concept development workshop
VicHealth physical activity
innovation challenge

welcome
DAVID HOOD
@DavidAHood
JULIAN WATERS-LYNCH
@jwaterslynch
join the conversation on twitter with
@VicHealth
@DoingSomeGood
#VHinnov
doing
something good

workshop program
• quick review of previous workshops
• intro to Business Models and Business Model Innovation
• develop Business Model Canvas for your Innovation
Challenge concept
• discuss social impact measurement
• design an experiment to test your idea

purpose
For you to leave with:
• a good first go of your Business Model Canvas
➡ final version to be submitted to VicHealth
• ideas and insights in to how you can improve your concept

http://www.businessmodelgeneration.com/book

check in
check in

CHECK IN
1. What questions or comments do you have about the
Business Model Canvas (BMC) so far?

CHECK IN
1. What questions or comments do you have about the
Business Model Canvas (BMC) so far?
2. Which aspect/s of the Business Model Canvas (BMC)
would you like to focus on today?

review

shaping great ideas
Start with
why
Why are you doing this? What do you believe you can change? What do
you believe you can make different/better/easier? What do you believe is
possible?
of the context 1 What is the current situation? Who does it impact? What is it’s impact on
Build your understanding
people, the planet, the economy? What are the possible causes? Observe.
Listen. Learn. Enquire.
Identify your target
audience
Who are you designing your service or product for? Be specific. Who
believe’s what you believe? It’s not everybody.
Get to know your target
audience
3 Seek to understand their needs and aspirations, what motivates them and
their challenges. Develop user personas and user journeys to provide
valuable insights.
Identify the problem you
are solving
How does your idea help your target audience to get what they need or
what they value? How does it help them to overcome challenges and
barriers?
Prototype and
test ideas
Gain insights into customers’ needs by designing and deploying the
smallest amount of functionality possible (AKA your minimum viable
product/service). Evolve the solution based on insights provided by
engaged early adopters.
1
2
3
4
5
6

what are VicHealth looking for?
Ideas that address the following criteria:
1. Get more people physically active
2. Point of difference: be clever, timely and unique.
3. Equity: reach the hard to reach and move the hard to move.
4. Scalability: able to be expanded, upscaled or transferred
5. Sustainability: will be able to stand on its own two feet.
6. Partners: recruited a project team that brings a unique perspective
7. Sharable: documented your project so we can share it online
8. Ready to roll!: must be able to test within 12 months

intro to HCD

THE FUTURE OF AUSTRALIAN SPORT
SIX MEGATRENDS SHAPING THE SPORTS SECTOR

segments of non-club members
with high potential for acquisition
Adults
1. Sidelined Sportsters
2. Club Wary
3. Ponderers
!
!
Children
1. Thrifty Enthusiasts
2. Ponderers
!

"Lean Startup" is a system for developing
a business, product or service in the most
efficient way possible to reduce the risk
of failure.
It is an approach that treats all ideas as
having assumptions (or hypotheses) that
must be validated by rapid
experimentation in the marketplace. The
approach relies on scientific
experimentation, iterative product
releases, and customers feedback to
generate validated learning.

The key is to identify
assumptions - would
people actually buy or do
this? Not by building the
whole product, but by
building a Minimum
Viable Product (MVP).
The MVP is the most basic
version of your product that
is valuable to your user, that
will enable you to test and
learn.

5
4
3
2
1
Get more people
physically active
5
4
3
2
1
Point of
difference
5
4
3
2
1
Equity
5
4
3
2
1
Scalability
5
4
3
2
1
Sustainability
5
4
3
2
1
Partners
5
4
3
2
1
Sharable
5
4
3
2
1
Ready to roll
How would you score yourself so far?
VicHealth is committed to getting people
more active. The more physical activity you
do, the better your health! So, the more
people you can get being active, the more
impressed we’ll be. Need we say more?
We’re offering start-up funding
to kick-start smart ideas. Your
project should be clever,
timely and unique. Use your
imagination and think big!
We will be impressed by
proposals that cater for
everyone, including those that
are less likely to participate.
Will your project be fair,
accessible and inclusive?
We want to invest in ideas
that have the potential to
go from good to great. Will
it be expanded, upscaled
or transferred over time?
VicHealth can give you a kick
start, but your project will
need to stand on its own two
feet in time. Make sure you
think about the long term
business model from the start.
VicHealth plays a team game.
Who have you recruited to your
project team that brings a
unique perspective, are they
social entrepreneurs? Are they
corporate hot shots? Are they
changemakers?
We want to get as many
people talking about your
project as possible - so
whatever you do needs to be
documented in some way that
we can share online (photos
and video are our favourites)!
You must be able to
test your project
within 12 months of
receiving start-up
funding

