green technologies english

Dr. Michael Prange

TUHH ‐ Institut TIM (W7)Schwarzenbergstraße 95 DD‐21073 Hamburg

[email protected]

Business Model Generation & Green Technologies

Winter Semester 2014/2015Dr.‐Ing. Michael Prange

Overview

Dr.‐Ing. Michael Prange 2

1. Targets of the course

2. Contents of the seminar

3. Teaching methods

4. Schedule

5. Literature

Targets of the course


The course “Business Model Generation & Green Technologies" is offered regularly in winter semester as an elective course for all master's programs at TUHH.

Based on examples and case studies primarily in the field of green technologies, students learn the basics of Business Model Generation and will be able to develop business models and to evaluate start‐up projects.

As supplement, the course “Corporate Entrepreneurship & Green Innovation” takes place regularly in summer semester.

Contents of the seminar


Green Technologies Global trends Resource efficiency Climate protection

Green Technologies Global trends Resource efficiency Climate protection

Business Planning Business plan Financing Foundation

Business Planning Business plan Financing Foundation

Business Models Business idea Forms of representation Business model patterns

Business Models Business idea Forms of representation Business model patterns

Business Strategy Design techniques Strategy development Value proposition architecture

Business Strategy Design techniques Strategy development Value proposition architecture

Current Topics Component‐based foundations Concept‐driven Startups Lean Startup method

Current Topics Component‐based foundations Concept‐driven Startups Lean Startup method

Green Business Renewable energy systems Energy efficient buildings Integrated mobility solutions

Green Business Renewable energy systems Energy efficient buildings Integrated mobility solutions

Teaching methods


Lectures with PowerPoint slides

Discussion using examples

Group work using case studies

Grading by written exam

Schedule


15.10.2014 15.11.2014 06.12.2014

09:00 – 10:30 Green Technologies Business Strategy Green Business

10:30 – 12:00 Group work Group work Group work

12:00 – 13:00 Lunch Break Lunch Break Lunch Break

13:00 – 14:30 Business Models Business Planning Current Topics

14:30 – 16:00 Group work Group work Exam

Literature


Osterwalder, A.; Pigneur, Y.: Business Model Generation. Wiley, 2010.

Bessant, J.; Tidd, J.: Innovation and Entrepreneurship. Wiley, 2011.

Cooper, B.; Vlaskovits, P.: The Lean Entrepreneur. Wiley, 2013.

Ries, E.: The Lean Startup. Crown Business, 2012.

Faltin, G.: Brains versus Capital. Stiftung Entrepreneurship, 2013.

Green Technologies


Green Technologies


1. Introduction

2. Global trends

3. Resource efficiency

4. Climate protection

5. Group work

Introduction


Green Technologies define technologies for environmental and climate protection as well as for sustainable and efficient use of natural resources.

Alternative: Clean Technologies, Environmental Technologies

Green Technologies define technologies for environmental and climate protection as well as for sustainable and efficient use of natural resources.

Alternative: Clean Technologies, Environmental Technologies

Green Business defines enterprises which offer products and services in the field of Green Technologies.

Alternative: Cleantech Business, Environmental Business


Alternative: Cleantech Business, Environmental Business

Green Entrepreneurship defines innovative entrepreneurship in the field of Green Business as well as Startups in the field of Green Technologies.

Alternative: Ecopreneurship, Sustainable Entrepreneurship

Green Entrepreneurship defines innovative entrepreneurship in the field of Green Business as well as Startups in the field of Green Technologies.

Alternative: Ecopreneurship, Sustainable Entrepreneurship

Trends


Types of Trends: Meta trends Megatrends Socio‐cultural trends Consumption and Zeitgeist trends Product and Fashion trends Techno trends

Penetration depths of Trends: Pure surface phenomenon

(e.g. Product trends) Deep, sustainable tendency

(e.g. Megatrends)

Requirements for Megatrends: Half period of at least 25 to 30

years Persistence against short‐term ups

and downs Appearance and with impact in all

possible areas of life Basically global character

Source: Zukunftsinstitut (2013)

Megatrends


Globalization

Urbanization

Neo‐Ecology

Connectivity

Mobility

Health

New Learning

New Work

Female Shift

Silver Society

Individualization

Source: Zukunftsinstitut (2013)

Megatrend Urbanization


In the future, 20 to 30 mega‐cities dominate the world economy: 1970 about ⅓ of humanity lived in ci es. 2010 more than half of all people lived in cities. 2050 about ⅔ of humanity is expected to live in cities.

