Business Model Canvas

Question 1

What are some of the business model patterns that exist?

Answer 1

1. Multi-sided platform
2. Free
3. Subscription box
4. Crowdfunding
5. Peer-to-peer sharing

Question 2

Describe and give an example of the multi-sided platform business model pattern

Answer 2

There are two distinct but different customer segments with different needs and value propositions, but they depend on each other in a significant way. The revenue streams are often unbalanced, so that one segment subsidizes the other. Eg: Visa/MasterCard: the two segments are their cardholders and the merchants (retailers/restaurants/hotels/etc.). The more people that accept Visa, the more other businesses want to offer Visa as a method of payment. Eg: eBay - customers and sellers; newspapers - advertisers and readers; video game consoles; social media

Question 3

What are the four ways in which google uses a multi-sided platform business model canvas pattern?

Answer 3

1. Adwords; advertisers can target their main customer segment instead of sending out a broad advertisement: they can use their advertising dollars more effectively
2. Free search engine; the more people that use google as a web browser, the more appealing it is to advertisers
3. AdSense; if you have a website and you let google put ads on your website, google will pay you a little bit of what they are earning from their advertisers
4. Keyword activities; when you type in certain keywords, ads about those topics will show up more. More popular keywords will earn more advertising dollars.

Question 4

Describe the free business model pattern

Answer 4

You have at least one customer segment that receives a benefit either completely free or close to free. That close-to-free offer is financed by another part of the business model or another customer segment, such as advertising

Question 5

What are the two types of the free business model pattern?

Answer 5

“Freemium” and “Bait and Hook”

Question 6

Describe and give an example of the freemium business model pattern

Answer 6

The product is free to the masses, but is financed by a smaller group who is willing to pay for added features. Eg: Skype is free to everyone, but SkypeOut is a model that people pay for in order to use skype from phone to phone instead of computer to computer. These costs to users help to subsidize the costs generate by the free model

Question 7

When does the freemium model not work? Why?

Answer 7

When you are manufacturing goods, because you have too many shipping costs

Question 8

Describe and give an example of the bait and hook business model pattern

Answer 8

When one part of the product is very close to free, but there is another part that keeps customers coming back to buy more. Eg: Gillette’s razor blade handles are very close to free, but then customers have to go back and buy the razor blades again and again, which have a much higher cost margin than the handles

Question 9

What do you have to do to make sure that your customers keep coming back? How does Gillette do this?

Answer 9

You have to be able to create high lock-in costs. Gillette does this by creating a lot of patents to protect their designs. Once those patents become public knowledge, other companies also pay Gillette for the use of those designs. This increases their revenue streams and increases the lock-in costs of customers of other companies

Question 10

Describe and give an example of the subscription box business model pattern

Answer 10

When customers pay a set fee for a monthly/yearly/etc. product. Eg: makeup subscriptions/magazine subscriptions: you get a box of makeup/magazine in the mail every month/year

Question 11

Describe and give an example of the crowdfunding business model pattern

Answer 11

When you get a little bit of money from a lot of different people in return for pre-orders of your product, shares of the company, or other rewards. Eg: Kickstarter

Question 12

Describe and give an example of the peer-to-peer sharing business model pattern

Answer 12

When you have many people who help to drive/run/manage your company. Eg: AirBnB, Uber

Question 13

What are the different customer segments for a social business model canvas? (What is the difference between the user and the customer?)

Answer 13

User: the user of the good, who cannot access the good/service, or who cannot afford the entire cost of the product
Customer: the group that supports the social initiative/pays for another product. The revenues from these customer streams pay for the costs of the goods to the user

Question 14

How many value propositions do you need for a social business model canvas? Why?

Answer 14

You need two, because you have two distinct customer segments

Question 15

What is impact measurement?

Answer 15

How much of an impact your product/your venture has made: how many schools were able to get books, how many children were able to get into school, etc.

Question 16

What happens to a profit surplus in a social venture?

Answer 16

You have to decide what to do with the surplus; what will best increase the social value that is being created? Do you put it towards the social side, or do you re-invest it in the business?

Question 17

What happens to a profit surplus in a business venture?

Answer 17

The surplus is used for wealth creation

Question 18

Give an example of a social business. Be able to describe its business model canvas (not on flashcards)

Answer 18

Kiva

Question 19

What are the four steps to building the business model canvas?

Answer 19

1. Talk to customers: ensure you have a value proposition they care about
2. Understand the environmental context: what are the resulting implications for your business model
3. Prototype the business model canvas: think and create visually
4. Tell the story

Question 20

Describe the process of understanding the environmental context

Answer 20

Shrink down the canvas and look at the environmental effects around in; what are the implications for your product?

Question 21

What are the four environmental forces?

Answer 21

1. Market forces
2. Key Trends (is your model prepared for emerging trends)
3. Industry forces (is your model in line with current customer needs)
4. Macroeconomic effects (how will your model change with macroeconomic effects)

Question 22

Describe the process of talking to customers

Answer 22

Talk to your potential customers / target market, and see if there is a need or a demand for your product. Does it create a solution that needs to be met?

Question 23

Describe the process of prototyping your business model canvas

Answer 23

Layout what your business model canvas looks like using words, drawings/images, and relationships: use key information to simplify and clarify what your business is and how it will work

Question 24

Describe the process of telling the story of the business model canvas

Answer 24

Use a logical and connected story to explain how the different elements of the business model fit together

Question 25

Give an example of a value proposition statement

Answer 25

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