Having a great idea doesn't guarantee success.
A great business idea must also have a great
business model to support and sustain it.
Alex Osterwalder

intro to business models

8.40 5 mins
What is a business model?

Who has used BMC before this workshop?
What are the advantages of BMC over traditional BP?
What was easy about it?
What was hard?
Remaining questions?
What is most useful to explore today?

Def_Business Model
A business model describes
the rationale of how an
organisation creates, delivers,
and captures value.
Source: Business Model Generation

Which part needs more detail?
What
Who
Why
How
Value
Unclear Clear
Unclear Clear
Unclear Clear
Unclear Clear
Unclear Clear

business model innovation

Innovators
2.5%
Edge
Early
Adopters
13.5%
Early
Majority
34%
Late
Majority
34%
Laggards
16%
Core
Chasm

The Business
Model Canvas
A shared language for describing, visualizing,
assessing, and changing business models

The Business Model Canvas is a tool for
you to design, analyse, test and describe
your business model and how your
organisation intends to create, deliver,
and capture value in a profitable way.

Why use Business Model Canvas?
Fundamentally, it delivers three things:
1. Focus: Stripping away the 40+ pages of ‘stuff’ in a traditional business
plan, it can help to clarify and focus on what’s driving the business (and
what’s non-core and getting in the way).
2. Flexibility: It’s a lot easier to tweak the model and try things (from a
planning perspective) with something that’s sitting on a single page.
3. Transparency: Your team will have a much easier time understanding
your business model and be much more likely to buy in to your vision
when it’s laid out on a single page.

OFFER
CUSTOMER
RELATIONSHIPS
personal!
DISTRIBUTION
CHANNELS
CUSTOMER
SEGMENTS
KEY
ACTIVITIES
risk
management!
lending &
collecting
payments!
branches!
brand/
trust!
COST STRUCTURE REVENUE STREAMS
PARTNER
NETWORK
KEY
RESOURCES
ʻs business model
poor
entrepreneurs!
branches!
micro-loans!
capital!
government!
people!
capital
costs!
interest
rates!

getting started

order
CS VP CH CR
Customer
Segments
An organization serves
one or several Customer
Segments.
Value
Propositions
It seeks to solve customer
problems and satisfy
customer needs with
value propositions.
Channels
Value propositions
are delivered to customers
through communication,
distribution, and sales
Channels.
Customer
Relationships
Customer relationships
are established and
maintained with each
Customer Segment.
1 2 3 4

R$ KR KA KP C$
Revenue
Streams
Revenue streams result
from value propositions
successfully oΩered to
customers.
Key
Resources
Key resources are the
assets required to oΩer
and deliver the previously
described elements . . .
Key
Activities
. . . by performing a num-ber
of Key Activities.
Key
Partnerships
Some activities are
outsourced and some
resources are acquired
outside the enterprise.
Cost
Structure
The business model
elements result in the
cost structure.
5 6 7 8 9

guess
guess
guess
guess
guess
guess
guess
guess
guess
guess
guess
guess
guess
guess
guess guess

• use multi-coloured post-its
• can use editable version of PDF

9 business model canvas building blocks
1. description of each block - role/function
2. key question and supporting questions to be asked
3. examples of types of responses
4. things to think about
5. case study
6. work on your own Business Model Canvas
7. questions for Jules and David

1. customer segments

The Customer Segments Building Block
defines the different groups of people or
organizations an enterprise aims to
reach and serve.