Related to Green Technologies: Smart City Car Sharing Bike Boom Mixed Mobility Urban Farming Urban Mining Mega‐Cities City Quarters

Megatrend Neo‐Ecology


Focus on Sustainability and Efficiency in all areas of Life

LOHAS movement in USA (Lifestyle of Health and Sustainability)

Related to Green Technologies: Bio Boom Renewable Energy Green Jobs Environmental awareness Sustainability Society Green Investments E‐Mobility Energy Grids Reuse, Reduce, Recycle Smart Buildings

Megatrend Connectivity


Internet with more than 4 billion users as basis for world‐wide Information and Cooperation

Strong growth of Social Media and Cloud Computing as well as increasing linkage of Cyberspace and Real World

Related to Green Technologies: E‐Commerce Internet of Things Big Data Open Innovation Energy Grids Smart Devices Small‐World‐Networks Crowd Sourcing

Megatrend Mobility


Greater individual mobility by more leisure and prosperity

Increase in global mobility by road, rail and air transport

Increase in transport volume in logistics due to globalization

Related to Green Technologies: M‐Commerce E‐Mobility Markets on the way 24/7 Society Mixed Mobility Bike Boom Car Sharing Slow Traffic

Megatrends

Megatrends as basis for Innovations


Green Technologies

Action fields

Smart City Car Sharing Bio Boom E‐Mobility Energy Grids Smart Buildings Big Data E‐Commerce Mixed Mobility Bike Boom …

Kondratieff Cycles


1790 1840 1890 1940 1990 Steam engine Cotton

Steel Railway

Electricalengineering Chemistry

Petro chemistry Automobile

Informationtechnology

1. Kondratieff 2. Kondratieff 3. Kondratieff 4. Kondratieff 5. Kondratieff

Clothing Mass transport Mass consumptionIndividualmobility

Information,Communication

Long economic waves due to new Basic Technologies

What influences the next Kondratieff Cycle?


No incremental, but only radical innovations form the trigger for long economic waves.

Green Technologies and Life Science Technologies based on Information Technologies could be the new Basic Technologies for the 6th Kondratieff cycle.

After the dot‐com boom begins in Silicon Valley already the green tech boom.

The development speed of internet‐based economy is urgently needed in Green Business for resource efficiency, climate change and sustainable growth!

Discussion


What impact does the megatrend Urbanization have on our cities?

What influence does the megatrend Neo‐Ecology have on our daily life?

How will the megatrend Connectivity change our working environment?

Which role does the megatrend Mobility play in the world economy?

What can Green Technologies effect in the future?

Resource efficiency


Resource efficiency is defined as the ratio of a particular benefit to the required use of natural resources.

The benefit can be provided in the form of a product or service. The lower the required input of natural resources or the higher the benefit of the product or service, the higher is the resource efficiency.

Resource efficiency is defined as the ratio of a particular benefit to the required use of natural resources.

The benefit can be provided in the form of a product or service. The lower the required input of natural resources or the higher the benefit of the product or service, the higher is the resource efficiency.

Natural Resources are components or functions of nature that have an economic benefit. These include raw materials, space as well as the function and quality of components of the environment such as soil, air and water.

Natural Resources are components or functions of nature that have an economic benefit. These include raw materials, space as well as the function and quality of components of the environment such as soil, air and water.

Resource efficiency as a political goal


Avoidance of supply bottlenecks (technical and economic availability of certain raw materials)

Raising of market potential and competitive advantages for resource efficiency technologies in the sense of ecological modernization of the economy

Reduction of negative environmental effects resulting from the extraction and processing of raw materials, the manufacturing of semi‐finished and finished goods as well as the use of the generated products and their disposal

Compliance with planetary sustainability boundaries

Preservation of natural resources for future generations

Resource efficiency in the product life cycle


Lightweight and miniaturization already in product design

Savings of raw materials during the production

Reduction of material consumption in the use phase

Possibility of clean separation and recycling of the materials in the technical or natural cycles

Climate protection


Climate protection is the collective term for all measures that counteract human‐induced global warming and mitigate possible consequences or even prevent them.

Climate protection is the collective term for all measures that counteract human‐induced global warming and mitigate possible consequences or even prevent them.

Global warming refers to the rise in the average temperature of the lower atmosphere and the oceans, which has been observed since the middle of the 19th century.

By Climate Research expected and partly already observable consequences of global warming include depending on the Earth region: sea ice and glaciers melt, sea level rise, thawing of permafrost, growing arid zones and increasing weather extremes with corresponding repercussions on the life and survival situation of people and animals.

Global warming refers to the rise in the average temperature of the lower atmosphere and the oceans, which has been observed since the middle of the 19th century.

By Climate Research expected and partly already observable consequences of global warming include depending on the Earth region: sea ice and glaciers melt, sea level rise, thawing of permafrost, growing arid zones and increasing weather extremes with corresponding repercussions on the life and survival situation of people and animals.

Climate protection as a political goal


Reduction of the consumption of fossil fuels

Reduction of the emission of greenhouse gases that are released by industrial and agricultural production, by energy consumption in transport, in private homes and in public spaces

Preservation and promotion of such natural components that can accommodate the quantitatively most significant greenhouse gas carbon dioxide (oceans, tropical rain forests, boreal forests, wetlands)

Measures to adapt to the unavoidable climate change (dike construction, disaster preparedness)

Education and behavioral changes of people, especially in industrialized countries with high energy consumption and greenhouse gas emissions

Sustainable growth in Europe


Building a more competitive low‐carbon economy that makes efficient, sustainable use of resources

Protecting the environment, reducing emissions and preventing biodiversity loss

Capitalizing on Europe's leadership in developing new green technologies and production methods

