“Profit is the oxygen of a business.” How would you classify your profit model? How would you improve or innovate on it? If you are asking the above questions, you are thinking about Profit Model Innovation (PMI). The current focus is on business model innovation. However, for established businesses the Profit Model poses the greatest risk to the existence of the business. This presentation presents an industry-based classification system for profit models. The Profit Model Classification System (PMCS) can be used to visually organize and classify profit models in the past, present, and future. The PMCS would save you considerable time and energy when formulating, testing, and managing prototypes of profit models.

1. AGRICULTURE
&
MINING
Industry
SERVICE
Industry
INFRASTRUCTURE/PLATFORM
Management
MANUFACTURING
Industry
Nespresso’s
PROFIT
MODEL
CLASSIFICATION
SYSTEM
(PMCS)
How
Businesses
Really
Make
Money
and
Win
Business
Model
Compe66ons
in
the
Imita6on
Economy
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
hGp://businessmodels.ning.com
&
hGp://twiGer.com/RodKuhnKing
GENERIC
PROFIT
MODEL
q Luxury
Spot
(Differen1a1on)
q Ecosystem
Management
What
industry
is
the
business
(or
customer)
in?

2. AGRICULTURE
&
MINING
Industry
SERVICE
Industry
INFRASTRUCTURE/PLATFORM
Management
MANUFACTURING
Industry
PROFIT
MODEL
CLASSIFICATION
SYSTEM
(PMCS)
-­‐
By
Industry
(Categories
of
Products/Services)
How
Businesses
Really
Make
Money
and
Win
Business
Model
Compe66ons
in
the
Imita6on
Economy
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
hGp://businessmodels.ning.com
&
hGp://twiGer.com/RodKuhnKing
GENERIC
POFIT
MODELS
What
industry
is
the
business
(or
customer)
in?

3. AGRICULTURE
&
MINING
Industry
SERVICE
Industry
INFRASTRUCTURE/PLATFORM
Management
MANUFACTURING
Industry
PROFIT
MODEL
CLASSIFICATION
SYSTEM
(PMCS)
-­‐
By
Sector
of
Industry
(Categories
of
Products/Services)
How
Businesses
Really
Make
Money
and
Win
Business
Model
Compe66ons
in
the
Imita6on
Economy
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
hGp://businessmodels.ning.com
&
hGp://twiGer.com/RodKuhnKing
GENERIC
PROFIT
MODELS
q Healthcare,
Life
Sciences,
and
Pharmaceu?cals
q Chemicals
Manufacturing
q Autos,
Trucks,
Trains,
Ships,
and
Other
Vehicles
q Consumer
Products
Manufacturing
q Aerospace
&
Defense
q Food,
Beverage,
and
Tobacco
Manufacturing
q Mining,
Metals,
Energy,
U?li?es,
and
Environmental
Services
q Agriculture,
Forestry,
Fishing,
and
Hun?ng
q Insurance
q Food
Services
&
Lodging
q Construc?on
&
Eng.
q Healthcare
q Banking,
Fin.
Markets
&
Services
q Consumer,
Educa?on,
Real
Estate
and
Public
Services
q IT
Services
q Business
&
Consul?ng
Services
q Retail
q Media
&
Entertainment
Note:
The
above
descrip6on
of
sectors
is
based
on
the
IBBCS;
see
hGp://www.industrybuildingblocks.com/Industry-­‐Groups.php
q Travel
What
industry
is
the
business
(or
customer)
in?
Who
is
the
customer-­‐protagonist
(most
dissa?sfied)?
What
is
the
customer
Job-­‐To-­‐Get-­‐Done?
What
is
the
profit
model
of
the
business
(customer)?
What
are
analogs
and
an?logs
of
the
profit
model?

