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<p> <span style="font-family:times new roman,times,serif;"><span style="font-size:14px;">Start-up and established conglomerates ponder about creating or pivoting their business models and have serious questions like what business model to choose, which will give a competitive advantage, which will be the right fit for us. Creating an innovative business model which is disruptive is as important as creating a product with unique value proposition. As Harvard Professor Michael J Skok states, the perfect storm happens when <strong>Disruptive Business Model, Discontinuous innovation and Uunderserved Market</strong> overlap. It should create innovator’s dilemma by changing the game, threatening the incumbents, rewriting the rules and creating a new playing field. (Eg. Google’s model of leveraging data gathered from its free services for ad revenue as opposed to Microsoft’s licensing model for software).</span></span></p> <table align="left" border="1" cellpadding="0" cellspacing="0" style="width:360px;" width="360"> <tbody> <tr> <td colspan="5" style="width:360px;height:2px;"> <p style="text-align: center;"> Business Model Canvas (BMC)</p> </td> </tr> <tr> <td rowspan="2" style="width:71px;height:51px;"> <p style="text-align: center;"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Key Partnerships</span></p> </td> <td style="width:67px;height:51px;"> <p style="text-align: center;"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Key Activities</span></p> </td> <td rowspan="3" style="width:67px;height:51px;"> <p style="text-align: center;"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Value Proposition</span></p> </td> <td style="width:69px;height:51px;"> <p style="text-align: center;"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Customer Relationship</span></p> </td> <td rowspan="2" style="height:51px;"> <p style="text-align: center;"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Customer Segments</span></p> </td> </tr> <tr> <td style="width:67px;height:52px;"> <p style="text-align: center;"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Key Resources</span></p> </td> <td style="width:69px;height:52px;"> <p style="text-align: center;"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Channels</span></p> </td> </tr> <tr> <td colspan="2" style="width:138px;height:23px;"> <p style="text-align: center;"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Cost Structures</span></p> </td> <td colspan="2" style="width:155px;height:23px;"> <p style="text-align: center;"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Revenue Streams</span></p> </td> </tr> </tbody> </table> <p> <span style="font-family:times new roman,times,serif;"><span style="font-size:14px;">The figure titled<strong> Business Model Canvas</strong> (BMC) shown was developed by Alexander Osterwalder is a strategic management tool which helps entrepreneurs design a customized business model by picturing out the unique value proposition of their product or service which is the core of the model, the value creation process and the value delivery process.</span></span></p> <p> <span style="font-size:14px;"><span style="font-family:times new roman,times,serif;">In figure titled Segments in BMC, I have created an abridged simplistic canvas, where the center of segments depicts the value (core of the business). Adjacent to the core (value proposition / value segment), on one end there is operational or business part of the model (<strong>value creation process</strong>) which includes, key resources required for running the business, key operational activities in the business, key partnerships for value delivery and the costs incurred. On the other end there is customer part of the model (<strong>value delivery process</strong>) which includes, channels for customer acquisitions / developing customer relationships, channels of distribution / delivery to customers, Revenue from sales.</span></span></p> <table align="left" border="1" cellpadding="0" cellspacing="0"> <tbody> <tr> <td colspan="3" style="width:378px;height:1px;"> <p align="center"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Segments in BMC</span></p> </td> </tr> <tr> <td style="width:119px;height:128px;"> <p align="center"> </p> <p align="center"> </p> <p align="center"> </p> <p align="center"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Value Creation</span></p> <p align="center"> </p> <p align="center"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">(Business)</span></p> <p align="center"> </p> <p align="center"> </p> <p align="center"> </p> </td> <td style="width:139px;height:128px;"> <p align="center"> </p> <p align="center"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Value</span></p> <p align="center"> </p> <p align="center"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">(Product/Service)</span></p> <p align="center"> </p> </td> <td style="width:120px;height:128px;"> <p align="center"> </p> <p align="center"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">Value Delivery</span></p> <p align="center"> </p> <p align="center"> <span style="font-family:lucida sans unicode,lucida grande,sans-serif;">(Customer)</span></p> <p align="center"> </p> </td> </tr> </tbody> </table> <p> <span style="font-family:times new roman,times,serif;"><span style="font-size:14px;">A new business venture need to do concept testing, where the venture takes several ideas and determines their viability, and develops prototype of the products which are likely to yield the best results. Most of the ventures overlook this step and are blinded by their preconceived notions. Products testing is a strategy which gives feedback on marketing and sales activities, achieve competitive advantage through product superiority, determine the willingness to pay, predict consumer acceptance and monitor product quality.</span></span></p> <p> <span style="font-size:14px;"><span style="font-family:times new roman,times,serif;"><strong style="color: rgb(255, 0, 0);">Top 5 Reasons for Start-up Failure</strong></span></span></p> <p> <span style="font-family:times new roman,times,serif;"><span style="font-size:14px;">Weak barrier to entry (clones and me-too product / service)</span></span></p> <p> <span style="font-family:times new roman,times,serif;"><span style="font-size:14px;">Failure in finding the must-have product rather than nice to have products (Product-Market Fit)</span></span></p> <p> <span style="font-family:times new roman,times,serif;"><span style="font-size:14px;">Challenges in acquiring customers or Customer Acquisition Cost is greater than the Life Time Value (CAC > LTV)</span></span></p> <p> <span style="font-family:times new roman,times,serif;"><span style="font-size:14px;">Poor Execution of the Team</span></span></p> <p> <span style="font-family:times new roman,times,serif;"><span style="font-size: 14px;">High cash burn rate and weak unit economics</span></span></p>
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