Introducing efficient smart electricity grids

Harnessing EU‐scale networks to give European businesses (especially small manufacturing firms) an additional competitive advantage

Improving the business environment (in particular for SMEs)

High‐Tech Strategy of the German Government


Prioritize future tasks for prosperity and quality of life Digital Economy and Society Sustainable Economics and Energy Innovative Working Environment Healthy Living Intelligent Mobility Civil Security

Join forces and promote transfer

Strengthen innovation dynamics of the economy

Create a favorable environment for innovation

Strengthen dialogue and participation

Economic Sectors of Green Business


Automobile and Transport

Bio Fuels and Agriculture

Energy Management and Efficiency

Renewable Energy Technologies

Energy Storage

Nanotechnology and Nanomaterials

Waste Management

Water

Discussion


Why has the European Union committed to sustainable growth?

What does the German government want to achieve with their high‐tech strategy?

In addition to the political goals, does it also make sense from a business perspective to deal with resource efficiency?

What can businesses contribute to climate protection?

Group work 1: Green Technologies


60 Minutes Working Time

20 Minutes Presentation

10 Minutes Discussion

Business Models


Business Models


1. Introduction

2. Business idea

3. Forms of representation

4. Business model patterns

5. Group work

Introduction


A business idea is a concept with which an economic existence can be established.A business idea is a concept with which an economic existence can be established.

A business model pattern describes business models with similar characteristics, similar arrangements of building blocks or similar behaviors.A business model pattern describes business models with similar characteristics, similar arrangements of building blocks or similar behaviors.

A business model describes the rationale of how an organization creates, delivers and captures value.A business model describes the rationale of how an organization creates, delivers and captures value.

A business model innovation is a deliberate alteration of an existing business model or the generation of a new business model for an existing organization.A business model innovation is a deliberate alteration of an existing business model or the generation of a new business model for an existing organization.

Business idea


The following types of business ideas can be distinguished: Imitative business ideas Improved business ideas Innovative business ideas

Business idea imitative improved innovative

Product known partly known unknown

Functionality known partly known unknown

Manufacturing & distribution costs

known partly known estimated

Price known partly estimated estimated

Product awareness given partly given not given

Customer needs known partly known estimated

Innovative business ideas


An innovative business idea is based on a new product or a new service, which is not yet known in the market and their needs are difficult to estimate.

Various design techniques can be used to design suitable business models for innovative business ideas: Customer Insights Ideation Visual Thinking Prototyping Storytelling Scenarios

Forms of representation


A representation of a business model must cover the main areas of a business: Customers Offer Infrastructure Finance

Business Model Canvas allow a structured representation and visualization of business ideas and business models.

Business Model Canvas


Key Partners Key Activities Value Propositions Customer Relationships Customer Segments

Key Resources Channels

Cost Structure Revenue Streams

Building blocks of business models


1. Customer Segments

2. Value Propositions

3. Channels

4. Customer Relationships

5. Revenue Streams

6. Key Resources

7. Key Activities

8. Key Partnerships

9. Cost Structure

Example: Apple iPod/iTunes Business Model





Customer Segments


The Customer Segments Building Block defines the different groups of people or organizations an enterprise aims to reach and serve: For whom are we creating value? Who are our most important customers?

Examples: Mass Market Niche Market Segmented Diversified Multi‐sided Platform






Mass marketMass market

Value Propositions


The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment: What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying?

Characteristics: Newness Performance Customization “Getting the Job Done” Design, Brand/Status Price, Cost Reduction, Risk Reduction Accessibility, Convenience/Usability






Seamlessmusic

experience

Seamlessmusic

experience


Channels


The Channels Building Block describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition: Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost‐efficient? How are we integrating them with customer routines?

Channel phases:1. Awareness: How do we raise awareness about our company’s products and

services?2. Evaluation: How do we help customers evaluate our organization’s Value

Proposition?3. Purchase: How do we allow customers to purchase specific products and services?4. Delivery: How do we deliver a Value Proposition to customers?5. After sales: How do we provide post‐purchase customer support?






Seamlessmusic

experience

Seamlessmusic

experience


Retail stores

Apple stores

Website

iTunes store

Retail stores

Apple stores

Website

iTunes store

Customer Relationships


The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments: What type of relationship does each of our Customer Segments expect us to

establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they?

Examples: Personal assistance Dedicated Personal Assistance Self‐Service Automated Services Communities Co‐creation






Seamlessmusic

experience

Seamlessmusic

experience

Love markLove mark

High switching costs



Retail stores

Apple stores

Website

iTunes store

Retail stores

Apple stores

Website

iTunes store

Revenue Streams


The Revenue Streams Building Block represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings): For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues?

Types: Asset sale Usage fee/subscription Lending/renting/leasing Fixed Pricing Dynamic Pricing






Seamlessmusic

experience

Seamlessmusic

experience

Love markLove mark




Retail stores

Apple stores

Website

iTunes store

Retail stores

Apple stores

Website

iTunes store

Large hardware revenues


Low music revenuesLow music revenues

Key Resources


The Key Resources Building Block describes the most important assets required to make a business model work: What Key Resources do our Value Propositions require? Our Distribution Channels? Our Customer Relationships? Our Revenue Streams?