4. AGRICULTURE
&
MINING
Industry
SERVICE
Industry
INFRASTRUCTURE/PLATFORM
Management
MANUFACTURING
Industry
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
hGp://businessmodels.ning.com
&
hGp://twiGer.com/RodKuhnKing
GENERIC
PROFIT
MODELS
q Consumer
Products
Manufacturing
q Food,
Beverage,
and
Tobacco
Manufacturing
q Food
Services
&
Lodging
q Retail
Note:
The
above
descrip6on
of
sectors
is
based
on
the
IBBCS;
see
hGp://www.industrybuildingblocks.com/Industry-­‐Groups.php
What
industry
is
the
business
(or
customer)
in?
Who
is
the
customer-­‐protagonist
(most
dissa?sfied)?
What
is
the
customer
Job-­‐To-­‐Get-­‐Done?
What
is
the
profit
model
of
the
business
(customer)?
What
are
analogs
and
an?logs
of
the
profit
model?
Nespresso’s
PROFIT
MODEL
CLASSIFICATION
SYSTEM
(PMCS)
-­‐
By
Sector
of
Industry
How
Businesses
Really
Make
Money
and
Win
Business
Model
Compe66ons
in
the
Imita6on
Economy

5. AGRICULTURE
&
MINING
Industry
SERVICE
Industry
INFRASTRUCTURE/PLATFORM
Management
MANUFACTURING
Industry
PROFIT
MODEL
CLASSIFICATION
SYSTEM
(PMCS)
-­‐
By
Profit
Strategies/Tac6cs/PaGerns
How
Businesses
Really
Make
Money
and
Win
Business
Model
Compe66ons
in
the
Imita6on
Economy
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
hGp://businessmodels.ning.com
&
hGp://twiGer.com/RodKuhnKing
q Asset
Sale
q Long
Tail
q Open
Source
Collabora?on
q Dona?on
q SoTware
as
a
Service
q Two-­‐sided
Market
q Asset
Sale
q Razor
Blade
(Bait
&
Switch)
q Subscrip?on
Fee
q Crowdsourcing
q Lending/Ren?ng/Leasing
q Licensing
q Licensing
q Brokerage
q Usage
Fee
q Asset
Sale
q Adver?sing
q Co-­‐crea?on
q Usage
Fee
q Mul?-­‐sided
Market
PlaXorm
q Ad
Network
q Outsourcing
q Ecosystem
Management
q Direct
Sale
q Indirect
Sale
q Offline
q Online
q Discount
q Tiered
Payment
q Auc?on
q Facilitated
Network
q Brand
Mul?plier
q Reverse
Auc?on
q Customiza?on
q Cross-­‐subsidiza?on
q Franchise
q Product
Leadership
q Automa?on
(Self-­‐service)
q Gamifica?on
q B2C
q B2B
q Pre-­‐Payment
q Fair
Pricing
q Community
(Hub)
q On
Demand
q DIY
q Unbundling
q Unbundling
q Bundling
q Free
GENERIC
PROFIT
MODELS
q P2P
PlaXorm
q Landlord
q Leasing
q 2nd
Hand
q Luxury
Spot
(Differen1a1on)
q Disrup1on
Spot
(Low
Cost;
Lean)
q Blue
Ocean
(Value
Innova1on)
q Creator
q Distributor
q Broker
q Sweet
Spot
q Product
Extension
q Opera?onal
Excellence
q Frac?onaliza?on
q Customer
In?macy
q Affiliates
What
industry
is
the
business
(or
customer)
in?
Who
is
the
customer-­‐protagonist
(most
dissa?sfied)?
What
is
the
customer
Job-­‐To-­‐Get-­‐Done?
What
is
the
profit
model
of
the
business
(customer)?
What
are
analogs
and
an?logs
of
the
profit
model?
q Shared
Value

6. AGRICULTURE
&
MINING
Industry
SERVICE
Industry
INFRASTRUCTURE/PLATFORM
Management
MANUFACTURING
Industry
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
hGp://businessmodels.ning.com
&
hGp://twiGer.com/RodKuhnKing
q Asset
Sale
q Asset
Sale
q Outsourcing
q Ecosystem
Management
q Direct
Sale
q Offline
q Online
q Product
Leadership
q Automa?on
(Self-­‐service)
q Pre-­‐Payment
q Community
(Hub)
GENERIC
PROFIT
MODEL
q Shared
Value
q Product
Extension
q Customer
In?macy
What
industry
is
the
business
(or
customer)
in?
Who
is
the
customer-­‐protagonist
(most
dissa?sfied)?
What
is
the
customer
Job-­‐To-­‐Get-­‐Done?
What
is
the
profit
model
of
the
business
(customer)?
What
are
analogs
and
an?logs
of
the
profit
model?
q Luxury
Spot
(Differen1a1on)
q Brand
Mul?plier
Nespresso’s
PROFIT
MODEL
CLASSIFICATION
SYSTEM
(PMCS)
-­‐
Profit
Strategies/Tac6cs/PaGerns
How
Businesses
Really
Make
Money
and
Win
Business
Model
Compe66ons
in
the
Imita6on
Economy
q Bundling

