The first step is to define and grasp the profit source-customers.
The profit source of an enterprise refers to the customer groups who buy the goods or services of the enterprise, and they are the only source of enterprise profits. The definition of enterprise profit source and its demand determine who the enterprise creates value for. Enterprise customer groups are divided into main customer groups, auxiliary customer groups and potential customer groups. A good target customer base, first, must have a clear definition, the customer base without a clear definition is often unstable; Second, there must be enough scale, and the business scale of enterprises without enough customer base is bound to be limited; Third, enterprises should have a deeper understanding and understanding of the needs and preferences of customer groups.
When designing a business model, we first need to analyze customer needs, with the aim of finding a customer group that can easily present value for products. Generally speaking, the difficulty of enterprise profit lies not in technology and products, but mainly in customers. Sometimes, even grasping the little needs of corporate customers may produce great customer value. In the copier industry, Xerox's profit sources are mainly large enterprises and professional copying companies. He can't see the demand of individual customers for copying convenience, so he lost the opportunity to develop desktop copiers. Canon can't compete with Xerox in the scale of resources, so it adopts a differentiation strategy, pays attention to the systematic analysis and research of the profit sources of individual customers, and excavates the unsatisfied special customer groups according to the value needs of individual customers, and finally produces an innovative idea of developing simple desktop copiers. Canon introduced a simple desktop copier at 1976. The technological innovation of this new product is relatively backward, which not only has slow copying speed and poor copying quality, but also provides extremely limited copying functions. But in the eyes of customers, it is a successful product and can bring great value, because it can provide great convenience for managers and individual workers in their work. These customers do not need to go to the copy center to copy a page of documents, but only need simple operations to meet the copying needs at home or in their personal offices.
If the business model can't find a relatively clear customer demand, then this new business will encounter the potential risk of not creating profits. For example, JVC and Sony invested in the new business development of video recorders in the 1960s, unable to grasp the potential customer demand in advance, so they had to constantly introduce new products to the market for testing. It was not until the 1970s that they successfully developed VHS and Beta products after roughly grasping the customer's demand for this new product.
Unclear profit sources, that is, unclear customers and customers' needs, are the primary reasons for the unsound business model of enterprises. For example, in the emerging fields of science and technology in previous years (such as Internet, e-commerce, wireless Internet and other new industries before 2000), it is difficult to find out how the value of new technologies will be presented in the new market because the market has not yet formed and the customer demand is not clear. Therefore, most of the business models of many Internet companies lack specific customer demand information, and they can only use the development trend of Internet technology to describe the bright future market. But this is the main risk that some enterprises encounter when investing in the emerging technology market: new technologies have high potential to create value, but new businesses continue to suffer a lot of losses. A large number of commercial practices show that when designing and perfecting a business model, it is the primary task to analyze and grasp customer needs and seek the best positioning of products in the market.
The second step is to continuously improve the profitability of enterprises-products.
Profit point refers to the products or services that the enterprise can make a profit and the target customers buy. The profit point determines what value an enterprise creates for its customers, as well as its main income and income structure. A good profit point is the combination of customer value maximization and enterprise value maximization, which requires a clear demand preference for target customers, creating value for target customers and enterprises. Some enterprises' products and services are either not targeted at customers or do not create profits at all, so they are not good profit points.
Microsoft's business model is internationally recognized as the most successful business model, but looking back at the history of Microsoft's continuous improvement of corporate profitability, we will find that Microsoft was unable to design competitive products from the beginning. Looking at the graphical operating system developed by Microsoft, we will find that it is the competitiveness of Microsoft's business model to continuously improve products according to customers' needs. When Microsoft introduced Windows 1.0, this product was not much better than the GEM graphical user interface of digital research company. Critics even compare it to a pale imitation of a product developed by PARC Xerox. It was not until 1990 that Windows3.0 was released that Microsoft took out the improvement of memory management so that users could use the capabilities of 286 and 386 microprocessors. 1993, it took Microsoft another three years to improve nt with an interface similar to Windows95. The powerful management and control functions of the new product make WindowsNT very popular in the IT field. In the web browser business, it took Microsoft three years to catch up with Netscape. Microsoft has established a great business model because it listened to customers' feedback and fixed the shortcomings in its products. Microsoft's success is not because it has developed a "sensational" technology. Microsoft has perfected a system to integrate customer feedback and improve corporate profitability, which can also explain why Microsoft has been the first enterprise in this field for a long time.
The third step is to build a powerful profit lever and build an internal operation value chain of the business model.
Constructing profit lever-planning the internal operation value chain of an enterprise is an important content in the design and improvement of business model, which determines whether a product or service brings value to the enterprise and how much value it brings. Corporate profit leverage mainly includes the following types: organization and mechanism leverage, technology and equipment leverage, production operating leverage, capital operation leverage, supply and logistics leverage, information leverage, human resources leverage and so on. These internal business activities can clearly define the cost and cost structure of internal business and the planned profit rate.
