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Enterprise

MindMap Gallery Discovering Business Models Zhu Wuxiang Wei Wei

Discovering Business Models Zhu Wuxiang Wei Wei

Different business models determine different enterprise outcomes. If you observe carefully, you will find that there are some companies in various industries that are different. These companies can often obtain profits that greatly exceed the average profit level of the industry, even in mature industries with fierce competition! This book provides an in-depth introduction to business models from both theoretical and practical perspectives.

Edited at 2021-05-08 12:10:18

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Discovering Business Models Zhu Wuxiang Wei Wei

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Outline

Principles of Business Model
- 9
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"Discovering Business Models" Zhu Wuxiang Wei Wei

Preface

When creating a business model, three issues need to be considered:

Keep thinking about who your “stakeholders” are

Analyze “what value can be exchanged” by stakeholders

Design a win-win “deal structure”

business model

What is your “positioning”?

What kind of "business system" should be established?

Which "profit model" to choose?

What “key resource capabilities” are needed?

What kind of "free cash flow structure" does it constitute?

Strategy and Business Model

Strategy determines the company’s positioning and the value it provides its customers

How does business model decision-making realize the company’s positioning and deliver the expected value?

Innovation is divided into two categories

technological innovation

Business model innovation

Insight into business models

business model

definition

A business model is essentially a transaction structure for stakeholders

The business model solves strategic problems before the formulation of corporate strategy, and is also a bridge connecting customer value and corporate value.

constitute

position

Positioning is what a company should do. It determines what products/services a company should provide to achieve customer value.

Positioning is the result of an enterprise's strategic choices and the starting point for other organic parts of the business model system.

theory

Michael Porter

"Competitive Strategy"

Pay attention to the development of enterprises at the company level

Jack Trout

"position"

Focus on the company’s specific products and services

Philip Kotler

"Marketing Management"

STP theory

Focus on product marketing

Positioning is about establishing a more direct and concrete link between the strategic and executive levels

business system

The business system refers to the business links needed for the company to achieve its positioning, the roles played by each partner, and the methods and content of stakeholder cooperation and transactions.

structure

Industry value chain

Internal value chain of the enterprise

Partner's role

Business system is the core of business model

key resource capabilities

Key resources and capabilities are important resources and capabilities needed to make the business system run.

Profit model

Profitability refers to how a company obtains revenue, allocates costs, and makes profits

free cash flow structure

The free cash flow structure is the cash income generated during the operation of the enterprise after deducting cash investment. Its discounted value reflects the investment value of the enterprise using this business model.

Corporation value

Enterprise value, that is, the investment value of a company, is the discounted value of free cash flow that the company expects to generate in the future.

The investment value of an enterprise is determined by its growth space, growth ability, growth efficiency and growth speed.

The positioning of an enterprise affects its growth space. The business system, key resources and capabilities affect the enterprise's growth ability and efficiency. Together with profitability, it will affect the enterprise's free cash flow structure, that is, it affects the enterprise's investment scale, operating cost payment and The ability and speed of sustained revenue growth, which in turn affects the investment value of the company and the efficiency and speed of corporate value realization.

Business model and management model

The management model includes strategy, organizational structure, management control, corporate culture, human resource management, and performance. The management model reflects the execution mechanism of the enterprise

Business model includes positioning, business system, key resources and capabilities, profit model, free cash flow, and enterprise value

The business model is the basic structure of the enterprise, similar to a battleship. The management model is similar to fleet officers and soldiers driving battleships.

The management model focuses on the determination of the company's long-term goals and the achievement of performance, while the business model is a bridge between meeting customer needs, creating value for customers and maximizing corporate value.

The management model emphasizes the execution ability of the organization and the people in the organization, while the business model tells everyone how the enterprise operates and reflects the operating mechanism of the enterprise.

position

How can companies position themselves?