7. Disrup1on
Spot
Luxury
Spot
Strategic
Choice
Sweet
Spot
Profit
Model
Blue
Ocean
Profit
Model
Luxury
Spot
(“Differen?a?on”)
Profit
Model
DisrupLon
Spot/Lean
(“Low
Cost”)
Profit
Model
ILLUSTRATION
OF
THE
4
GENERIC
PROFIT
MODELS
Trade-­‐off
Map
of
Cost
vs.
Revenue
(-­‐):
PAIN:
Cost
(+):
DELIGHT:
Revenue
Key
Profitable
Model
Unprofitable
Model
“Insane”
Happiness
(Value)
Ideal
Final
Result
(IFR)
Infinite
Shared
Happiness
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
hGp://businessmodels.ning.com
&
hGp://twiGer.com/RodKuhnKing
Market
Segment
(Job-­‐To-­‐Get-­‐Done/Goal;
Product/Tool):
………………..…..……..…….
…………
……………………………………………………………………….…………….………….……………….

8. Disrup1on
Spot
Luxury
Spot
Strategic
Choice
Sweet
Spot
Profit
Model
Blue
Ocean
Profit
Model
Luxury
Spot
(“Differen?a?on”)
Profit
Model
DisrupLon
Spot/Lean
(“Low
Cost”)
Profit
Model
GENERIC
PROFIT
MODEL
of
Nespresso
Trade-­‐off
Map
of
Cost
vs.
Revenue
(-­‐):
PAIN:
Cost
(+):
DELIGHT:
Revenue
“Insane”
Happiness
(Value)
Ideal
Final
Result
(IFR)
Infinite
Shared
Happiness
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
hGp://businessmodels.ning.com
&
hGp://twiGer.com/RodKuhnKing
Market
Segment
(Job-­‐To-­‐Get-­‐Done/Goal;
Product/Tool):
Drink
coffee
Key
Profitable
Model
Unprofitable
Model

9.
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
h^p://businessmodels.ning.com
&
h^p://twi^er.com/RodKuhnKing
VALUE
CREATION
MODEL
VALUE
PROPOSITION
MODEL
PROFIT
MODEL
ENVIRONMENT
PROFIT
MODEL
STORYTREE
For
Nespresso
Generic
Profit
Model
Management:
Visualize
the
Abrac?veness
of
Your
Profit
Model

10.
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
h^p://businessmodels.ning.com
&
h^p://twi^er.com/RodKuhnKing
VALUE
CREATION
MODEL
VALUE
PROPOSITION
MODEL
PROFIT
MODEL
PROFIT
MODEL
STORYTREE
For
Nespresso
Industry
Ecosystem
(IE):
Supply
Market
Ecosystem
(ME):
Demand
Key
Trends
&
Complementors
(KTC):
PESTLIED
(-­‐/+)
Macro-­‐Economic
Influencers
(MEI):
Global
Economy
Generic
Profit
Model
Management:
Visualize
the
Abrac?veness
of
Your
Profit
Model

11.
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
h^p://businessmodels.ning.com
&
h^p://twi^er.com/RodKuhnKing
VALUE
CREATION
MODEL
VALUE
PROPOSITION
MODEL
PROFIT
MODEL
Generic
Profit
Model
Management:
Visualize
the
Abrac?veness
of
Your
Profit
Model
PROFIT
MODEL
STORYTREE
For
Nespresso
Bargaining
Power
of
Suppliers
Bargaining
Power
of
Customers
Threat
of
New
Entrants
Threat
of
SubsLtute
Products

