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Business Model

By definition, a business model is a model representation of the logical connections of how an organization creates value for customers and secures revenue. The goal of this module is to understand what makes up a business model, how you can develop business models for your idea, and which steps are crucial in the process.

Lesson 1: Customer Benefit

A company does not exist for its own sake. Therefore, the benefit for customers is at the center of considerations around the business model. A company presents itself to its customers with a value proposition - also called Unique Selling Proposition (USP). A prerequisite for the development of the USP is a problem of the customers, which the company solves and thereby creates added value. One way to identify customer problems is through the "Jobs to be done" method by Dr. Clayton Christensen, a professor at Harvard University. In the following videos, he explains the principle using the jobs that cars and milkshakes can do for their owners.
To the video "Jobs to be done - Clay Christensen"
To the McDonald's video: Jobs done by Milkshakes

Lesson 2: Market Development

If a company has developed a solution to a problem that it wants to sell, it enters the market as a provider. All providers of solutions to the problem meet with the customers who have the problem in the market. The approach to customers should be tailored to how developed the market already is. Is the market new, and the customers are not even aware of their problem yet? Or are there already many solutions, and one is in competition with them?

When considering which customers to focus on when entering the market, Everett M. Rogers' "Diffusion of Innovation" curve (Diffusion Theory) can help. In the video, you will learn which customer groups you need to convince if you want to establish yourself in a market.
To the video "Diffusion of Innovation Theory: The Adoptive Curve"
To the video "How to start a movement – Lessons about leadership from a dancing guy".

Lesson 3: Elements of the Business Model

The Business Model Canvas by Dr. Alexander Osterwalder of the University of St. Gallen is a practical and widely used tool for developing business models. It represents the areas of every company that can be designed to create value. The canvas can be used to describe, design, and question the logical connections within a business model.
The Business Model Canvas explained by Alexander Osterwalder
Look at least one example of a business model innovation. You can choose from:
AirBnB
Uber
Tesla
Netflix
Apple

Sources

¹ Gabler Business Dictionary, retrieved on 11.04.2020 from https://wirtschaftslexikon.gabler.de/definition/geschaeftsmodell-52275

² Book recommendation: Christensen, C., Hall, T., Dillon, K., & Duncan, D. (2016). Competing against luck. New York: HarperBusiness.

³ Book recommendation: Osterwalder, A., & Pigneur, Y. (2013). Business model generation. Hoboken, N.J.: Wiley.
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