Business Model Framework Example

Business Model Framework is a comprehensive approach to building a business case. It includes the following components:

1. Business Opportunity:

• Describe the market opportunity or problem you're addressing.

• Explain how this opportunity aligns with the company's strategic goals.

2. Value Proposition:

• Highlight the unique value your solution offers to customers.

• Explain how it addresses their pain points or needs.

3. Market Strategy:

• Outline the plan to enter the market.

• Define your target customer segments.

• Explain your competitive positioning.

4. Revenue Model:

• Describe how you intend to generate revenue.

• Specify pricing strategies and sales channels.

5. Cost Structure:

• Break down the costs associated with your initiative.

• Identify both initial and ongoing costs.

6. Organizational Capability:

• Assess the company's existing capabilities and expertise.

• Identify gaps that need to be addressed.

7. Technology and Product:

• Explain the technology or product you'll leverage.

• Highlight its features and how it solves the problem.

8. Risks and Assumptions:

• Identify potential risks and assumptions.

• Develop strategies to mitigate those risks.

9. Financial Projections:

• Present a financial forecast.

• Include projected revenues, expenses, and profits.

10. Implementation Plan:

• Outline the steps and timeline for executing the initiative.

• Assign responsibilities and resources.

11. Metrics and KPIs:

• Define key performance indicators to measure success.

• Establish milestones and targets.

Here's a sample business case using the Business Model Framework:

Business Opportunity: There is a growing need for advanced data analytics tools in the market. Our solution can help businesses make data-driven decisions and gain a competitive edge, aligning with our strategic goal of becoming a data-driven company.

Value Proposition: Our data analytics platform offers real-time insights, predictive analytics, and customizable dashboards, enabling businesses to optimize operations, reduce costs, and increase revenue.

Market Strategy: We will initially target medium-sized enterprises in the healthcare sector, where data analytics adoption is lagging. Our strategy includes targeted marketing campaigns and partnerships with healthcare associations.

Revenue Model: We will offer a tiered subscription model based on the number of users and data storage. Additional revenue will come from consulting services and support packages.

Cost Structure: Costs include software development, marketing, and customer support. We'll also invest in data security measures and training for our team.

Organizational Capability: Our team has strong expertise in data science and software development, but we need to hire more sales and marketing professionals.

Technology and Product: Our platform leverages cutting-edge machine learning algorithms to provide accurate insights. It is scalable and can integrate with existing IT systems.

Risks and Assumptions: Risks include market competition and data security concerns. We assume that our marketing efforts will generate sufficient leads.

Financial Projections: We project $1.5 million in revenue in the first year, with a 20% annual growth rate. The break-even point is expected in the second year.

Implementation Plan: Launch marketing campaigns, hire sales and marketing teams, develop the software, and provide training for customer support.

Metrics and KPIs: Key performance indicators include customer acquisition cost, customer lifetime value, and user adoption rates.

Here is another example business case using the Business Model Framework:

Value Proposition: Our proposed solution is an AI-powered customer service chatbot that can manage common customer inquiries 24/7. This will provide customers with quicker responses and resolutions to their issues.

Target Customers: Our chatbot will target existing customers who contact our customer service department for assistance. It will be able to handle common repetitive inquiries, freeing up our human agents for more complex issues.

Revenue Sources: The chatbot will be sold as a SaaS offering with monthly recurring subscription fees based on number of users. We estimate selling to at least 50 customers in Year 1 generating over $500,000 in revenue.

Key Activities: Development of natural language capabilities for conversational AI chatbot. Integration of chatbot with existing CRM and knowledge base. Ongoing training of chatbot with new data.

Key Resources: Data science team to develop NLP algorithms. Customer service scripts and dialogues. Integration with CRM and knowledge base APIs. Cloud infrastructure to host chatbot and scale usage.

Key Partners: Cloud providers like AWS for hosting infrastructure. AI & chatbot platforms like IBM Watson for base NLP capabilities. System integrators to help integrate with existing systems.

Cost Structure: Main costs will be cloud hosting fees, salaries for data scientists, customer service team for training chatbot, and marketers to promote the solution.

Competitive Advantage: Our key advantage is a highly accurate NLP model tailored for each client's industry terminology. This provides a more seamless customer experience compared to generic chatbots.

Implementation Roadmap: We plan an 8 month timeline from proof of concept to beta launch. We already have prototype with 80% accuracy for basic inquiries. Further development will expand knowledge domains.

These business case examples provides a structured and comprehensive framework for presenting a new business opportunity and can be used to gain support from stakeholders or investors.

In my next blog, I'll cover different types of business model framework structures such as Lean Canvas, Business Model Canvas, Gartner Value Model Framework, Blitzscaling Canvas, SaFe Value Streams etc.

Sash Barige

Oct/13/2019

Photos: unsplash.com