Well now I am reading this article on Reinventing Your Business Model on Harvard business review. The following writing is not my own material its just my notes and personal understanding of the material. I hope by writing continuously quality of my writing will improve as well as my speed of writing. The reason why I started reading the business articles is to understand the terms better when I go into the business world and to acquire more knowledge outside the scope of my field.
Well in the article the author said that how to write a good business model.
Four important aspects:
1. Customer Value proposition:
Who is the customer.
What is the job exactly needed to be done for the customer. describe it very precisely.
How are you designing and offering that will meet the customer's needs.
2. Profit formula:
how much money can be made.
what are the margins
what are the costs.
resource velocity: how quickly resource needs to be allocated and reused to generate margins
3. Identify Key resources:
4. Identify key processes:
While crating a value proposition for the customer keep in mind that he has 4 constraints:
1. time
2. access
3. money
4. skill
Well to cut the crap the bottom line is you have to really should pin point the need of the customers and think with out the influence of the previous service you provided.
Like take the example of Hilti. Hilti used to sell tools to the customers but it realized that it customer does not make money by owning the tools they actually make money by using them. So they changed their BM to rent out the tools to people instead of selling it to them.
Like take the example of Hilti. Hilti used to sell tools to the customers but it realized that it customer does not make money by owning the tools they actually make money by using them. So they changed their BM to rent out the tools to people instead of selling it to them.
