MBA1308 Guest Teacher: Justin Lokitz- How to Create a Go-To Market Strategy by Developing Multiple Business Model Options

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Hey oh. Welcome to the Hundred Dollar MBA show. Because your business deserves the best. That's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar mba, a complete business training and community online and today's episode is a guest teacher episode. On our guest teacher episodes I call upon an expert to teach their area of expertise. Today we have Justin Lokitz and he'll be teaching how to create a go to market strategy by developing multiple business model options. Love this topic. Love this lesson. Because many people talk about idea validation. In fact we talk about it on the show a lot. There's a lesson that we had back in the day that Justin mentions that's about idea validation and validating your business. Your product idea is important but not enough. People talk about the options you have when it comes to your business model, the different ways, the different models of doing business. Justin Lucas is a best selling author. His best selling book Design a Better Business has helped countless people. He has two decades of experience in this area people. He's a keynote speaker and he's going to be delivering a fantastic lesson giving you a blueprint on how to know your options when it comes to your business model. He's going to give you resources. He's going to get you to really get down and write things down and take notes. So it's one of those episodes. If you can hit pause, pull over your car, or grab a note taking app or a paper and pen, this is going to be extremely useful. This is going to be like a workshop. Can't wait to get into this one. So let's get into it. Let's get down to business. Like I mentioned at the top of the episode, Justin's got so much experience in this area. He's helped multinational companies like Autodesk and Oracle, as well as small startups, use his frameworks, use his techniques to have better options when it comes to having better business models. I'm going to let him take the reins because he's the expert in this area. But I'll be back with my takeaways and to wrap up the lesson. But for now, take it away, Justin.

Hey everyone, I'm Justin Lokitz, Managing Director at Business Models Inc. Or BMI for short, a business model innovation and strategy design firm. Thanks for joining me today. Today I'll be teaching you how to create a go to market strategy by developing multiple business model options and just as importantly, how to prototype and validate business model options along the way. So let's get down to business. So most of you have probably employed or read about or heard about prototyping and validating our ideas before launching. This is pretty common today and you may have even heard Omar speak about this on his early, early number 18 show called how to Validate youe Business Before. While this is absolutely table stakes for your startup or idea, what most people forget about is that prototyping and validating your product or service often only helps you dial in its desirability. But this leaves out the two other equally important aspects of any sustainable, scalable business, startup or otherwise, which are feasibility and viability. This is exactly where business models come in. So what is a business model, you may ask? Well, for this podcast we're going to use Alex Osterwalter's definition of a business model, which is in short is something like this. It's how any company or product or service creates, delivers and captures value. So in short, a business model is not only what product or service you're going to sell or how you're going to make money on it. It's everything you must do from day zero to day 10,000 to to continually create, deliver and exchange value with your customers. So honestly, while there are many, many tools out there in the world that can help you get a grip on what you're trying to do. The best for designing a business model is unequivocally the business model canvas. This comes from the best selling book Business Model Generation, which if you don't already have it, you should go out and buy now, at least star on your Amazon. And once you purchase that, you should also grab the best selling companion book, Design a Better Business, which goes deeper into how to prototype and validate business models. Shameless Plug. I'm an author on Design a Better Business, so you might ask yourself as well, and maybe you're a startup and you've seen this out there. What's different in a business model canvas than a lean canvas? The key difference is this. A business model canvas is different in that it looks at your company and how you and your company are going to create, deliver and capture value. It's not about the externals, it's not about your competitors, it's about your business. And so it's essential to build a business model to help model your business. But what I think is most important about using business model canvases for your business is that you can and really should and probably must use them to create prototypes of your overall business and its various options. The key here is just like there may be many iterations of your product, there's no single right solution for your business model. And the same goes with go to market strategy. There's no single right solution there either. And it takes several business model iterations to create a complete picture for your go to market strategy. So what are the things that you'll need to consider as part of your business model? Well, the best way to do that is to describe simply the business model and how it's laid out first place, and specifically the business model canvas. I realize you may be in a place where you can't readily pull out a business model canvas at this very moment. Maybe you're driving, but perhaps you can download one when you get to work. They're free and it's part of Creative Commons. So in the meantime, I'll speak through this and I'll, you know, I hope that you can imagine this as well. And then when you get to work, you can dig a bit deeper. So the business model canvas is comprised of nine boxes that together represent again, any business product or service. And the nine boxes sort of start at the very center with value propositions. Value propositions are the products and promises for your business. Right. And it's both because, well, first you're interested in building a product. But your customers are interested in buying the promise that your product comes with. On the right side of the business model canvas, on the very right edge are customer segments. Customer segments really describe who are the customers that are interested in buying that product and promise from you. Connecting these things is another box called channels. Channels are all the ways that your customers will find you and your product and promises, but also of course, where they go to exchange that value with you. And so if for instance, you're Amazon, they may find you through Amazon.com or a mobile app, but they may just as easily find you through other affiliate links and things like that. But then when they're going to exchange value, they're doing so on Amazon.com right above that, above that channels box is something else called customer relationships. And customer relationships is often left for the very last thing, or it's maybe even overlooked or missed totally. But I think of it as one of the most important of these nine boxes as well, especially in today's businesses. And customer relationships describes how you, in your business and in your business model are going to set up a way to continue a relationship with your customer after the point of sale. You definitely don't want to keep going back to the same customers to sell the same thing over and over. And if you don't have to, at the very bottom on the right hand side then are revenue streams. And that describes basically how you're going to make money. Are you selling units of something? Is it some subscription service? Is someone getting something for free? And another customer segment is paying for something else. So this is all the things, all the ways that you're going to make money on the service or product. All five of these boxes on the very right hand side of this business model canvas concept, you can think of these things as front of house. And front of house are things that we can easily describe for any business out there. We don't have to do much digging. We could do that right now. That leaves the operational aspects. How do you actually create this value for your customers? That's the last four boxes and these are on the left hand side of a business model canvas. And we'll start with key resources. The key resources box describes what's key to your company and your business model that enables you to actually create these products in the promising that they carry. And this could be brand, it could be ip. It's certainly your people, your prowess, specific processes that you may have as well. Sometimes it's even if you have the right setup in your customer Relationships. It may even be your network of customers or something like that. I like to think of key resources also as competitive differentiators. So what do you have that's special to your business that allows you to do something different than someone else? Above, key resources are key activities. Think of these as verbs. Key activities are the things you do every single day to create and deliver and capture that value right in your value proposition. And so that could be everything from product development and testing to marketing and advertising and sales. You get the picture. They're all those verbs that go in your business. At the very left of the business model canvas then are something called key partners. Key partners shouldn't be confused with commodities or, you know, or perhaps resellers that you buy something from, or wholesalers that you buy something else, something from that you could go to someone else for really, really easily. Key partners are often thought of as other companies that, that you need in your business model to do something that, without which you would spend a tremendous amount of money, time, resources to create yourself. That also means that switching costs, switching from one key partner to another may cost a lot. And so there are plenty of people, for instance, who build online services using Amazon Web Services specifically And all the APIs that come with that. In that case, while Amazon may not think of you as their key partner, you should probably think of them as Amazon as your key partner because you need them to do part of your business that otherwise would cost a lot of money and time and resources to do yourself. Finally, the last box, the very bottom on the left hand side are cost structure. And cost structure are all the costs, all the things that it takes to keep your key resources around to do all that, those key activities to pay your partners and everything else it costs in your business to basically run it, the operational aspects. And if you can think about it this way, if you look at your revenue streams and your revenue streams times the number of customers in some specific customer segment that will create, well, what do you think your actual revenue is going to be in this business model that minus your costs and your cost structures, the sum of your cost structures, that's going to give you your overall profit or perhaps your loss. So this is a business model and together these boxes form the ecosystem that is your business. And you can tell from that, except for partners, really, there's no externalities in that. These are all core parts of your business. This also means that when you add or remove one element to any box, something else upstream and probably downstream is bound to change as well. This is how a business model is built. It is an ecosystem. It's not just nine independent boxes. They work together. And that also means that you can and should build and test multiple options of your business model as well. And it's just as easy as copying what you have and maybe adding a few other things or simply starting over on a brand new business model canvas. What's more, because business models represent a single point in time, to create a go to market strategy, you'll want to layer multiple business models on top of each other. Imagine that there's a z axis that runs through the middle of these, that represents that time, and each business model represents a different stage of your rollout. If that's the case, then each point in time can be represented by a single business model canvas. And each one of those business model canvases can highlight different elements that are most important at that stage in your business. So if you're like Amazon, which we continue to use as a good example of this, when Amazon started, you would highlight in a business model canvas books as the main starting value proposition. And perhaps the customer segments are still, perhaps the customer segments are still the, you know, consumers and readers. But then of course, as you can also imagine, as you get into today's Amazon, it's going to be a totally different canvas that's going to represent a marketplace for buying and selling anything. So you can see you can basically develop just about any business model and certainly you can go ahead and develop multiple business versions of your product or service and be able to develop and test multiple options of your business model to go along with those things. And as you learn about what's feasible, viable and desirable, you can also begin to orient various business model options that build over time, giving you a very clear new approach to go to market strategy. All right, well, this is Justin Locus from Business Models Inc. Or bmi. And if you'd like to learn more about business model innovation strategy, like some of the stuff we talked about Today, please visit businessmodelsinc.com thanks again for joining me today and I'll head back over to Omar.

