Develop Business Model

Developing a business model is crucial for understanding how your product will create, deliver, and capture value. This step involves defining your value proposition, identifying revenue streams, determining key partners and resources, and outlining your cost structure. A well-defined business model helps ensure the sustainability and profitability of your product.

Why it's Important

Clarity on Value Creation: Defines how your product will provide value to customers.
Revenue Generation: Identifies how your product will generate revenue.
Resource Allocation: Helps in identifying key resources and partners necessary for success.
Cost Management: Outlines the cost structure to manage expenses effectively.
Sustainability: Ensures your product is financially viable in the long term.

How to Implement

Define Value Proposition

Clearly articulate the unique value your product provides to customers.

Identify Customer Segments

Define the specific groups of people or organizations your product serves.

Determine Revenue Streams

Identify how your product will generate income (e.g., subscriptions, one-time sales, advertising).

List Key Resources

Identify the essential resources needed to deliver your value proposition (e.g., technology, personnel, partnerships).

Identify Key Partners

Determine the partners and suppliers that will help you succeed (e.g., technology partners, distributors).

Outline Cost Structure

Map out the costs involved in operating your business (e.g., development, marketing, operations).

Create a Business Model Canvas

Use the Business Model Canvas to visually map out the components of your business model.

Available Workshops

Value Proposition Workshops: Define and refine your product’s value proposition.
Customer Segmentation Workshop: Identify and analyze your target customer segments.
Revenue Model Workshop: Explore and define potential revenue streams.
Business Model Canvas Workshop: Create a comprehensive Business Model Canvas with your team.
Cost Estimation Workshop: Outline and analyze your cost structure for better financial planning.

Deliverables

A clear value proposition.
Defined customer segments.
Identified revenue streams and pricing strategy.
List of key resources and partners.
Detailed cost structure.
Completed Business Model Canvas.

How to Measure

Value Proposition Clarity: Ensure your value proposition is clear and compelling.
Revenue Stream Viability: Assess the potential of identified revenue streams to generate income.
Resource Identification: Verify that all necessary resources and partners are identified.
Cost Structure Accuracy: Ensure the cost structure is comprehensive and realistic.
Business Model Canvas Completeness: Evaluate the completeness and coherence of your Business Model Canvas.

Real-World Examples

Netflix

Business Model: Subscription-based model providing unlimited streaming of movies and TV shows.

Outcome: Successfully transitioned from DVD rentals to streaming, becoming a leading entertainment provider.

Uber

Business Model: Platform connecting drivers with passengers, with revenue generated through ride commissions.

Outcome: Disrupted the traditional taxi industry by offering a convenient and cost-effective alternative.

Airbnb

Business Model: Platform for short-term rentals, earning revenue through service fees on bookings.

Outcome: Created a new market for shared accommodations, benefiting both hosts and travelers.

Get It Right

Customer Focus: Ensure your business model is centered around delivering value to customers.
Diverse Revenue Streams: Explore multiple revenue streams to diversify income sources.
Cost Efficiency: Regularly review and optimize your cost structure to improve profitability.
Scalability: Design your business model to scale with increasing demand.
Adaptability: Be prepared to pivot your business model based on market feedback and changes.

Don't Make These Mistakes

Ignoring Customer Needs: Focusing on internal capabilities rather than customer value.
Overcomplicating Revenue Streams: Creating overly complex revenue models that are hard to manage.
Underestimating Costs: Failing to account for all costs, leading to financial shortfalls.
Neglecting Key Partners: Overlooking the importance of strategic partnerships for growth.
Static Business Model: Not adapting the business model in response to market changes and feedback.

Provided courtesy of Deanne Watt, Chief Product Officer
MiNDPOP Group