MODULE III :BUSINESS MODELLING20%-7

•BASICS OF LEAN APPROACH AND LEAN

CANVAS,
• TYPES OF BUSINESS MODELS,

• RISK AND DOCUMENTATION OF ASSUMPTIONS

 TWO MAIN TAKE-AWAY LESSONS.

• 1. VALUE THAT YOU PROPOSE IS MUCH MORE THAN JUST THE PRODUCT YOU
PROVIDE. EG,

• EVERY CAR BRINGS YOU FROM A TO B.

• BUT CUSTOMERS CHOOSE A CAR BECAUSE IT MAY PROVIDE THEM STATUS, A

FEELING OF SAFETY, LOW COSTS, AND SO FORTH.

• CUSTOMERS ARE ONLY WILLING TO PAY FOR THE CAR, IF IT PROVIDES THEM
WITH THE VALUE THAT THEY ARE SEEKING.
• 2. ANY DECISION ON VALUE PROPOSITION, AFFECTS , OTHER BUILDING BLOCKS AS
THEY NEED TO BE METICULOUSLY ALIGNED WITH EACH OTHER. EG,

• CREATING COMFORT OR STATUS MOST LIKELY APPEALS TO A CUSTOMER

SEGMENT THAT

• ALSO WANTS GOOD CUSTOMER RELATIONSHIPS AND

• A COMFORTABLE WAY TO ORDER AND RECEIVE THE CAR.

• THIS ALSO AFFECTS

• WHAT THE MAIN ACTIVITIES OF THE FIRM SHOULD BE (E.G. R&D, CUSTOMER SERVICE, ETC.),
• COSTS THAT COME WITH IT AND THE PARTNERS THAT ONE NEEDS TO WORK WITH.
BLANK LEAN CANVAS
 EXPLAINTION OF EACH LEAN CANVAS BLOCK
(AND IN THE ORDER TO GO THROUGH THEM):

• 1. PROBLEM

• EACH CUSTOMER SEGMENT (CS) YOU ARE THINKING TO WORK WITH WILL HAVE
A SET OF PROBLEMS THAT THEY NEED SOLVING.
• IN THIS BOX TRY LISTING THE ONE TO THREE HIGH PRIORITY PROBLEMS THAT
YOU CS HAS.
• WITHOUT A PROBLEM TO SOLVE, YOU DON’T HAVE A PRODUCT/SERVICE TO
OFFER.

• 2. CUSTOMER SEGMENTS

• PROBLEM AND CUSTOMER SEGMENTS CAN BE VIEWED AS INTRINSICALLY

CONNECTED —
• WITHOUT A CS IN MIND YOU CAN’T THINK OF THEIR PROBLEMS, AND VISA-
VERSA.
 EXPLAINTION OF EACH LEAN CANVAS BLOCK
(AND IN THE ORDER TO GO THROUGH THEM):

• 3. UNIQUE VALUE PROPOSITION

• VALUE PROPOSITION IS A PROMISE OF VALUE TO BE DELIVERED.

• IT’S THE PRIMARY REASON A PROSPECT SHOULD BUY FROM YOU.

• THINK WHY ARE YOU DIFFERENT AND WHY SHOULD YOUR CS BUY/INVEST TIME
IN YOU .
 EXPLAINTION OF EACH LEAN CANVAS BLOCK
(AND IN THE ORDER TO GO THROUGH THEM):

• 4. SOLUTION

• GET OUT OF THE BUILDING , SOLUTION IS NOT IN YOUR OFFICE, IT’S OUT THERE
IN THE STREETS.

• SO GO INTERVIEW YOUR CUSTOMER SEGMENT, ASK THEM QUESTIONS, AND

TAKE THOSE LEARNINGS.

• REMEMBER THE LEAN STARTUP IS VALIDATED LEARNING THROUGH A

CONTINUAL BUILD — MEASURE — LEARN CYCLE.
 EXPLAINTION OF EACH LEAN CANVAS BLOCK
(AND IN THE ORDER TO GO THROUGH THEM):

• 5. CHANNELS

• CHANNELS ARE WAYS FOR YOU TO REACH YOUR CS.

• IN INITIAL STAGES, IT’S IMP NOT TO THINK ABOUT SCALE, BUT TO FOCUS ON
LEARNING.

• WITH THAT IN MIND, TRY TO THINK ABOUT WHICH CHANNELS WILL GIVE YOU
ENOUGH ACCESS TO YOUR CS AT THE SAME TIME GIVE YOU ENOUGH LEARNING.

• CHANNELS CAN BE EMAIL, SOCIAL, CPC ADS, BLOGS, ARTICLES, TRADE SHOWS,
RADIO & TV, WEBINARS ETC. AND BTW, YOU DON’T HAVE TO BE ON ALL OF
THEM, JUST WHERE YOUR CS ARE.
 EXPLAINTION OF EACH LEAN CANVAS BLOCK
(AND IN THE ORDER TO GO THROUGH THEM):

• 6. REVENUE STREAMS

• HOW YOU PRICE YOUR BUSINESS WILL DEPEND ON THE TYPE OF MODEL IT IS,
HOWEVER, IT’S QUITE COMMON FOR STARTUPS TO LOWER THEIR COST, EVEN
OFFER IT FOR FREE TO GAIN TRACTION.