Types of resources: Physical Intellectual (brands, patents, copyrights, data) Human Financial






People

iPod hardware

iTunes software

Content + agreements

People

iPod hardware

iTunes software


Seamlessmusic

experience

Seamlessmusic

experience

Love markLove mark




Retail stores

Apple stores

Website

iTunes store

Retail stores

Apple stores

Website

iTunes store




Key Activities


The Key Activities Building Block describes the most important things a company must do to make its business model work: What Key Activities do our Value Propositions require? Our Distribution Channels? Our Customer Relationships? Our Revenue streams?

Categories: Production Problem Solving Platform/Network






Hardware designHardware design

MarketingMarketing

People

iPod hardware

iTunes software


People

iPod hardware

iTunes software


Seamlessmusic

experience

Seamlessmusic

experience

Love markLove mark




Retail stores

Apple stores

Website

iTunes store

Retail stores

Apple stores

Website

iTunes store




Key Partnerships


The Key Partnerships Building Block describes the network of suppliers and partners that make the business model work: Who are our Key Partners? Who are our Key Suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform?

Motivations for partnerships: Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities






Record companiesRecord companies

OEMOEM


MarketingMarketing

People

iPod hardware

iTunes software


People

iPod hardware

iTunes software


Seamlessmusic

experience

Seamlessmusic

experience

Love markLove mark




Retail stores

Apple stores

Website

iTunes store

Retail stores

Apple stores

Website

iTunes store




Cost Structure


The Cost Structure describes all costs incurred to operate a business model: What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive?

Is your business more: Cost Driven (leanest cost structure, low price value proposition, maximum

automation, extensive outsourcing) Value Driven ( focused on value creation, premium value proposition)

Sample Characteristics: Fixed Costs (salaries, rents, utilities) Variable costs Economies of scale Economies of scope






Record companiesRecord companies

OEMOEM


MarketingMarketing

People

iPod hardware

iTunes software


People

iPod hardware

iTunes software


Seamlessmusic

experience

Seamlessmusic

experience

Love markLove mark




Retail stores

Apple stores

Website

iTunes store

Retail stores

Apple stores

Website

iTunes store

Marketing+

Sales

Marketing+

Sales

PeoplePeople

ManufacturingManufacturing




Discussion


What are the advantages of a uniform representation of business models with Business Model Canvas?

Which importance do key partnerships have in a business model?

What can be derived from the financial structure shown in the Business Model Canvas, and what not?

Business model patterns


Business models with similar characteristics, similar arrangements of building blocks or similar behaviors can be described by business model patterns.

Some important concepts of business model patterns are:1. Unbundling business models2. Long Tail3. Multi‐Sided Platforms4. FREE as a business model5. Open business models

Unbundling business models


The concept of the “unbundled” corporation holds that there are three fundamentally different types of businesses: Customer Relationship businesses, Product innovation businesses, Infrastructure businesses.

Each type has different economic, competitive and cultural imperatives.

The three types may co‐exist within a single corporation, but ideally they are “unbundled” into separate entities in order to avoid conflicts or undesirable trade‐offs.

Examples: Mobile telecom industry, private banking industry, Energy Industry

Example: Unbundling business model





B2BB2B

B2C / B2BB2C / B2B

Customer focusedCustomer focused

Infrastructure services

Infrastructure services

Product & service innovation


Highly service oriented

Highly service oriented

Strong relationships, acquisition & retention

Strong relationships, acquisition & retention

Strong channelsStrong channels

InfrastructureInfrastructure

Manage R&DManage R&D

Customer acquisitionCustomer acquisition

Large volumeLarge volume

Talent poolTalent pool

Customer baseCustomer base



Infrastructure managementInfrastructure management

Commodities pricing

Commodities pricing

Premium pricingPremium pricing

Large share of wallet

Large share of wallet

High fixed costsHigh fixed costs

High employee costs

High employee costs

High costs of customer acquisition

High costs of customer acquisition

Long Tail


Long tail business models are about selling less of more: They focus on offering a large number of niche products, each of which sells relatively infrequently.

Aggregate sales of niche items can be as lucrative as the traditional model whereby a small number of bestsellers account for most revenues.

Long Tail business models require low inventory costs and strong platforms to make niche content readily available to interested buyers.

Examples: Amazon, Ebay, YouTube, Facebook

Example: Long Tail business model





Many niche segmentsMany niche segments

Large scope of niche contentLarge scope of niche content

Niche content providers


InternetInternetPlatformPlatform

Selling less of more

Selling less of more

Platform management & development


Platform managementPlatform

management

Service provisioning




Content production tools

Content production tools

User generated content

User generated content

Multi‐Sided Platforms


Multi‐sided platforms bring together two or more distinct but interdependent groups of customers.

Such platforms are of value to one group of customers only if the other groups of customers are also present.

The platform creates value by facilitating interactions between the different groups. A multi‐sided platform grows in value to the extent that it attracts more users, a phenomenon known as the network effect.

