Lecture Notes: Business Models by Dr. Adam Jae Bok

Introduction

• Presenter: Dr. Adam Jae Bok
• Topic: Business Models
• Context: Part of disciplined entrepreneurship framework
  • Covered markets, value propositions, end-users, and total addressable market

Importance of Business Models

• Personal Interest: Dr. Bok's favorite topic, focus of research and publications
• Resources: Visit BismolBook.com for worksheets and resources
• Historical Context:
  • Emerged in the 1980s-1990s
  • Became common post dot-com boom
  • Developed in practice before academic theory

Definitions and Perspectives

• Academic vs. Practical Definitions
  • Jerry George & Dr. Bok: Design of organizational structure to enact a commercial opportunity
  • Business Model Book: Framework for value extraction from customer
  • Alexander Osterwalder: Rationale of how an organization creates, delivers, and captures value
  • McGregor: Stories explaining how innovative firms succeed and grow
• Key Understanding: Have a solid grasp of what a business model is and its application

Business Model Innovation

• Value Creation: Significant potential but challenging to change established models
• Entrepreneurial Advantage: Flexibility in developing novel models

Business Model Canvas

• Overview: Standard framework for evaluating and communicating business models
  • Nine Building Blocks:
    1. Customer Segments
    2. Value Proposition
    3. Channels
    4. Customer Relationships
    5. Revenue Streams
    6. Key Resources
    7. Key Activities
    8. Key Partners
    9. Cost Structure
• Benefits:
  • Consistency in business logic
  • Framework for financial modeling
  • Industry standard for communication
• Caution: Canvas is a starting point, requires validation of assumptions

Case Study: Southwest Airlines

• Example of Business Model in Practice:
  • Low-cost operation through specific strategies (e.g., single aircraft type, no luxury services)
  • High investment in employee training to minimize costly errors

Assignment: Building a Business Model

• Tool: CanvaNizer
• Task: Create a business model for a local business
  • Use the canvas to outline customer segments, value propositions, resources, etc.
• Recommendation: Choose a manageable local company over large corporations

Additional Instructions

• Resources: Additional slides on Canvas
• Next Steps:
  • Additional presentations on business model canvases
  • Discussion on business model innovation