pattern No.3
•Multi sided platforms bring together
two or more distinct but independent
groups of customers.
•The platforms creates value by
facilitating interactions between the
different groups.

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Multi-sided Platforms
Multi-sided Platforms Example:
•Credit card – link merchants with cardholders.
•Operating system – link hardware
manufacturers, application developers, and
users.
•Newspapers – link readers and advertisers.
•Video gaming consoles – link game
developers with players.

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Multi-sided Platforms
Operators of multi-sided platforms must ask
themselves several key questions:
•Can we attract sufficient numbers of
customers for each side of the platform?
•Which side is more price sensitive?
•Can that side be enticed by a subsidized
offer?
•Will the other side of the platform generate
sufficient revenues to cover the subsidies?

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Multi-sided Platforms
 Google’s Business Model
• The heart of Google’s business model is its
Value Proposition of providing extremely
targeted text advertising globally over the
Web.
• The model only works, though, if many
people use Google’s search engine

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Multi-sided Platforms

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Multi-sided Platforms
• Google caters to this second group of
consumer customers with a powerful search
engine and a growing number of tools such
as Gmail (Web based e-mail), Google maps,
and Picasa (an online photo album) among
others.
• To extend its reach even further, Google
designed a third service that enables its ads
to be displayed on other, non- Google Web
sites.

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Multi-sided Platforms

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Multi-sided Platforms
 Wii versus PSP/Xbox Same Pattern,
Diferent Focus
• PSP/Xbox Focus
Traditionally, video console manufacturers
targeted avid gamers and competed on
console price and performance. For this
audience of “hardcore gamers” graphics and
game quality and processor speed were the
main selection criteria.

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Multi-sided Platforms

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Multi-sided Platforms
• Wii Focus
Nintendo aimed its consoles at the huge
audience of casual gamers rather than the
smaller “traditional” market of avid gamers.
It won the hearts of casual gamers with
relatively inexpensive machines equipped
with a special remote control device that
allows players to control the action with
physical gestures.

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Multi-sided Platforms

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Multi-sided Platforms
The key resource required
for this business model
pattern is the platform.
The three Key Activities are
usually platform management,
service provisioning,
and platform promotion.
The value proposition usually
creates value in three main areas:
•First, attracting user groups (i.e.
Customer Segments);
•Second, matchmaking between
Customer Segments;
•Third, reducing costs by
channeling transactions through the
platform.
They have two or more
customer segments, each
of which has its own Value
Proposition and associated
Revenue Stream. Moreover,
one Customer Segment cannot
exist without the others
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Multi-sided Platforms

Each Customer Segment

produces a different
revenue stream. One or more
segments may enjoy free
offers or reduced prices
subsidized by revenues from
other Customer Segments.

The main costs incurred

under this pattern relate
to maintaining and
developing the platform.

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Free as Business Model

Def_Pattern No.4
Free, in the free business model at least
one substantial customer segment is able
to continuously benefit from a free of
charge offer.

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Free as Business Model

(How) can you set free?

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Free as Business Model
 Freemium: Get the Basics for Free,
Pay for More
In a freemium model, the key metrics to
watch are;
• the average cost of serving a free user,
• the rates at which free users convert to
premium (paying) customers

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Free as Business Model

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Free as Business Model
 Open Source: Freemium with a Twist
Business models in the enterprise software
industry are usually characterized by two
traits:
• First, the high fixed cost of supporting an
army of expert software developers who build
the product;
• Second, a revenue model based on selling
multiple per-user licenses and regular
upgrades of the software.

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Free as Business Model

Red Hat, a U.S. software

company builds its product on top
of so-called open source software
developed voluntarily by thousands
of software engineers around the
world

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Free as Business Model

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Bait & Hook Business Model

Def_Pattern No.5
The term bait & hook pattern
to describe the general idea of
luring customers with an
initial offering, while earning
from follow-up sales.

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Bait & Hook Business Model

Operators initially
lose money by
giving away mobile
phones for free, but
they easily cover the
loss through
subsequent monthly
service fees.

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Bait & Hook Business Model

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Bait & Hook Business Model

The key to this model is the

close link between the
inexpensive or free initial
product and the follow-up
item—usually disposable—
on which the company
earns a high margin

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Bait & Hook Business Model

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Open Business Model

Def_Pattern No.6
Open business model can used by
companies to create and capture value by
systematically collaboration with outside
partner.
* This may happen from the “outside-in”
or “inside-out”.

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Open Business Model

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Open Business Model
 Procter & Gamble: Connect & Develop
In order to link its internal resources and R&D
activities with the outside world, Procter &
Gamble built three “bridges” into its
business model:
• Technology entrepreneurs,
• Internet platforms, and
• Retirees

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Open Business Model
Technology entrepreneurs are senior scientists
from P&G business units who systematically
develop relationships with researchers
at universities and other companies. They also
act as “hunters” who scan the outside world
for solutions to internal P&G challenges

P&G solicits knowledge from retirees

through YourEncore.com, a platform the
company launched specifically to serve as
an open innovation “bridge” to the outside
world

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Open Business Model

Through Internet platforms, P&G connects

with expert problem-solvers around the world.
Platforms such as InnoCentives allow P&G to
expose some of its research problems to non-
P&G scientists around the globe. Respondents
earn cash prizes for developing successful
solutions.

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Open Business Model
 The Connector: Innocentive

InnoCentive provides connections

between organizations with research
problems to solve and researchers from
around the world who are eager to
solve challenging problems.

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Open Business Model

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Open Business Model

“Open Innovation is fundamentally

about operating in a world of abundant
knowledge, where not all the smart
people work for you, so you better go
find them, connect to them, and build
upon what they can do.”
Henry Chesbrough
Executive Director, Center for Open Innovation
Haas School of Business, UC Berkeley

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