Customer Segments
There are different types of market segments:
1. Mass market
2. Niche market
3. Segmented
4. Diversified
5. Multi-sided platforms (or multi-sided markets)

Key Questions
1. For whom are we creating value?
2. Who are our most important customers?

segments of non-club members
with high potential for acquisition
Adults
1. Sidelined Sportsters
2. Club Wary
3. Ponderers
!
!
Children
1. Thrifty Enthusiasts
2. Ponderers
!

sidelined sportsters

club wary

ponderers

thrifty enthusiasts

ponderers

tips
Customer groups represent separate segments if:
• Their needs require and justify a distinct offer
• They are reached through different Distribution Channels
• They require different types of relationships
• They have substantially different profitabilities
• They are willing to pay for different aspects of the offer

activity
1. Which market segment are you targeting?
2. Is there a particular niche within that market segment that
you are targeting? What is it?

next…
• develop 2-3 personas for each of your customer segments
• identify what they value & identify what problems they
have
• identify the barriers they face to getting active
• map out a day in the life for each customer segment
• what is their usual routine?
• what are their habits?
• which trend/s are you tapping in to with your concept?

2. VALUE PROPOSITIONS

The Value Propositions Building Block
describes the bundle of products and
services that create value for a specific
Customer Segment.

Value Propositions
Elements from the following non-exhaustive list of quantitative or
qualitative values can contribute to customer value creation:
1. Newness
7. Price
2. Performance
8. Cost reduction
3. Customization
9. Risk reduction
4. “Getting the job done”
10. Accessibility
5. Design
11. Convenience/Usability
6. Brand/status

Key Questions
1. What value do we deliver to the customer?
2. Which one of our customer’s problems are we helping to
solve?
3. Which customer needs are we satisfying?
4. What bundles of products and services are we offering to
each Customer Segment?

Simple Fix for Blown Head Gaskets
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Repairs Blown Head Gaskets in
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Tips
• Make it as plain as day
• Use your customer’s language. How would they describe
the benefits themselves?
• Strengthen your case
• Customer testimonials
• Assurance
• Social proof

3. channels

The Channels Building Block describes
how a company communicates with and
reaches its Customer Segments to
deliver a Value Proposition.

Channels
Channels serve several functions, including:
• Raising awareness among customers about a company’s
products and services
• Helping customers evaluate a company’s Value Proposition
• Allowing customers to purchase specific products and
services
• Delivering a Value Proposition to customers
• Providing post-purchase customer support

Channel Types & Phases

Key Questions
1. Through which Channels do our Customer Segments want
to be reached?
2. How are we reaching them now?
3. How are our Channels integrated?
4. Which ones work best?
5. Which ones are most cost-efficient?
6. How are we integrating them with customer routines?

Activity
Create a user journey map for each of your personas:
• What touch points do they have with you?
• Where are you best able to give them maximum value on (i.e.
a great experience)?
• Which ones might be costing you a good deal but not
providing much value for customers?
• Which ones could you potentially create a lot more value
through without much effort or resources?

Tourism Australia

4. customer relationships

The Customer Relationships Building
Block describes the types of
relationships a company establishes with
specific Customer Segments.

Customer Relationships
Relationships can range from personal to automated.
Customer relationships may be driven by the following
motivations:
1. Customer acquisition
2. Customer retention
3. Boosting sales (upselling)

Key Questions
1. What type of relationship does each of our Customer
Segments expect us to establish and maintain with them
2. Which ones have we established?
3. How costly are they?
4. How are they integrated with the rest of our business
model?