Examples: Visa, Google, Ebay, Microsoft Windows

Example: Multi‐Sided Platform





Customer segment 1Customer segment 1


Platform managementPlatform

management



PlatformPlatform



Revenue flow 1Revenue flow 1

Value proposition 1

Value proposition 1

Value proposition 2

Value proposition 2


Possible revenue flow subsidy

Possible revenue flow subsidy


Value proposition 3

Value proposition 3


FREE as a business model


In the free business model at least one substantial Customer Segment is able to continuously benefit from a free‐of‐charge offer.

Different patterns make the free offer possible.

Non‐paying customers are financed by another part of the business model or by another Customer Segment.

Examples: Skype, Google, Open Source, free mobile phones

Example: FREE as a business model





Small base of paying usersSmall base of paying users

Large base of free users

Large base of free users

Automated & mass customizedAutomated &

mass customizedPremium servicePremium service

Paid premium services

Paid premium services

Infrastructure development & maintenance

Infrastructure development & maintenance

PlatformPlatform

Fixed costsFixed costs

Cost of service for premium users

Cost of service for premium users

Free basic serviceFree basic service

Free basic servicesFree basic services

Cost of service for free users

Cost of service for free users

Open business models


Open business models can be used by companies to create and capture value by systematically collaborating with outside partners.

This may happen from the “outside‐in” by exploiting external ideas within the firm, or from the “inside‐out” by providing external parties with ideas or assets lying idle within the firm.

Examples: Procter & Gamble, GlaxoSmithKline, InnoCentive

Example: Open business model





Secondary marketSecondary market

LicenseesLicensees

Innovation customersInnovation customers

Internet platformsInternet platforms

Sales divestitureSales divestiture

License feesLicense fees

Spin‐offSpin‐off

Sell innovationSell innovation

R&D resultsR&D results

Unused intellectual property

Unused intellectual property

Buy innovationBuy innovation

Externalizing development

costs

Externalizing development

costs

ScreeningScreening

Managing networksManaging networks

Exploring marketExploring market

Screening capabilitiesScreening capabilities

Access to innovation network

Access to innovation network

Innovation partnersInnovation partners

Research communityResearch community

Discussion


What sense does it make to deal with already known concepts of business model patterns when designing a new business model for an innovative business idea?

Which business model patterns are also still widespread?

Wherein do business models differ that are built on the same business model pattern?

Group work 2: Business Models





Business Strategy


Business Strategy


1. Introduction

2. Design techniques

3. Strategy development

4. Value proposition architecture

5. Group work

Introduction


A business strategy describes the medium‐ and long‐term planned behavior of a company to achieve its business objectives.A business strategy describes the medium‐ and long‐term planned behavior of a company to achieve its business objectives.

Design techniques are methods to promote creativity and generating new ideas targeted to develop visions or solve problems.Design techniques are methods to promote creativity and generating new ideas targeted to develop visions or solve problems.

The value proposition architecture of a company defines how the division of labor looks like and how to coordinate the specialized, but logically related value‐added labor activities.

The value proposition architecture of a company defines how the division of labor looks like and how to coordinate the specialized, but logically related value‐added labor activities.

Design techniques


Design techniques can help to design better and more innovative business models.

Design techniques are primarily used in workshops where a group of people often explores unfamiliar terrain while designing business models.

Well‐known business model design techniques are: Customer Insights Ideation Visual Thinking Prototyping Storytelling Scenarios

Customer Insights


Adopting the customer perspective is a guiding principle for the entire business model design process. Customer perspectives should inform our choices regarding Value Propositions, Distribution Channels, Customer Relationships, and Revenue Streams.

Customer‐centric business model design: What jobs do our customers need to get done and how can we help? What are our customer’s aspirations and how can we help him live up to them? How do our customers prefer to be addressed? How do we, as an enterprise, best fit into their routines? What relationship do our customers expect us to establish with them? For what values are customers truly willing to pay?

Ideation


Basic attitude for idea generation: Ignore the status quo Forget the past Stop focusing on competitors Challenge orthodoxies

Epicenters of business model innovation: Resource‐driven Offer‐driven Customer‐driven Finance‐driven Multi‐Epicenter‐driven

Challenge conventional assumptions with “what if” questions

Visual Thinking


Arguments for Visual Thinking: Understand the essence Enhance dialogue Explore ideas Improve communication

Tools for Visualizing: Post‐it Notes Drawings Mind maps

Telling a Visual Story: Map your business model Draw each business model element on a note Define the storyline Tell the story using the notes on the canvas

Prototyping


Mindset of Prototyping: Multiple business models in and across industries Inside‐out: business models transform industries Opportunistic thinking Exploratory search for business model Design‐focused Value‐ and efficiency‐focused

Prototypes at different scales: Napkin sketch: outline and pitch a rough idea Elaborated canvas: explore what it would take to make the idea work Business case: examine the viability of the idea Field‐test: investigate customer acceptance and feasibility

Storytelling


Reasons for Storytelling: Introduce the New and make it tangible Clarification of complex relationships Engaging people (investors, employees, customers, …)

Perspectives for Storytelling: Company perspective Customer perspective

Techniques for Storytelling: Talk & Image Video Clip Role Play Text & Image Comic Strip

Scenarios


Scenarios can be useful in guiding the design of new business models to render the abstract tangible.