• HOWEVER, THIS CAN POSE A FEW PROBLEMS.

• THE KEY BEING IT ACTUALLY DELAYS/AVOIDS VALIDATION.

• GETTING PEOPLE TO SIGN UP FOR SOMETHING FOR FREE IS A LOT DIFFERENT

THAN ASKING THEM TO PAY.

• THERE IS ALSO THE IDEA OF PERCEIVED VALUE.

 EXPLAINTION OF EACH LEAN CANVAS BLOCK
(AND IN THE ORDER TO GO THROUGH THEM):

• 7. COST STRUCTURE
• LIST ALL OPERATIONAL COSTS FOR TAKING THIS BUSINESS TO MARKET.

• HOW MUCH WILL IT COST TO BUILD / LANDING PAGE?

• WHAT IS YOUR BURN RATE — YOUR TOTAL MONTHLY RUNNING COSTS?

• HOW MUCH WILL IT COST TO INTERVIEW YOUR CUSTOMER SEGMENT?

• HOW MUCH DO MARKET RESEARCH PAPERS COST? ETC.

• YOU CAN THEN USE THESE COSTS AND POTENTIAL REVENUE STREAMS TO
CALCULATE A ROUGH BREAK-EVEN POINT.
 EXPLAINTION OF EACH LEAN CANVAS BLOCK
(AND IN THE ORDER TO GO THROUGH THEM):

• 8. KEY METRICS

• EVERY BUSINESS, WILL HAVE SOME KEY METRICS THAT ARE USED TO MONITOR
PERFORMANCE.

• BEST WAY IS TO VISUALIZE A FUNNEL TOP DOWN THAT FLOWS FROM LARGE
OPEN-TOP, THROUGH MULTIPLE STAGES, TO NARROW END.

• A GOOD MODEL TO HELP WITH THIS IS DAVE MCCLURE’S ARRRR (AKA PIRATE
METRICS)
 EXPLAINTION OF EACH LEAN CANVAS BLOCK
(AND IN THE ORDER TO GO THROUGH THEM):

• 9. UNFAIR ADVANTAGE

• DIFFICULT BLOCK TO ANSWER. THINK ABOUT THIS AS HAVING AN UNFAIR

ADVANTAGE THAT HELP WHEN IT COMES TO SEEKING PARTNERS & INVESTORS.

• DEFINITION OF UNFAIR ADVANTAGE: “THE ONLY REAL COMPETITIVE ADVANTAGE

IS THAT WHICH CANNOT BE COPIED AND CANNOT BE BOUGHT.” — JASON
COHEN.

• UNFAIR ADVANTAGE CAN BE INSIDER INFO, A DREAM TEAM, GETTING EXPERT

ENDORSEMENTS, EXISTING CUSTOMERS ETC.

• SO RATHER THAN THINK ABOUT ADDING SOMETHING LIKE “COMMITMENT AND

PASSION” AS AN UNFAIR ADVANTAGE (BECAUSE IT IS NOT), THINK ABOUT WHAT
YOU HAVE THAT NO ONE ELSE CAN BUY.
 AIRBNB

• BACK IN 2008, 3 NEIGHBORS, NAMELY BRIAN CHESKY, JOE GEBBIA, NATHAN

BLECHARCZYK, DECIDED TO EARN SOME MONEY BY SHARING SPARE SPACE IN THEIR
SAN FRANCISCO ACCN WITH GUESTS OF A POPULAR CONFERENCE HOSTED IN THIS
CITY.

• IN 10 YEARS, IT WAS ALREADY ONE OF WORLD’S BIGGEST

TOURIST ACCOMMODATION PLATFORMS WITH FUNDING THAT EXCEEDS $4.4
BILLION.

• AIRBNB IS A PERFECT EXAMPLE OF HOW FLEXIBILITY AND A CREATIVE APPROACH

HELPED TRANSFORM A SMALL IDEA INTO A GIANT OF THE ONLINE TOURIST
MARKET.

