S

Business Models –

Patterns & Examples

Part IAhmed Taha

May 2015

Agenda

S Business Model

S Descriptions

S Business Model Patterns

S Unbundling business models

S Long tail

S Multi-Sided Platform

S Free Business Model

S Open Business Model

Business Model

S Definition:

S A business model describes the rationale of how an

organization creates, delivers, and captures value

S It is the way a business or a product monetize the

value it deliver.

Business Model Canvas

Business Model Patterns

S There is no right or wrong. Just make sure your offer or product fit the business model.

S You can invent your own pattern.

S Famous Patterns

S Unbundling business models

S Long tail

S Multi-Sided Platform

S Free Business Model

S Open Business Model

Unbundling business models

S Divide business into separate entities to focus and avoid

conflicts.

S Business entities can be

S Product Innovation department

S Innovation and Employee centered

S Infrastructure Management

S Cost mentality

S Customer relationship management

S Customer comes first.

Example

S Swiss Private Banking Mentality

S Focus on the wealthy, giving them advice. (relationship based business)

S They want to keep everything in house for secrecy.

S Today Environment

S Outsourcing is attractive, cheaper

S Laws against total banking secrecy

S Clients are interested in best offer regardless of origin

S Product Innovation is driven by speed and quick market entry

Example

S Maerki Baumann

S Unbundle its core business

S Customer relationship and advisory

S Incore Bank, offer banking services to other banks

S Geneva-based Pictet

S Largest swiss private bank

S 200 years old

S Remains integrated

Long Tail

S Offering a large number of niche products.

S Selling less of more.

Long Tail – Example 1

S Book Publishing Mentality

S Work only with known authors

S Print and publish well known best sellers with high

estimated demand.

S Lulu.com

S Anyone can publish

S Printing is done after book order

Long Tail – Example 1

Long Tail – Example 2

S Lego interlocking bricks

S Variety of themes

S Competitions becomes tough with new entries

S Lego started user-generated content

S Users can use Lego Digital designer to create their own

theme.

Long Tail – Example 2

Multi-Sided Platform

S Bring two distinct customer groups together

S Business has two segments A,B. The existence of one

segment without the other makes no profit.

S Both segments pay.

S Google- AdSense

S Website owners

S Advertisers

Multi-Sided - Example

S PSP / XBOX/ Wii

S Segment A

S PSP / XBOX target hardcore gamers

S Wii target causal gamers

S Segment B

S Game developers

Multi-Sided - Example

PSP / XBOX Wii

Target gamers Hardcore gamers Casual Gamers

Revenue Stream Game players Both game players and

developers

Price Range High Low

Game quality Very sophisticated Motion controlled and

fun factor

Game developers Licensed game

manufacturers like EA-

sport.

Royalty from game

developers

Multi-Sided - Example

S Apple – iTunes

S Songs and album maker

S Song and music listeners

Free business Model

S Another form of Multi-sided Business Model

S One segment is lured with the free service

S The other segment pay for the service

Free business Model -

Example

S Google - Adwords

S Search users

S Advertisers

S Skype

S Free users online Voice calls

S Premium users pay for VOP though wholesale carriers

Bait and Hoot

S Bait and Hoot another form of free

business model

S Customers start as Free user and

then encourage to make purchases

S Gillette sold razor handles at steep

discount or even for free, to create

demand on disposable blades

Bait and Hoot - Example

S Apple

S Offer Free iPhone

S Obligated with mobile operator for

two years contract

Open business Model

S Collaborating with external parties

S Using service from external companies

S Provide help to external parties

S Provide service to external companies

Open business Model -

Example

S Procter and Gamble

S Instead of spending more on R&D

S “Connect and develop” strategy

S Exploiting research through external partners

Open business Model -

Example

S InnoCentive originally part of Eli Lilly

S Now InnoCentive is an independent business that

connects

S Organizations that need research resources

S With Researchers around the world

Reference

S http://www.reddit.com/r/explainlikeimfive/comments/1ggl1b/eli5_how_do_apps_like_instagram_and_vine_make/

S http://bmimatters.com/

S http://knowledge.wharton.upenn.edu/article/how-instagram-can-make-money-without-alienating-users/

S https://www.linkedin.com/pulse/20140331143635-39873847-social-media-landscape-business-models-5-10

S http://techcrunch.com/2013/06/12/king-quits-advertising-since-it-earns-so-much-on-candy-crush-purchases/

S http://www.businessinsider.com/zynga-revenue-analysis-2011-9

About Me

S Software Engineer, Co-founder of Inova LLC , TA at Alexandria University

S Website : www.ahmed-taha.com

S LinkedIn: eg.linkedin.com/in/ahmdalitaha

S Twitter : www.twitter.com/ahmdalitaha

S Email : ahmed.taha@inovaeg.com