Use of different types of scenarios: Customer scenarios Future scenarios

Development of new business models with future scenarios: Develop a set of future scenarios based on two or more main criteria Describe each scenario with a story that outlines the main elements of the scenario Develop one or more appropriate business models for each scenario

Discussion


Why is it useful to take the customer's perspective for the development of business models?

Why should a neutral, non‐judgmental attitude be taken for Ideation?

How do Visual Thinking and Storytelling support the development and presentation of business models?

Why does it make sense to create several prototypes of different possible business models first instead of one detailed business planning?

What role do Scenarios play for business model innovation?

Strategy development


There is not only a single business model, there are really a lot of opportunities and options that will be discovered.

The business model environment must be considered for the strategy development: Key trends Industry forces Market forces Macro‐economic forces

Strengths, weaknesses, opportunities und threats of business models can be evaluated with a SWOT analysis. Hereby all buildings blocks of a business model canvas will be analyzed in detail.

Value proposition architecture


The strategy development process leads to the value proposition architecture of the company.

The organizational structure and the process organization of the company can be derived from the value proposition architecture.

Established companies must often be able to manage multiple business models. Therefore they have different options: Integration Autonomy Separation

The evaluation of the value proposition architecture by creating new and innovative business models is a permanent process.

Example: Strategies of Daimler and CAR2GO


Daimler (www.daimler.com) is an international automobile manufacturer with an annual revenue exceeding 136 billion Euro through sales of more than 2 million vehicles.

Car2go (www.car2go.com) is a startup business offering city dwellers mobility on demand using a citywide fleet of Smart cars.

Both companies have different business strategies to offer their customers individual mobility. Therefore they use different business models.

Example: Daimler Business Model





Car Parts Manufacturers

Car Parts Manufacturers


DesignDesign

Vehicle PlantsVehicle Plants

Cars, Trucks,Vans, Busses,

Financial Services

Cars, Trucks,Vans, Busses,

Financial Services

Mainly High‐End Brands

Mainly High‐End Brands


DealersDealers

Marketing+

Sales

Marketing+

Sales

R & DR & D


Vehicle SalesVehicle Sales Vehicle FinancingVehicle Financing

Sales ForceSales ForceIntellectual PropertyIntellectual Property

BrandsBrands

Example: CAR2GO Business Model





City ManagementCity Management Fleet Management

Fleet Management

TelematicsTelematics

Service teamService team

Individual urban mobility without car ownership

Individual urban mobility without car ownership

One‐off Sign‐upOne‐off Sign‐up City DwellersCity Dwellers

CAR2GO.COM

Mobile phone

CAR2GO shops

Parking lots

CAR2GO.COM

Mobile phone

CAR2GO shops

Parking lots

Systems Management

Systems Management

Fleet Management

Fleet Management

Pay per minutePay per minute

CleaningCleaning

Telematics SystemsTelematics Systems

Car fleetCar fleet

Discussion


Wherein do the business strategies of Daimler and Car2go differ?

What are the fundamental differences in the value proposition of the two business models?

What business strategy is more appropriate for the global megatrends of Urbanization and Mobility?

Group work 3: Business Strategy





Business Planning


Business Planning


1. Introduction

2. Business plan

3. Financing

4. Foundation

5. Group work

Introduction


A business plan is a written document which describes all necessary measures for the implementation of a business idea in a structured form.A business plan is a written document which describes all necessary measures for the implementation of a business idea in a structured form.

Financing includes all operational processes for providing and repayment of funds.Financing includes all operational processes for providing and repayment of funds.

The foundation includes all processes to implement a business idea until the start of the business operation in a new company.The foundation includes all processes to implement a business idea until the start of the business operation in a new company.

Business plan


A business plan is an instructional description from the idea to the foundation. It is the basis for action and decision‐making for investors.

The business plan consists of 4 parts, in which the results and decisions of a feasibility study are composed: Foundation plan Marketing plan Management plan Financial plan

Foundation plan


The foundation plan should include the following points: Formal data Name of the founder, company name, legal form, business activity

Founding idea What is the product? What is it? What we do? Is it something special? Why do we want to do that?

Market Condition, size, revenues, prices, special features

Competition Number, market shares, changes Insights from the successes and mistakes of other market participants

Forecast Assumptions and expectations, potential of the company Why is the company profitable?

Marketing plan


The marketing plan describes how we enter the market, claiming it and want to grow: Target market Who and where are our customers? Is there something special to them?

State of the market and competitors Results of the market and competitive analysis How is our product different from the competition? What can we learn from the competition?

Market expansion and market differentiation Do we can and want to expand our market? Do we want to gradually penetrate new markets or market segments?

Customer approach How do we want to attract customers, keep them and increase their number? Which marketing tools do we want to use?

Price How do we want to make the prices of our products?

Management plan


The management plan makes clear knowledge, skills and the organization: People Who runs the company? What obligations and what personal and professional background do they have?