Customer Relationships
We can distinguish between several categories of Customer
Relationships, which may co-exist in a company’s relationship
with a particular Customer Segment:
1. Personal Assistance

Customer Relationships
We can distinguish between several categories of Customer
Relationships, which may co-exist in a company’s relationship
with a particular Customer Segment:
1. Personal Assistance
2. Dedicated Personal Assistance

Customer Relationships
We can distinguish between several categories of Customer
Relationships, which may co-exist in a company’s relationship
with a particular Customer Segment:
1. Personal Assistance
2. Dedicated Personal Assistance
3. Self-service

Customer Relationships
We can distinguish between several categories of Customer
Relationships, which may co-exist in a company’s relationship
with a particular Customer Segment:
1. Personal Assistance
2. Dedicated Personal Assistance
3. Self-service
4. Automated services

Customer Relationships
We can distinguish between several categories of Customer
Relationships, which may co-exist in a company’s relationship
with a particular Customer Segment:
1. Personal Assistance
2. Dedicated Personal Assistance
3. Self-service
4. Automated services
5. Communities

Customer Relationships
We can distinguish between several categories of Customer
Relationships, which may co-exist in a company’s relationship
with a particular Customer Segment:
1. Personal Assistance
2. Dedicated Personal Assistance
3. Self-service
4. Automated services
5. Communities
6. Cocreation

customer development principles
1. There Are No Facts Inside Your
Building, So Get Outside
2. Failure is an Integral Part of the
Search for the Business Model
3. Iterations and Pivots are Driven by
Insight
4. Validate Your Hypotheses with
Experiments
5. Success Begins with Buy-In from
Investors and Co-Founders
6. No Business Plan Survives First
Contact with Customers
7. Not All Startups Are Alike
8. If it’s not About Passion, You’re
Dead the Day You Opened your
Doors
9. Preserve Cash While Searching.
After It’s Found, Spend
10.Communicate and Share Learning

5. revenue streams

The Revenue Streams Building Block
represents the cash a company
generates from each Customer Segment
(costs must be subtracted from revenues
to create earnings).

Revenue Streams
A business model can involve two different types of Revenue
Streams:
1. Transaction revenues resulting from one-time customer
payments
2. Recurring revenues resulting from ongoing payments to
either deliver a Value Proposition to customers or provide
post-purchase customer support

Key Questions
• For what value are customers willing to pay?
• How much are they willing to pay?
• How do they want to pay?
• How will you price your product or services? Will it be a one off
purchase? Will their be tiered pricing structure? Will it be fixed,
variable or subscription?
• What are other sources of revenue? How much do they contribute
to overall revenue?

Revenue Streams
There are several ways to generate revenue:
1. Asset Sale

Revenue Streams
There are several ways to generate revenue:
1. Asset Sale
2. Usage Fee

Revenue Streams
There are several ways to generate revenue:
1. Asset Sale
2. Usage Fee
3. Subscription Fees

Revenue Streams
There are several ways to generate revenue:
1. Asset Sale
2. Usage Fee
3. Subscription Fees
4. Lending/Leasing/Renting

Revenue Streams
There are several ways to generate revenue:
1. Asset Sale
2. Usage Fee
3. Subscription Fees
4. Lending/Leasing/Renting
5. Licensing

Revenue Streams
There are several ways to generate revenue:
1. Asset Sale
2. Usage Fee
3. Subscription Fees
4. Lending/Leasing/Renting
5. Licensing
6. Brokerage fees

Revenue Streams
There are several ways to generate revenue:
1. Asset Sale
2. Usage Fee
3. Subscription Fees
4. Lending/Leasing/Renting
5. Licensing
6. Brokerage fees
7. Advertising

Revenue Streams
There are several ways to generate revenue:
1. Asset Sale
2. Usage Fee
3. Subscription Fees
4. Lending/Leasing/Renting
5. Licensing
6. Brokerage fees
7. Advertising
8. Freemium

Revenue Streams
There are several ways to generate revenue:
1. Asset Sale
2. Usage Fee
3. Subscription Fees
4. Lending/Leasing/Renting
5. Licensing
6. Brokerage fees
7. Advertising
8. Freemium
9. Crowdfunding

Fixed Menu Pricing
Pricing Mechanisms
Predefined prices are based on static variables
Dynamic Pricing
Prices change based on market conditions
List price Fixed prices for individual products, services,
or other Value Propositions
Negotiation
(bargaining)
Price negotiated between two or more partners
depending on negotiation power and/or negotiation skills
Product feature
dependent
Price depends on the number or quality of
Value Proposition features
Yield management Price depends on inventory and time of purchase
(normally used for perishable resources such as hotel
rooms or airline seats)
Customer segment
dependent
Price depends on the type and characteristic
of a Customer Segment
Real-time-market Price is established dynamically based on supply
and demand
Volume dependent Price as a function of the quantity purchased Auctions Price determined by outcome of competitive bidding

