22/10/2024
Business Model
Prof. Dr. Juho Mäkiö
Example Scenario 1
• You go to a café in a shopping centre and realise that you need to
publish some documents that are part of the meeting you have with
an important customer. You use your smart devices (gadgets) to
search for a wireless smart printer nearby. You receive a response
from a nearby wireless smart printer. You send a dictation to the
printer and it prints out some text files for you at a reasonable and
realistic price instead of travelling to the office just to print.
Business Model?
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Example Scenario 2
• You are in a smart city and you feel like having some
Italian food. You use your smart gadget to look nearby
Italian restaurant. You engender a response from a
server from a nearby Italian restaurant, the server allows
you to book a table and order some meal from a range of
menu 25 min before you progress to the destiny.
Business Model?
IoT application domains
• Three main domains
– Industry,
– Smart city and
– Health care
• Main goal: to enrich the standard of
everyday life
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Industrial domain
• Industrial undertakings focus of the profitability and
financial transactions between enterprises, large
corporates and other associated entities.
• Typical cases
– banking sector,
– service sector,
– manufacturing and logistics and
• e.g.
– RFID to distinguish the materials and merchandise
– bus and train fare collection
– luggage management and routing
– intermediaries.
Added value ?
company
Material + Work Material + Work
Production
Storage Storage
Procure Logistics
Logistics Sales
ment Procurement Information Selling
market
market
Data Data
Money Finances Money
Capital market & Goverment
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Business models
• Business model: Public sector cost reduction
• Public sector investment for economic growth
• Provision by citizens through crowd-sourcing
• Private sector investment for revenue
• Private sector investment as technology demonstrator
• Private sector construction investment
• Academic research
• Collaboration and hybrid business models
IoT and IIoT Business Models
• The new business models will stem
from the increased interactions
afforded by IoT and IIoT (Industrial
IoT) devices
• Interactions and flow of
data/insights between connected
devices/machines and the user
increase possibilities for value
creation and capture.
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Business Model Canvas
• The Canvas is a strategic management tool that
provides:
– a visual framework for developing,
– describing, and
– analyzing a business model.
• Designed to be straightforward and user-friendly
• Tool that allows stakeholders (entrepreneurs,
managers, and teams) to lay out and iterate on
their business ideas quickly and effectively.
Interaction dimensions
There are four elements to the interactions:
1. the device owner/user (a person)
2. the connected machine or device
3. flow of data between the person and connected
device/machine
4. improvements to the performance of the person and
connected device from the analysis of the data.
Interactions between the four elements provide more
combinations of value provision and value capture.
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Components of a Business Model Canvas
• Nine building blocks, each representing a key component of a
business:
– Customer Segments
– Value Propositions
– Channels
– Customer Relationships
– Revenue Streams
– Key Resources
– Key Activities
– Key Partnerships
– Cost Structure
Benefits of the Business Model Canvas
• Clarity and Focus: Provides a clear and concise overview of how a business intends
to create, deliver, and capture value. It forces clarity of thought and focus by
distilling the business model into a single page.
• Alignment and Communication: Supports communication and understanding
among team members and stakeholders by providing a visual representation of
the business model.
• Flexibility and Iteration: Allows for quick adjustments and iterations, making it an
ideal tool for brainstorming and exploring various business strategies and
scenarios.
• Problem-Solving: Helps identify potential challenges and areas for improvement
within the business model, encouraging proactive problem-solving.
• Strategic Planning: Aids in strategic planning and decision-making by illustrating
the interconnected elements of the business, helping align operations with
broader business goals.
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Business Model Components
o Who is the customer? o How is revenue generated?
o What does the customer value? o What is the cost structure?
o How does our product/service
o How exactly is profit
meet the customer’s needs? created?
Customer
Value
Proposition Profit Model
Critical Critical
Processes Resources
o What are the business o What are the business
activities critical to our o and technology
being able to both provide resources necessary in
customers with the products order to carry out
and services they value and critical processes in an
do so in a profitable effective and efficient
manner? manner?
© Prof. Dr. Juho Mäkiö – [email protected] 13
Components of Apple’s Business Model
o High prices due to in-demand
o Technically-savvysegment of the
mass market hardware products (new, stylish,
o Seamless online access to content
high quality)
o Moderate manufacturing and
across multiple media
marketing costs
o High margins
Customer
Value
Proposition Profit Model
Critical Critical
Processes Resources
o Electronic content delivery platforms
o Internalproduct design o Relationships with content providers
o Product architecture o Employee talent in product design,
o Tight control of sales and marketing product architecture, brand
o Outsourced manufacturing management, digitization, and
digitization management
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Components of Walmart’s Business Model
o Cost-sensitive segment of the mass
market (‘Everyday Low Prices’) o Low prices, low costs
o Availability of a broad range of products, o High volume, high product turnover
enabling one-stop shopping
Customer
Value
Proposition Profit Model
Critical Critical
Processes Resources
o Retail and distribution facilities
o Store site selection
o Digital technology
o Tailor local inventory to local market
o Digitized data
o Shelf-space optimization
o Employee talent in logistics, supplier
o Supplier relationships
o Logistical processes
management, merchandizing,
purchasing, digitization, and digitization
management
© Prof. Dr. Juho Mäkiö –
[email protected] 15
Innovative Business Models
Business Model Components
Company Customer Value
Profit Model Key Business Capabilities
Proposition
• High margins
• Overnight delivery • Package visibility
• Controlled logistical
FedEx • Guaranteed • Logistical coordination
costs
delivery • Data management
• Customer self-service
• Competitive prices
• Customer-configured • Product design
• Minimal inventories
Dell products • Supply chain coordination
• Industry-leading
• Low-cost products • Supplier/partner collaboration
cash management
• Industry-leading cost • Local store merchandising
• Everyday low prices
Walmart structures • Supply chain coordination
• Product availability
• Sales volume • Supplier/partner collaboration
• Competitive fares
• Aircraft/terminal operations
Southwest • Low fares • Industry-leading cost
• Route portfolio management
Airlines • Satisfying customer structures
• Employee relations
experience • Customer self-service
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Relative Impact of Digital Investments on Financial Performance
Business Model
Business Process
Digital Investments
Effectiveness
Overall
Financial
Performance
Business Process Value
Efficiency Risk
Technology Operations and Services
Task in this course
• Set up an international team
• Develop a business model for IoT / CPS /
ICPS
• Present your business model for a
„venture capitalist“
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To be successful you need
Idea Starting point
Team Capital
New
business Venture capital
Development steps
Established
company
Start-up and
expansion
Business
planning
Idea
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You look at any giant
corporation, and I mean the
biggies, and they all started with
a guy with an idea, doing it well.
Presentation of a business idea…
• The seller
• The technician
• The entrepreneur
How to do it?
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Business innovations
New innovation
New Product New industry
Product/Service
Existing
Existing Business New Business
System system
Existing New innovation
Business system
© Prof. Dr. Juho Mäkiö – [email protected] 23
Who cannot clearly say what he wants should not
say anything. (Karl Popper, own translation)
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The check list…
• What is the innovation in the idea?
• In which way the idea is unique?
• Who is the client?
• Why should the client buy the product? What is the need the product
fills?
• Why or in what the product is better that the competitor’s product?
• What are the competitive advantages of the new company, and why
can not a competitor simply copy these benefits?
• How the product get’s to the client?
• Is it possible to make money with the product? What are the costs?
What is the price?
Structure of the business plan (one possibility)
• Check the document in Moodle
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Yes we can…
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