Hello again and welcome back to How to Start Your Business. In this session we'll start Module 2 on business models and value proposition. In fact, in this first session we'll talk about the business model and the value proposition based on the canvas methodology. First, we need to understand what a business model is and, as you can see, it consists of the basics on how to create an organisation, delivery and value capture so it can be passed on to the customer. In fact, the customer is the first thing that a good business model must respond to. Who is the customer to whom we will deliver value? In fact, what is this value that we're offering the customer? The third point we need to respond to is how we can generate this value to a specific customer in a sustainable manner through time. How do we generate sustainable value for this customer so that they remain our customer across time? To translate this into a methodology, we'll use the canvas model created by Alexander Osterwalder from Stanford, and featured in the book <i>Business model generation</i>, published in various editions, and covers the canvas methodology which we'll now explain. The canvas methodology, as you can see, is useful to define a business model. Here are the different sections contained in it. As you can see, first we need to define in the centre the value proposition. It's key. If we don't have a value proposition, everything else will be useless. Earlier I told you that the first thing to be clear about is who our customers are. Once we have customer segmentation and value proposition, we can spend time thinking about how we can transmit our value proposition through our communication channels, how we will communicate with them, what resources we'll need, what our key activities are and what partners we'll need to launch our business model. And, obviously, all this is supported by a certain revenue model and costs which may be different depending on the business model we're working with. I told you that the most important part in a company is delivering value. If we're not delivering value, the company has no purpose. Defining the value proposition is the first key reason we need to understand to start a business. The definition of a value proposition is the reason for which customers choose us as opposed to another company. Obviously, it will be a solution to a problem or it will meet a need the customer has. That's a given. But there are many companies and in the end what we must determine is what value proposition we want to deliver in order for them to choose us instead of another solution or product. To do this, we have a specific canvas. It's the value proposition canvas which will determine the joys, frustrations and work of the customers and all this will be translated into a value proposition gathered together and delivered to the customer. We'll talk more about this later in the course, but before that I'd like to end today's session by explaining to you the difference between value and price. You'll be wondering... The price is what something is worth. Well, no. Consider this. Here's a little game. This painting is <i>The Card Players</i> by Cézanne. Putting a price on it is very difficult. The value, and I'm giving you a clue here, that someone might place on this painting is a matter of taste and it's very subjective, it could be very different to the value someone else would assign to it. The price fluctuates in accordance. The price is what it is, but the value is subjective. Here's another example. This white T-shirt which some might think could be priced at €6, what would happen if we placed a simple logo on it, Nike's logo? Consider how the price increases. Well, the T-shirt is the same. Some might say: "Paying a difference of €24 for the same T-shirt...". There are people willing to pay that because in the end the value of the item now that it's associated with a brand is much higher even though the product is practically the same. So, the price and the value are completely different. The price is what it is and the value is a completely subjective concept. We've reached the end of the first session. See you in the next one.