Payment
Providers
Distribution
Partners
Telco
Partners
Software
Development
Software
Developers
Software
Free Internet &
Video Calling
Cheap Calls to
Phones
(SkypeOut)
Mass
Customized
Skype.com
Headset
Partnerships
Web Users
Globally
People Who
Want to Call
Phones
Software
Development
Complaint
Management Free
SkypeOut Pre-
Paid or
Subscription
Hardware
Sales
Diagram from Alex Osterwalder, Business Model Generation

6. key resources

The Key Resources Building Block
describes the most important assets
required to make a business model work.

Key Resources
Key Resources can be categorised as follows:
1. Physical

Key Resources
Key Resources can be categorised as follows:
1. Physical
2. Intellectual

Key Resources
Key Resources can be categorised as follows:
1. Physical
2. Intellectual
3. Human

Key Resources
Key Resources can be categorised as follows:
1. Physical
2. Intellectual
3. Human
4. Financial

Key Questions
• What physical, intellectual, human and financial resources
will you need to deliver your:
•Value proposition?
•Distribution channels?
•Customer relationships?
•Revenue streams?

7. key activities

The Key Activities Building Block
describes the most important things a
company must do to make its business
model work.

Key Activities
Key Activities can be categorised as follows:
1. Production

Key Activities
Key Activities can be categorised as follows:
1. Production
2. Problem solving

Key Activities
Key Activities can be categorised as follows:
1. Production
2. Problem solving
3. Platform/network

Key Questions
• What key activities are require to deliver your:
•value propositions?
•distribution channels?
•customer relationships?
•revenue streams?

8. key partnerships

The Key Partnerships Building Block
describes the network of suppliers and
partners that make the business model
work.

Key Partnerships
We can distinguish between four different types of
partnerships:
1. Strategic alliances between non-competitors

Key Partnerships
We can distinguish between four different types of
partnerships:
1. Strategic alliances between non-competitors
2. Coopetition: strategic partnerships between competitors

Key Partnerships
We can distinguish between four different types of
partnerships:
1. Strategic alliances between non-competitors
2. Coopetition: strategic partnerships between competitors
3. Joint ventures to develop new business

Key Partnerships
We can distinguish between four different types of
partnerships:
1. Strategic alliances between non-competitors
2. Coopetition: strategic partnerships between competitors
3. Joint ventures to develop new business
4. Buyer-supplier relationships to assure reliable supplies

Key Partnerships
It can be useful to distinguish between three motivations for
creating partnerships:
1. Optimisation and economy of scale

Key Partnerships
It can be useful to distinguish between three motivations for
creating partnerships:
1. Optimisation and economy of scale
2. Reduction of risk and uncertainty

Key Partnerships
It can be useful to distinguish between three motivations for
creating partnerships:
1. Optimisation and economy of scale
2. Reduction of risk and uncertainty
3. Acquisition of particular resources and activities

Key Questions
• Who are your key partners?
• Who are your key suppliers?
• Who can help you fill any resource gaps or help you provide
greater value to customers?
• Who can provide distribution or marketing channels to help
you reach your target audience?
• What key activities might they deliver?

9. cost structure

The Cost Structure describes all costs
incurred to operate a business model.

