More Related Content Similar to Building Breakthrough Business Models (20) Building Breakthrough Business Models2. Let’s Face an Uncomfortable Fact:
Most New Ventures Fail
© John Mullins 2010
3. Let’s Face an Uncomfortable Fact:
Most New Ventures Fail
• Why…
© John Mullins 2010
4. Let’s Face an Uncomfortable Fact:
Most New Ventures Fail
• Why…
• Most new businesses fail because
the business model doesn’t work!
© John Mullins 2010
5. Let’s Face an Uncomfortable Fact:
Most New Ventures Fail
• Why…
• Most new businesses fail because
the business model doesn’t work!
– Too little cash coming in…
© John Mullins 2010
6. Let’s Face an Uncomfortable Fact:
Most New Ventures Fail
• Why…
• Most new businesses fail because
the business model doesn’t work!
– Too little cash coming in…
– Too much cash going out.
© John Mullins 2010
7. Let’s Take a Look at How Today’s
Start-up Process Works
© John Mullins 2010
11. My Assertion: Today’s Start-up
Process, Like Ali G’s Pitch,
Is Seriously Flawed
• Driven by business plans based on
naïve and unfounded assumptions
© John Mullins 2010
12. My Assertion: Today’s Start-up
Process, Like Ali G’s Pitch,
Is Seriously Flawed
• Driven by business plans based on
naïve and unfounded assumptions
• All in support of a “Plan A” that
rarely works
© John Mullins 2010
13. My Assertion: Today’s Start-up
Process, Like Ali G’s Pitch,
Is Seriously Flawed
• Driven by business plans based on
naïve and unfounded assumptions
• All in support of a “Plan A” that
rarely works
• And it’s not the entrepreneur’s
fault…
© John Mullins 2010
15. Plan A or Plan B?
“I’ve made more money
on Plan B than I ever
made by sticking to Plan
A!”
© John Mullins 2010
17. Why, Then, All the Blood,
Sweat and Tears?
• Pages of prose
© John Mullins 2010
18. Why, Then, All the Blood,
Sweat and Tears?
• Pages of prose
• Reams of spreadsheet data
© John Mullins 2010
19. Why, Then, All the Blood,
Sweat and Tears?
• Pages of prose
• Reams of spreadsheet data
• And the hockey-stick projections
© John Mullins 2010
20. Why, Then, All the Blood,
Sweat and Tears?
• Pages of prose
• Reams of spreadsheet data
• And the hockey-stick projections
• All in support of the perfect Plan A
(that probably won’t work!)
© John Mullins 2010
22. A Question for You…
“Why will or won’t Ali G’s
plan for an ice cream
glove work?”
© John Mullins 2010
23. So, is there a solution to the
flawed start-up process?
© John Mullins 2010
24. So, is there a solution to the
flawed start-up process?
• A rigorous solution, perhaps, for
getting from your Plan A that
probably won’t work
© John Mullins 2010
25. So, is there a solution to the
flawed start-up process?
• A rigorous solution, perhaps, for
getting from your Plan A that
probably won’t work
• To a better Plan B, a better business
model, based on
© John Mullins 2010
26. So, is there a solution to the
flawed start-up process?
• A rigorous solution, perhaps, for
getting from your Plan A that
probably won’t work
• To a better Plan B, a better business
model, based on
– Real data
© John Mullins 2010
27. So, is there a solution to the
flawed start-up process?
• A rigorous solution, perhaps, for
getting from your Plan A that
probably won’t work
• To a better Plan B, a better business
model, based on
– Real data
– For a real product or service
© John Mullins 2010
28. So, is there a solution to the
flawed start-up process?
• A rigorous solution, perhaps, for
getting from your Plan A that
probably won’t work
• To a better Plan B, a better business
model, based on
– Real data
– For a real product or service
– From real customers
© John Mullins 2010
31. The Conventional Business
Modeling Approach
• Turn on Excel
• Make silly “assumptions” (SWAGs)
lacking in real evidence
© John Mullins 2010
32. The Conventional Business
Modeling Approach
• Turn on Excel
• Make silly “assumptions” (SWAGs)
lacking in real evidence
• Tweak the cells to create a “hockey
stick” pro forma
© John Mullins 2010
33. The Conventional Business
Modeling Approach
• Turn on Excel
• Make silly “assumptions” (SWAGs)
lacking in real evidence
• Tweak the cells to create a “hockey
stick” pro forma
• Voila, you’ll soon be rich!
© John Mullins 2010
34. So, how can you develop a business
model that really stacks up?
© John Mullins 2010
35. So, how can you develop a business
model that really stacks up?
• Turn off Excel and consider the five
building blocks of every business
model
© John Mullins 2010
36. So, how can you develop a business
model that really stacks up?
• Turn off Excel and consider the five
building blocks of every business
model
– What’s your revenue model?
© John Mullins 2010
37. So, how can you develop a business
model that really stacks up?
• Turn off Excel and consider the five
building blocks of every business
model
– What’s your revenue model?
– Your gross margin model?