Tasks Who is responsible for which task? What are the strengths and weaknesses of the people and how can we solve deficits?

Employees Are employees to be taken? When and for what purposes? How many employees with what skills are needed?

Salaries What are the salaries of the founders and its employees and how should salaries develop?

Accounting and Controlling How is accounting organized? What processes are covered and how? How often are the controlling results evaluated?

Financial plan


The budget for capital, costs and revenues must match by time.

The financial plan consists of the foundation budget and the operating budget and is the set of figures of the business plan. Both budgets overlap, because the transition is smooth.

Liquidity is the "Achilles heel" of the company.

The foundation budget is a monthly statement when which funds must be available for the start‐up process.

The operating budget relates to the ongoing operation and includes the fixed and variable costs as forecasted figures for the first 3 to 5 years of doing business. For the first fiscal year a monthly list is common.

Discussion


What is the purpose of the business plan?

What would you suggest a founder to check its company‐specific skills and knowledge?

What effect do the expectations of the founders have on the business plan and how can the danger of overestimating be reduced?

Financing


The financial viability of the project is determined by the formation of trust and perspectives.

The funds can be divided into: Equity Venture capital Borrowing Public funding

Equity


The main feature of equity is that it is liable, and therefore it is subject to the risk of loss.

The decision to allocate capital is the result of the following rational consideration: How big is the risk of losing my money? What is my potential profit?

Venture capital


Venture capital is a special form of equity, which is made available by third parties.

Venture capital can be distinguished as follows: Informal risk capital Formal risk capital

Informal risk capital


Informal risk capital is provided by family and friends.

Relationship, trust and goodwill are crucial for informal risk capital.

The potential profit is not always the focus.

Informal risk capital plays a major role especially in the early stages of a start‐up project.

Formal risk capital


Formal risk capital is provided by venture capital companies. The funds come from wealthy individuals, businesses and the companies themselves.

Since they are often working with foreign money for a limited time (usually up to 10 years), the profit is the focus and must be above average.

The allocation of formal risk capital is preceded by: Selection of possible projects Assessment of the projects Examination of the business plan Assessment of the founders and the project team Decision on the start (when, by how much, for how long) Controlling and optionally advice of the current business operation Exit (disinvestment or sale of equity shares)

Borrowing


Borrowings are mostly loans that can be very different.

Basis for the decision is the founder and his business plan and a willingness to accept a letter of guarantee.

Loan type Loaner Loan period Securities Paying out Costs Repayment

Bank loans Bank negotiable banking practice

negotiable interest monthly, negotiable

Personal loans Friends & family

negotiable negotiable negotiable negotiable negotiable

Shareholder loans

Shareholder negotiable usually none negotiable negotiable negotiable

Overdraft credit

Bank until 60 days none 100% until limit

high interest open until limit

Supplier credit Supplier until 90 days purchased goods

in form of purchased goods

higher price or high interest

within 90 days

Public funding


Public funding can be divided into the following categories:1. Transfers in kind2. Transfers in cash3. Combinations of 1 and 2

Transfers in kind are help and advice (e.g. counseling centers, hotlines, training), which are worth money, but are not given in the form of a direct payment.

Transfers in cash are financial benefits. This takes place in the form of savings for the founders. These primarily include interest rate subsidies, tax breaks and loan guarantees.

Discussion


Is the term "informal risk capital" for equity contributions from family and friends really true?

Why is informal risk capital especially in the early stage of formation of particular importance?

Is formal risk capital an option only for innovative and fast growing companies or also for only fast growing companies?

Can founders limit their liability to their investment through the choice of the legal form "GmbH"?

Why would it be interesting for a bank to include public fundingin the start‐up financing – and why not?

Foundation


If the financing of the business plan is secured, the final decision on setting up a business is pending.

In case of a positive decision, the founding process can begin. There the requirements defined in the business plan are translated into action.

During the start‐up phase and the subsequent operational activities, a continuous adjustment of the current business data with the data from the business plan has to be done.

Founding process


The classic founding process begins with a feasibility study, a business plan and securing financing.

The implementation of the start‐up process for a corporation is done in several steps:1. Opening a company bank account and payment of the equity share capital2. Notarial certificate of the incorporation3. Entry in the commercial register at the Registration Court4. Registration of the trade5. Registration at the tax office6. Registration with the Social Security7. Registration with the Professional Association

After completing the formalities: the new company is authorized to operate and can put the business plan into action.

Group work 4: Business Planning





Green Business


Green Business


1. Introduction

2. Renewable energy systems

3. Energy efficient buildings

4. Integrated mobility solutions

5. Group work

Introduction



Economic sectors of Green Business are, inter alia, Automobile and Transport, Bio Fuels and Agriculture, Energy Management and Efficiency, Renewable Energy Technologies, Energy Storage, Nanotechnology and Nanomaterials, Waste Management and Water.


Economic sectors of Green Business are, inter alia, Automobile and Transport, Bio Fuels and Agriculture, Energy Management and Efficiency, Renewable Energy Technologies, Energy Storage, Nanotechnology and Nanomaterials, Waste Management and Water.

