Business Model Generation
Several weeks ago, we were invited to conduct a three-hour seminar for the Independent Garage Owners of North Carolina (IGONC). The subject of the seminar was Business Model Generation, a topic which shows the participants a method to look at their current business operation and discover ways to bring it more in-line with their customer needs.
This Association is made up of the local auto shops that make repairs and service cars and trucks. One’s first impression when considering the group is that they are composed of very good technicians, who pay little attention to business development. In fact, those in the workshop represented a very skilled and savvy group of entrepreneurial business people.
Business Model Generation is a process which involves the review and discussion of each of eight building blocks. It is best done when concentrated on a single organization. In this workshop however, it had to have a wider focus since a number of individual businesses were participating. The eight building blocks are:
- Customer Segments– A company or organization serves one or several customer segments
- Value Propositions-It solves customer problems and satisfies customer needs with its value proposition.
- Customer Relations– Customer Relations are established and maintained with each customer segment.
- Revenue Streams– Revenue Streams result from value propositions successfully offered to customers.
- Key Resources– Are the assets required to offer and deliver the previously described elements.
- Key Activities– How those products and services are performed
- Key Partnerships– Suppliers and resources outside the business
- Cost Structure– The model elements result in a cost structure.
The workshop started with a lecture on how a business owner wears several hats. The first is that of the technician. The technician is people who work in the business such as mechanics, accountants and sales people. The second is the manager, who develops standard procedures and controls the production and quality of the business activities. The third is the entrepreneur, who looks to the future of the business, expanding its customer base and adding new products/services. The development of a business model was mostly the role of the entrepreneur. For the balance of the session, they were to think like entrepreneurs and work On their business not In their business.
The participants were then divided into several working groups. Each group was given a large chart showing each of the model building blocks and asked to discuss each. As a result of those discussions, they placed the conclusions reached in the blocks. The whole workshop was then reconvened, and conclusions were discussed.
We found great interest in the level of discussion on customer segments, their needs, and services that were developed to address their needs. It became apparent that these participants were not only great technicians, but very knowledgeable and shrewd business leaders. It points to the fact that no matter what your business, your long-term success involves the utilization of entrepreneurial practices.
One of the participants is located near a good-size university. She explained that the students have a need to have their cars serviced or repaired; they also need to attend their classes. This garage owner actually transports the students to and from class, while their car is being serviced. The school is only minutes away from their shop so it is no great consumer of time and it provides the students with a valuable service.
A second participant has a shop a short driving distance from a public middle school. When a teacher has the need to have work done on their car, then call the shop and leave their keys in the front office of the school. Someone from the shop comes and picks up the car, services it, returns it to the school parking lot, and returns the keys with the bill to the office. The teacher can then do what teachers do best, educating children, not sitting in a waiting room.