Cost Structures
Naturally enough, costs should be minimized in every
business model. But low Cost Structures are more important
to some business models than to others. Therefore it can be
useful to distinguish between two broad classes of business
model Cost Structures: cost-driven and value-driven (many
business models fall in between these two extremes):
1. Cost driven

Cost Structures
Naturally enough, costs should be minimized in every
business model. But low Cost Structures are more important
to some business models than to others. Therefore it can be
useful to distinguish between two broad classes of business
model Cost Structures: cost-driven and value-driven (many
business models fall in between these two extremes):
1. Cost driven
2. Value driven

Cost Structures
Cost structures can have the following characteristics:
1. Fixed costs

Cost Structures
Cost structures can have the following characteristics:
1. Fixed costs
2. Variable costs

Cost Structures
Cost structures can have the following characteristics:
1. Fixed costs
2. Variable costs
3. Economies of scale

Cost Structures
Cost structures can have the following characteristics:
1. Fixed costs
2. Variable costs
3. Economies of scale
4. Economies of scope

Key Questions
• How much will it cost to initially develop the value
proposition?
• What are the most important costs?
• What’s the cost of your MVP?
• What key resources and activities are most expensive?

social impact measurement

What does success look like?

What can you learn?

#ImpactAU2014$
PAY(FOR(FAILURE(OR(INVEST(IN(SUCCESS?(

CONNECTICUT(STATE(RESULTS(
POLICY DATA
Between(2000(and(2010(( Between(2000(and(2010((
Raised$the$Age$from$16$to$18$
Status$offenders$removed$from$
deten)on$
Con)nuum$of$therapeu)c$and$
evidence^based$services$at$the$
community$level$
Progress$toward$reducing$
dispropor)onality$
Over$80%$of$youth$comple)ng$
supervision$without$re^arrest$
The$number$of$juveniles$referred$
to$the$court$is$down$30%$$
#ImpactAU2014$
Investment$in$family^based$services$
for$court^involved$youth$from$
$300,000$to$$39,000,000$
Recidivism$at$12$months$is$below$
50%$

NEW(YORK(POLICY(RESULTS(
Between(2010(and(2012
New$&$Stronger$Rela)onships$Across$the$System$
Deeper$Knowledge$of$Programs$&$Services$
Significant$Policy$Changes:$The$Close$to$Home$&$Raise$The$Age$
Commitment$to$Data^Driven$Decision$Making$
Engagement$of$Local$Communi)es$
Empowerment$of$New$Stakeholders$
Exponen)al$Level$of$Original$Investment$
#ImpactAU2014$

NEW(YORK(QUANTIFIABLE(RESULTS(
Between(2010(and(2012
Juvenile$arrests$dropped$by$24%$
Juveniles$admiSed$to$deten)on$declined$by$23%$
Juvenile$proba)on$intake$cases$declined$by$20%$
Juvenile$pe))ons$filed$declined$by$21%$
Juvenile$admissions$in$state$placement$were$down$28%$
Number$of$youth$in$state$custody$declined$by$45%$
$
#ImpactAU2014$

minimum viable product
Barn Suppers. Image courtesy of Philip Dunda

testing assumptions

“Don’t test your ideas. Test the assumptions
that have to be true to make your ideas
work.”
Teresa Torres

Lean Startup Experiments
Assumption Testing!
Experiment Design!
Hypothesis Participants
!!
Approach & Activities
!!
Expected Data
& Actual Data
Learning Goals &
Outcomes
Decision
BMC Iteration

criteria
1. Are there customers who will buy what you sell? What
evidence do you have?
2. Who are your competitors? Not just for similar products but
for funds, time, attention?
3. Why would customers use your product or service instead of
the competition? How different are you from the competition?
4. How will you respond to new competition?

criteria
5. Is this financially viable/sustainable?
6. Is this replicable and/or scalable? How will you increase
your reach or impact?

the
pitch

what makes a great pitch?
1. Start with why.
1. What’s the problem you’re solving.?
2. Why is it important?
3. What’s the impact? Use memorable facts, figures, anecdotes and
metaphors.
2. What’s your solution?
3. Who’s your audience?
4. What do they value?
5. How is your idea different from others out there?

what makes a great pitch?
6. Who are you partnering with?
7. What are you building on that already exists?
8. Where are you in the stage of implementing your idea?
9. What do you need to take the next step?
10. How can we help you get there? What would you like us to do?
11. Share your passion.
12. Finish with your tagline.

rocket launch

thank you
DAVID HOOD
@DavidAHood
JULIAN WATERS-LYNCH
@jwaterslynch
join the conversation on twitter with
@VicHealth
@DoingSomeGood
#VHinnov
doing
something good