Green Investments are investment activities that focus on companies or projects that are committed to the conservation of natural resources, the production and discovery of alternative energy sources, the implementation of clean air and water projects, and/or other environmentally conscious business practices.

Green Investments are investment activities that focus on companies or projects that are committed to the conservation of natural resources, the production and discovery of alternative energy sources, the implementation of clean air and water projects, and/or other environmentally conscious business practices.

Renewable energy


Renewable energy are energy sources which are virtually inexhaustible available in the context of human time horizon or renew itself relatively quickly. Thus, they differ from fossil energy sources that regenerate only over a period of millions of years.

Renewable energy sources are, in addition to higher energy efficiency, the most important building block of a sustainable energy policy and energy transition.

Renewable energy includes hydropower, wind energy, solar radiation, geothermal and renewable raw materials.

Decentralized energy systems


In decentralized energy systems, electric power is generated close to the consumer, e.g. within or near residential areas and industrial plants using small power plants.

The capacity of the electricity generation plants is usually designed only to meet the energy needs of the immediately or in the nearby area connected electricity consumers.

Also isolated networks, i.e. the interconnection of a few small power producers and consumers in remote locations that are not connected to the public power grid, are seen as decentralized energy systems. Likewise, wind farms and solar parks are commonly counted to decentralized energy systems, but the shift to centralized power generation, especially for larger systems, is flowing.

Example: Smart Hydro Power GmbH


German company located in Feldafing (near to Munich)

Mini hydroelectric power plant with 5 kW turbine

Energy management system with battery storage

Micro grid with auxiliary devices, e.g. pumps, water purification or cooling

Connector for the national grid

Energy efficient buildings


In private households in Germany about 85 percent of total energy demand is used for space heating and hot water.

The greatest energy savings potential lies in existing buildings. Here about three times as much energy is required for heating as in new buildings.

The energy demand can be reduced up to 20 percent by professionally modernization and use of advanced building technologies. From the energy saving potential, however, on average, only about one third is exhausted during renovations in practice.

All parties would benefit from energy‐efficient construction and renovation: the tenant and landlord, crafts and industry, environment and economy.

Example: Nest Labs, Inc.


American company located in Palo Alto (California) since 2010

Building automation system for energy efficiency and security

Thermostats, smoke detectors and webcams

Device control over Internet and smartphones

Usability and design unique selling proposition

Acquisition by Google in 2014

Integrated mobility solutions


Integrated mobility solutions are the foundation for a modern, regional and municipal mobility system: Well‐coordinated mobility services, a transport offering tailored to the mobility needs of the citizens and a customer‐friendly access to the different mobility services in the region.

It creates the prerequisites for a sustainable mobility behavior of citizens, commuters and companies in the region.

Examples are car‐sharing systems, bike rental systems, combined bus and rail services, lift‐arranging agencies and cross‐modal Internet platforms.

Example: ubitricity GmbH


German company located in Berlin

Cost‐efficient charging infrastructure for electric cars

Mobile electric meters with charging cable

Communications platform for transaction based billing

Discussion


How could an energy system of the future look like? What changes will the energy industry be faced then?

Why are energy efficient buildings an important topic for the future?

Where is a great need for integrated mobility solutions?

Group work 5: Green Business





Current Topics


Current Topics


1. Component‐based foundations

2. Concept‐driven Startups

3. Lean Startup method

Component‐based foundations


The term “component‐based foundations" means that even a complex entity may be created by using available components in the market: Accounting Office services Online Shop Web design and programming Logistics services

By a suitable composition of components available on the market, the investment and risk of a business start‐up can be reduced significantly.

Concept‐driven Startups


The term “concept‐driven Startups” describes a procedure for finding an innovative business model by focusing on the following properties: Function versus Convention Scalability Simplicity Minimizing risks

Examples: Teekampagne, Migros, Aldi, IKEA, Skype

Lean Startup method


The Lean Startup method is a method for the iterative search for a viable business model in several steps:1. Founders translate ideas into business model hypotheses, test assumptions about

the needs of the customers and create a minimal functional product to try out the solution to customers.

2. The company continues to test all other hypotheses and attempts to validate the interest of the customer through early orders or the use of the product. If there is no interest, the company can re‐align by changing one or more hypotheses.

3. The product will be revised to the extent that it can be sold. Based on its proven hypotheses, the company generates demand by boosting up marketing and sales quickly and expanding the company.

4. The company slowly leaves the startup mode, in which a team for customer development seeks answers, and forms functional departments for the implementation of the business model .

Discussion


Why are component‐based foundations less risky and more scalable? What are the disadvantages?

Why can concept‐creative Startups possibly change entire industries?

Which industries is the Lean Startup method useful for? What are the advantages?

Exam


Please note the following hints:


Only students with prior registration are allowed to participate!

You have 90 minutes for answering the questions.

You can achieve maximum 60 points in total. To pass the exam, you need 30 points or more.

You can answer the questions either in English or in German.

Please write clearly and in a precise and brief manner.

No additional tools (calculator, books, etc.) and no additional paper are allowed.

Please turn your mobile phone completely off.

Exam


green technologies english

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