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What an awesome, meaty lesson from Justin Lokitz. There was a lot to take in there, so don't be afraid to hit rewind and re listen to some of that lesson. If you want to learn more about this topic, you should check out Justin's website, businessmodelsinc.com that's businessmodelsinc.com in fact, if you want to take things to the next level, they have a design a better business bootcamp that you can sign up for. They also have smaller workshops and they were generous enough to give us a nice hefty discount. So if you're interested, you can get 30% off if you go to this link. Businessmodelsinc.com Masterclass DBB DBB stands for Design a Better Business, right? I love how Justin just broke down what exactly a business model is. Kind of just cutting through all the noise. You should really check out what he mentioned. The business model canvas is gonna help you put your head around all this because then you can plug in all these options that he mentioned into the canvas. And then of course, you can do what he said, validate the different elements of your business model. See if these things actually work in the real world with real customers. Listen, I understand that there's some people that don't really geek out on this. They're like, you know, this is really strategic and really high level. I'm not sure if this is necessary. It's not going to hurt you if you invest an hour to do this exercise and just get it out there. And at least you explored that and did it justice. You actually did your business justice by exploring the different business models with this business model canvas. It may allow you to open up your mind to new opportunities and chances for you to grow your revenue and build a better business. You owe your business at least an hour to do that. Thanks, Justin for that awesome, awesome lesson. Check them out@businessmodelsinc.com thanks again for that nice discount over at businessmodelsinc.com Masterclass DBB Guys, that wraps up today's lesson. Thank you so much for listening to the $100 MBA show. Before I go, I want to leave you with this. A lot of us, we kind of focus in and we get tunnel vision with our business. We say, you know, I have a SaaS business, I sell a product, I charge a monthly price. That's it. And we really limit our business to opportunities. How about having different ways of making revenue, like having some sort of done for you service, an onboarding, a paid handholding, concierge service, training conferences, masterminds, things like that. You can charge for those things and increase the lifetime value of each customer. Some people want more than just your product, so don't limit yourself to just one way. Thank you so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care.

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