• MOST PROBABLY, THE LEAN CANVAS FOR THIS STARTUP WOULD LOOK THE
FOLLOWING WAY.
• PROBLEM:
• IT IS VERY CHALLENGING TO FIND CHEAP AND AFFORDABLE ACCOMMODATION FOR
TOURISTS.
• TRADITIONAL HOTELS LACK AUTHENTICITY, SO TRAVELERS MAY HAVE ISSUES WITH
FINDING TRULY AUTHENTIC ACCOMMODATIONS IN THE COUNTRIES TO WHICH THEY
TRAVEL.
• PEOPLE WITH SOME EXTRA SPACE OR ACCOMMODATIONS MAY NOT KNOW HOW TO
MONETIZE THEM.
• HOME-SHARING CULTURE IS FAR FROM BEING CULTIVATED.
• SOLUTION:
• A WEB SERVICE THAT ALLOWS TRAVELERS TO FIND AFFORDABLE
ACCOMMODATIONS, AND HELPS HOMEOWNERS TO EARN EXTRA MONEY BY
RENTING OUT THEIR ACCOMMODATIONS ON A DAY-BY-DAY BASIS.
• UNIQUE VALUE:
• TRAVELERS CAN GET AN AUTHENTIC LIVING EXPERIENCE AT AN AFFORDABLE PRICE.
• HOMEOWNERS CAN EARN EXTRA MONEY BY RENTING OUT THEIR VACANT AREAS.
• UNFAIR ADVANTAGE:
• THE OPTION OF RENTING OUT SPACE IS AVAILABLE TO ANY HOMEOWNER.
• FLEXIBLE BI-DIRECTIONAL RATING SYSTEM FOR BOTH TOURISTS AND
HOMEOWNERS.
• INSURANCE BY DEFAULT BY HOSTS.
• CUSTOMER SEGMENTS:
• TRAVELERS SEARCHING FOR AFFORDABLE AND AUTHENTIC ACCOMMODATIONS.
• PEOPLE THAT ARE INTERESTED IN RENTING OUT THEIR EXTRA SPACE.
• EXISTING ALTERNATIVES:
• BOOKING.COM, HOTELS.COM.
• KEY METRICS:
• NUMBER OF BOOKINGS, NUMBER OF ACCOMMODATION HOSTS ON THE PLATFORM,
NPS, DAU/MAU.
• HIGH-LEVEL CONCEPT:
• AN APP THAT ESTABLISHES A HOST-SHARING ECONOMY.
• CHANNELS:
• INTERACTION WITH THE AUDIENCE, WORD OF MOUTH, ONLINE ADS, REFERRALS.
• EARLY ADOPTERS:
• PEOPLE THAT ARE READY TO SHARE THEIR RESIDENCES AND BECOME HOSTS.
• COST STRUCTURE:
• DEVELOPMENT, HOSTING, PAYROLL, MARKETING, INSURANCE, PHOTOGRAPHY.
• REVENUE STREAMS:
 AMAZON
• THE WORLD’S LARGEST TECHNOLOGY GIANT STARTED IN 1994 AS A BOOK-SELLING
WEBSITE BUILT BY JEFF BEZOS.

• LATER ON, THE ENTREPRENEUR TOOK MANY EXPERIMENTS AND ADAPTED TO

VARIOUS MARKET TRENDS TO DEVELOP HIS IDEA AND GROW HIS STARTUP.

• WHAT WE SEE NOW IS A PONDEROUS COMPANY INVOLVED IN ALL TECH SPHERES

AND E-COMMERCE DOMAINS.

• IN 1997, THE BUDGET OF THIS PLATFORM ALREADY REACHED $50 MILLION.

• THIS MEANS THAT BEZOS DID EVERYTHING RIGHT ALMOST FROM THE VERY START.

• THE LEAN CANVAS FOR HIS STARTUP WOULD PROBABLY LOOK LIKE THIS.
• PROBLEM:
• LACK OF ONLINE BOOKSTORES.
• PEOPLE HAD ISSUES WITH SELECTING BOOKS IN TRADITIONAL BOOKSTORES DUE TO
THE LACK OF RATINGS AND REVIEWS.
• SOLUTION:
• AN ONLINE BOOKSTORE WITH BILLIONS OF TITLES.
• UNIQUE VALUE:
• AN OPPORTUNITY TO BUY BOOKS FROM HOME BY USING A PC.
• UNFAIR ADVANTAGE:
• NO PREMISES AND FEWER EMPLOYEES, WHICH MEANS LOWER PRICES.
• NO COMPETITORS IN THE DOMAIN OF E-COMMERCE.
• CUSTOMER SEGMENTS:
• BOOK READERS, BOOK COLLECTORS.
• EXISTING ALTERNATIVES:
• INTERLOC (FUTURE ALIBRIS), LOCAL BOOKSELLERS, BARNES & NOBLE.
• KEY METRICS:
• CAC, USER TRAFFIC, WEBSITE’S ROI.
• HIGH-LEVEL CONCEPT:
• THE BIGGEST BOOKSTORE IN THE WORLD.
• CHANNELS:
• AFFILIATES, RESELLERS.
• EARLY ADOPTERS:
• BOOK ENTHUSIASTS SEARCHING FOR RARE BOOKS;
• ORDINARY INTERNET USERS THAT ARE INTERESTED IN ONLINE BOOKSTORES.
• https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.thepo
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• GOOD ARTICLE

• https://youtu.be/RzkdJiax6Tw