© John Mullins 2010
38. So, how can you develop a business
model that really stacks up?
• Turn off Excel and consider the five
building blocks of every business
model
– What’s your revenue model?
– Your gross margin model?
– Your operating model?
© John Mullins 2010
39. So, how can you develop a business
model that really stacks up?
• Turn off Excel and consider the five
building blocks of every business
model
– What’s your revenue model?
– Your gross margin model?
– Your operating model?
– Your working capital model?
© John Mullins 2010
40. So, how can you develop a business
model that really stacks up?
• Turn off Excel and consider the five
building blocks of every business
model
– What’s your revenue model?
– Your gross margin model?
– Your operating model?
– Your working capital model?
– And your investment model.
© John Mullins 2010
44. The Key Steps in Apple’s Journey
• Analogs
© John Mullins 2010
45. The Key Steps in Apple’s Journey
• Analogs
• Antilogs
© John Mullins 2010
46. The Key Steps in Apple’s Journey
• Analogs
• Antilogs
• Leaps of faith
© John Mullins 2010
47. The Key Steps in Apple’s Journey
• Analogs
• Antilogs
• Leaps of faith
• Hypotheses to rigorously test the
most crucial leaps of faith
© John Mullins 2010
49. Steve Jobs on
Analogs and Antilogs
“Picasso had a saying: he said
good artists copy, great artists
steal…
© John Mullins 2010
50. Steve Jobs on
Analogs and Antilogs
“Picasso had a saying: he said
good artists copy, great artists
steal…
and we have always been
shameless about stealing great
ideas.”
© John Mullins 2010
52. The First Building Block:
Your Revenue Model
• Plan A Plan B for two guys who
wanted to enter the fishing
industry…
© John Mullins 2010
60. Lest We Forget:
Your Investment Model
• Two vastly different business
models for VoIP telecom
technology
© John Mullins 2010
61. Lest We Forget:
Your Investment Model
• Two vastly different business
models for VoIP telecom
technology
© John Mullins 2010
62. Lest We Forget:
Your Investment Model
• Two vastly different business
models for VoIP telecom
technology
© John Mullins 2010
63. What Do Most of these Examples
Have in Common?
© John Mullins 2010
64. What Do Most of these Examples
Have in Common?
• All (except Zynga and Costco) built
their eventual success not on Plan
A, but on Plan B
© John Mullins 2010
65. What Do Most of these Examples
Have in Common?
• All (except Zynga and Costco) built
their eventual success not on Plan
A, but on Plan B
• For each of them, their
breakthrough was a business
model whose strength was
anchored in just one of the five
business model elements
© John Mullins 2010
67. On Which Elements Did
Each Break Through?
• Apple’s and Princess’ revenue
models
© John Mullins 2010
68. On Which Elements Did
Each Break Through?
• Apple’s and Princess’ revenue
models
• Zynga’s gross margin model
© John Mullins 2010
69. On Which Elements Did
Each Break Through?
• Apple’s and Princess’ revenue
models
• Zynga’s gross margin model
• Ryanair’s operating model
© John Mullins 2010
70. On Which Elements Did
Each Break Through?
• Apple’s and Princess’ revenue
models
• Zynga’s gross margin model
• Ryanair’s operating model
• Costco’s working capital model
© John Mullins 2010
71. On Which Elements Did
Each Break Through?
• Apple’s and Princess’ revenue
models
• Zynga’s gross margin model
• Ryanair’s operating model
• Costco’s working capital model
• Skype’s investment model
© John Mullins 2010
72. On Which Elements Did
Each Break Through?