A well-designed profit lever can make the business model extremely competitive. Southwest Airlines, on the other hand, has set an industry miracle of making profits for 29 consecutive years, and continued to make profits last quarter 1? 02 billion dollars. The success lies in that Southwest Airlines has always adhered to the strategy of "low cost operation and low fare competition", worked hard on the internal value chain that competitors did not pay attention to, and found its own wealth growth point. Southwest Airlines is mainly engaged in domestic short-haul business. Because the average flight distance of each flight is only one and a half hours, Southwest Airlines only provides soft drinks and peanuts, which can not only "cost the people very expensive food and beverage service", but also increase the net number of seats per plane by 7 to 9, and reduce the number of flight attendants per class. In most markets of Southwest Airlines, its fares are even cheaper than those of long-distance buses between cities. Some "giant" airlines call Southwest Airlines "cockroaches spreading everywhere in the cracks in the floor", which can be felt but cannot be eliminated.
Outsourcing internal value chain is an effective way to build profit leverage without competitive advantage. Many companies realize that in a very long and complex internal value chain, they may be highly competitive in only three or four links of the value chain, but they cannot be competitive in all links. Once they realize the dominant link in the internal value of the enterprise, they should position the company in that position and outsource other parts to other companies by signing contracts, thus making the profit leverage stronger.
For more than ten years, Nike has been in a leading position in the sports shoes industry in the United States. For Nike, marketing and novel design are its specialties, while for manufacturing, Nike adopts outsourcing strategy, and Nike also outsources some financial operations. Rolls-Royce will focus on the core competitiveness of the engine, and completely outsource parts such as the body to maximize the value. BMW controls the design of key components closely related to its core competitiveness, such as engines and vehicle platforms, while other non-key components are outsourced. The cost of the same product is different due to the difference of profit leverage or the difference of internal operation value chain. One enterprise may make money, and another enterprise may lose money. This is enough to show that the profit lever determines the profit of the enterprise.
The fourth step is to dredge and broaden the profit channels and build the external operation value chain of the business model.
Profit channel-that is, the channel through which enterprises supply products to customers and transmit product information-is an indispensable external value chain for the normal operation of business models. The value transfer of products or services is the distribution and dissemination activities of enterprises to deliver products and services to target customers, with the purpose of facilitating the target customers to purchase and understand the company's products or services conveniently.
Dell is a successful business model, and its profit channel itself has created great value for Dell. First of all, the direct selling model greatly reduces the cost. The essence of Dell's "direct selling model" is to simplify and eliminate middlemen, thus avoiding huge channel costs. Due to direct sales, Dell reduced the channel cost by about 20%. Secondly, the direct selling model has accelerated Dell's capital turnover. Major computer companies use affiliates to sell computers, and it usually takes 6-8 weeks from manufacturing to sales. Dell's time from placing an order to delivery to customers is 5 days, and from delivery to customer electronic payment is within 24 hours. Dell's capital turnover days have been reduced to ll days.
1963 Carrefour established its first supermarket in the suburbs of Paris. Within 30 years, Carrefour has developed into an international supermarket chain group with annual sales of 29 billion US dollars and market value of 20 billion US dollars. The key to its success is to provide excellent channels for customers. Before Carrefour appeared, France had a highly decentralized small store system, which was a very inefficient channel for customers and suppliers. Customers need to spend hours shopping, while distributors need to spend considerable costs and expenses to transport goods to hundreds of retail stores. The multiple failures and inefficiencies of this channel have stimulated the trend of channel concentration. Carrefour discovered this opportunity and created great shareholder value. Carrefour and Wal-Mart are successful because they have established efficient circulation channels for many commodity production enterprises, which is essential for almost all business models.
The fifth step is to establish profit barriers and effectively protect profits.
Profit barrier refers to the strategic control measures taken by enterprises to prevent competitors from plundering their target customers and protect profits from losses. The profit lever is to incite the "cheese" to belong to me, and the profit barrier is to protect the "cheese" from being moved by others. The more effective profit barriers mainly include establishing industry standards, controlling value chain, leading position, unique corporate culture, good customer relationship, brand, copyright, patent and so on.
The value of profit barriers to business models can be seen from the competition between Beta and VHS for industry standards. In the mid-1970s, Sony invented the Beta camera system with advanced technology, early market entry and strong brand support. However, Sony insisted on "not allowing other manufacturers to do OEM work" and went it alone, eventually becoming a loner in the market. 1985, Sony had to quit the home camera market. JVC is a VHS camera standard system established after Sony. At that time, it did not have a competitive advantage in performance and price. However, JVC believes that "excellent technology is shared by all", and forms a strong alliance with the color TV industry in the upper chain of the camera industry, and cooperates extensively with video rental stores and audio-visual products manufacturers in the lower chain. VHS of JVC was finally chosen as the industry standard by the market. Another unforgettable example is Apple Computer. For most of the 1980s and early 1990s, Apple had a graphical interface using system, which was much more advanced than Microsoft. However, as a result of the competition, the shareholder value of $654.38+00 billion was transferred from Apple to Microsoft, because Microsoft made every effort to make its operating system an industry standard.
It is hoped that the above five steps provided by World Factory Network will be helpful for enterprises to design business models.