Define the business of the enterprise

four methods

Define your business in terms of the products and services it sells

Emphasis on defining an enterprise's business for certain or all needs of a certain type of customer group

Determine the company's business based on the industry value chain link in which the company is located

Define the enterprise's business according to its key resource capabilities and their combinations

Target customers

three methods

Radically question existing customers’ mind-sets

Start thinking from different angles

Select customers based on the company's resources and capabilities

What kind of products and services does the company provide to its target customers?

experience

three methods

Existing gaps represent opportunities

do what you are good at

Find a balance between persistence and change

positioning role

Business positioning is a bridge that communicates "the past - the existing pattern, the present - its own characteristics, the future - the determination of the business model and the embodiment of the final corporate value"

business system

Identify business stakeholders

What business activities do I have or can engage in?

What business activities can the surrounding environment of the industry provide me with?

What value can I provide to relevant topics?

From a win-win perspective, how can I form these business activities into a value network while allowing stakeholders to get the benefits they want?

step

Find the right niche

Analyze your own strengths and see what resources and capabilities are needed

Build a stakeholder network

With the business system as the core, build the operating mechanism of the entire business model

key resource capabilities

resource

financial resources

physical resources

human Resources

information

intangible resources

customer relations

company network

strategic real estate

subtopic

ability

Organizational skills

material capabilities

trading ability

knowledge ability

Two methods

Determined according to the requirements of other conditions of the business model

Build a business model with key resource capabilities as the core

Focus on a single capability element within the enterprise and find and build other stakeholders that can be combined with that capability element.

Effectively integrate capability elements within the enterprise's internal value chain to create more competitive value chain outputs

experience

Different business models generally require different key resource capabilities.

The enterprise has its own key resource capabilities and uses these key resource capabilities to control other resource capabilities

Profit model

definition

Profitability is the source and method of corporate profits, and solves the problem of how companies themselves obtain profits.

A profit model that taps the value of attention

“Razor blade” profit model

Free cash flow structure and enterprise value

investment value

The discounted value of free cash flow expected to be generated by the investment object (project/business/enterprise) in the future

Whether an investment is worthwhile is determined by three factors

The term structure (FCF) of the free cash flow that the investment project is expected to generate in the future.

Duration of future expected free cash flow (H)

The rate of return required by investors, or the investor's opportunity cost (r), which is the cost of capital, reflects the company's expected future cash flow risk

Free cash flow from two perspectives

Total capital free cash flow

Equity Capital Free Cash Flow

The investment value of an enterprise and its realization efficiency and growth rate are determined by its growth space, growth efficiency, growth ability, growth speed and growth risk.

Growth space is affected by corporate positioning

Growth efficiency is closely related to business model

Growth capabilities are closely related to management mechanisms and execution capabilities, and are also related to business models.

Case: Hema Fresh

Five Steps to Business Model Design

Step One: Industry Scan

Industry scanning is based on the company itself, competitors, and benchmark companies, using the "Wei Zhu Business Model Six Elements Canvas" to describe them respectively.

Step 2: Pattern Analysis

Through scanning, we can discover the pain points and blind spots in our own or our competitors' existing models, as well as the opportunities for creation and improvement.

The specific methods include the "three mirrors"

Through a wide-angle lens, we discover more potential stakeholders and potential transaction-enabling technologies.

Look at the company's stakeholders from different angles through a multi-prism.

Restructure stakeholders and their transaction structures through a focusing lens.

Step Three: Pattern Design

After we have discovered the stakeholders and their resource capabilities, we can use the Wei-Zhu business model model to rearrange, combine or construct them to design some innovative business model solutions.

Step 4: Evaluate Decisions

two dimensions

The first dimension is result-based evaluation indicators, such as the return on investment of new business model companies, revenue growth or profit growth, user growth and user scale, etc.

The second dimension is process-based evaluation indicators, including the motivation, investment, resource capabilities, and resource utilization efficiency of stakeholder participation.

Step Five: Implement Feedback

Generally speaking, when building a new business model, it is recommended to conduct small-scale experiments first, and then amplify the successful model verified by the experiment for large-scale replication.

Business model canvas and Wei Zhu business model

The nine modules of the business model canvas are clearer and more operable

The Wei-Zhu business model model emphasizes the internal relationship between the six elements.