• Apple’s and Princess’ revenue
models
• Zynga’s gross margin model
• Ryanair’s operating model
• Costco’s working capital model
• Skype’s investment model
• On which element can you break
through to a better business
model?2010
© John Mullins
74. Putting Process and Framework
Together: The Business Model Grid
Business Model
Element
© John Mullins 2010
75. Putting Process and Framework
Together: The Business Model Grid
Business Model
Element
Revenue
Model
© John Mullins 2010
76. Putting Process and Framework
Together: The Business Model Grid
Business Model
Element
Revenue
Model
Gross Margin
Model
© John Mullins 2010
77. Putting Process and Framework
Together: The Business Model Grid
Business Model
Element
Revenue
Model
Gross Margin
Model
Operating
Model
© John Mullins 2010
78. Putting Process and Framework
Together: The Business Model Grid
Business Model
Element
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
© John Mullins 2010
79. Putting Process and Framework
Together: The Business Model Grid
Business Model
Element
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
80. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs
Element
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
81. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs
Element
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
82. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
83. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of Hypotheses
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
84. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of Hypotheses
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
85. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of Hypotheses
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
86. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of Hypotheses
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
87. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of Hypotheses
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
88. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of Hypotheses
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
89. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of Hypotheses
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
90. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of Hypotheses
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
91. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of Hypotheses
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
92. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of Hypotheses
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
93. Putting Process and Framework
Together: The Business Model Grid
Business Model Analogs Antilogs Leaps of Hypotheses
Element Faith
Revenue
Model
Gross Margin
Model
Operating
Model
Working Capital
Model
Investment
Model
© John Mullins 2010
94. Can this Work for You?
The Proof of the Pudding
© John Mullins 2010
95. Can this Work for You?
The Proof of the Pudding
© John Mullins 2010
96. Can this Work for You?
The Proof of the Pudding
© John Mullins 2010
97. Can this Work for You?
The Proof of the Pudding
© John Mullins 2010
99. What Do They Have in Common?
• None stuck to their original
business model
© John Mullins 2010
100. What Do They Have in Common?
• None stuck to their original
business model
• All became household names by
abandoning Plan A and getting to
Plan B
© John Mullins 2010
102. Lots More Examples,
in Start-ups and More
• China’s Shanda: Revenue model
© John Mullins 2010
103. Lots More Examples,
in Start-ups and More
• China’s Shanda: Revenue model
• Japan’s Toyota: Gross margin model
© John Mullins 2010
104. Lots More Examples,
in Start-ups and More
• China’s Shanda: Revenue model
• Japan’s Toyota: Gross margin model
• India’s Oberoi Hotels: Operating
model
© John Mullins 2010
105. Lots More Examples,
in Start-ups and More
• China’s Shanda: Revenue model
• Japan’s Toyota: Gross margin model
• India’s Oberoi Hotels: Operating
model
• USA’s Dow Jones: Working capital
model
© John Mullins 2010
106. Lots More Examples,
in Start-ups and More
• China’s Shanda: Revenue model
• Japan’s Toyota: Gross margin model
• India’s Oberoi Hotels: Operating
model
• USA’s Dow Jones: Working capital
model
• Spain’s Zara: Multi-dimensional
model
© John Mullins 2010
107. Lots More Examples,
in Start-ups and More
• China’s Shanda: Revenue model
• Japan’s Toyota: Gross margin model
• India’s Oberoi Hotels: Operating
model
• USA’s Dow Jones: Working capital
model
• Spain’s Zara: Multi-dimensional
model
© John Mullins 2010
• And many more, in visionary
109. A Closing Thought on
Why Business Plans Don’t Deliver
• Most of the time, Plan A doesn’t
work. Why?
© John Mullins 2010
110. A Closing Thought on
Why Business Plans Don’t Deliver
• Most of the time, Plan A doesn’t
work. Why?
• There’s simply too much that you
simply don’t know
© John Mullins 2010
111. A Closing Thought on
Why Business Plans Don’t Deliver
• Most of the time, Plan A doesn’t
work. Why?
• There’s simply too much that you
simply don’t know
– Some things you know you don’t know
© John Mullins 2010
112. A Closing Thought on
Why Business Plans Don’t Deliver
• Most of the time, Plan A doesn’t
work. Why?
• There’s simply too much that you
simply don’t know
– Some things you know you don’t know
– Others you don’t know you don’t know
© John Mullins 2010
116. There Is a Solution…
• Stop working on your business plan
for Plan A
© John Mullins 2010
117. There Is a Solution…
• Stop working on your business plan
for Plan A
• And get on with your business, your
journey to a more vibrant Plan B
© John Mullins 2010
118. There Is a Solution…
• Stop working on your business plan
for Plan A
• And get on with your business, your
journey to a more vibrant Plan B
– Find some analogs and antilogs
© John Mullins 2010
119. There Is a Solution…
• Stop working on your business plan
for Plan A
• And get on with your business, your
journey to a more vibrant Plan B
– Find some analogs and antilogs
– Identify your most crucial leaps of faith
and some hypotheses to examine them
© John Mullins 2010
120. There Is a Solution…
• Stop working on your business plan
for Plan A
• And get on with your business, your
journey to a more vibrant Plan B
– Find some analogs and antilogs
– Identify your most crucial leaps of faith
and some hypotheses to examine them
– Build a dashboard to guide your journey
© John Mullins 2010
121. There Is a Solution…
• Stop working on your business plan
for Plan A
• And get on with your business, your
journey to a more vibrant Plan B
– Find some analogs and antilogs
– Identify your most crucial leaps of faith
and some hypotheses to examine them
– Build a dashboard to guide your journey
– Get out there and learn
© John Mullins 2010
123. But Don’t Just Take it from
Randy and Me
“What matters most is not the quality of the
initial business plan, but instead the ability of
the team to iterate successive business plans
as a means to finding what works. So the trick
is to experiment quickly but intelligently, and
with discipline. This book provides an
exceptionally helpful framework for how to do
this.”
Dennis Whittle, CEO
GlobalGiving.com
© John Mullins 2010
124. For the Rest of the Story,
in Bookstores Now…
Number 1
Best-seller:
“Best Books for
Business
Owners”, 2009
Inc. Magazine
© John Mullins 2010
125. To Assess Your Opportunity:
The New Business Road Test
© John Mullins 2010 31
126. Questions?
jmullins@london.edu
www.getting-to-plan-b.com
© John Mullins 2010
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