12.
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
h^p://businessmodels.ning.com
&
h^p://twi^er.com/RodKuhnKing
VALUE
CREATION
MODEL
VALUE
PROPOSITION
MODEL
Inputs/Partners
q Coffee
Machine
Manufactur-­‐
er
q Coffee
q Coffee
Growers
Internal
Resources
q Employees
q Patents/IP
q Brand
q Plant
(for
Producing
Pods)
Processes/AcLviLes
q Produc6on
q Marke6ng/Branding
q Distribu6on/Logis6cs
Product/Value
ProposiLon
q Nespresso
Coffee
Machine
q Nespresso
Pods
q Best
Quality
Coffee
at
Home/in
Office
Channels
&
RelaLonships
q Retail
(Machines
Only)
q Nespresso.com
q Nespresso
Bou6ques
q Mail
Order;
Call
Center
q Nespresso
Club
Customer/Job-­‐To-­‐Get-­‐Done
q Luxury
Spobers
(High
Enders)
Who
Are
Struggling
to
Find
High
Quality
Coffee
at
Home/Office
q Drink
High
Quality
Coffee
at
Home/in
Office
Cost:
(Structure/Metrics)
High
Cost
q Supplies/Inputs
q Employees/IP
q Machinery/Produc6on
q Marke6ng/Distribu6on
Revenue:
(Streams/Metrics)
High
Revenue
q Sale
of
Coffee
Machine
q Sale
of
Pods/Capsules
q Sale
of
Other
Machine
Accessories
PROFIT
q High
Profit
Margin
PROFIT
MODEL
STORYTREE
For
Nespresso
PROFIT
MODEL
Strategic
Profit
Model
Management:
Visualize
Your
Profit
Model

13.
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
h^p://businessmodels.ning.com
&
h^p://twi^er.com/RodKuhnKing
VALUE
CREATION
MODEL
VALUE
PROPOSITION
MODEL
Inputs/Partners
Internal
Resources
Processes/AcLviLes
Product/Value
ProposiLon
Channels
&
RelaLonships
Customer/Job-­‐To-­‐Get-­‐Done
Cost:
(Structure/Metrics)
Revenue:
(Streams/Metrics)
PROFIT
PROFIT
MODEL
STORYTREE
…………………………………………………..
PROFIT
MODEL
Strategic
Profit
Model
Management:
Visualize
Your
Profit
Model

14.
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
h^p://businessmodels.ning.com
&
h^p://twi^er.com/RodKuhnKing
VALUE
CREATION
MODEL
VALUE
PROPOSITION
MODEL
Inputs/Partners
q What
material,
informa?on,
and
capital
are
needed
prior
to
launching
product?
q What
partners/alliances
are
needed?
Internal
Resources
q Who
are
team
members?
q What
hard
assets
(equip-­‐
ment/infra’)
will
are
needed
prior
to
launching
product?
q What
technology
is
needed?
Processes/AcLviLes
q What
are
development
ac6vi6es
that
must
be
completed
prior
to
launching
product/service/tool?
Product/Value
ProposiLon
q What
product/service/tool
will
customer
use
and/or
buy?
q Why
will
customer
buy
product/
service/tool?
Channels
&
RelaLonships
q How
will
product/service/tool
be
delivered
to
customer?
q What
sort
of
rela6onship
will
business
have
with
customer?
q How
will
customer
be
engaged,
acquired,
and
retained?
Customer/Job-­‐To-­‐Get-­‐Done
q What
customer
will
use
and/or
buy
product/service/tool?
q What
job
is
customer
trying
to
get
done?
What
are
obstacles?
q What
is
customer
pain?
q What
is
customer
delight?
Cost:
(Structure/Metrics)
q At
what
price
will
customer
buy
product/service/tool?
q What
effort
will
customer
expend
in
buying
product?
q What
is
customer
acqu.
cost?
q What
is
annual
total
cost?
Revenue:
(Streams/Metrics)
q How
soon
will
customer
buy?
q How
many
and
oTen
will
customer
buy?
q How
will
customer
pay?
q What
will
be
annual
total
revenue?
PROFIT
q What
will
be
the
annual
profit
margin?
q What
will
be
the
annual
profit?
PROFIT
MODEL
STORYTREE
…………………………………………………..
PROFIT
MODEL
Strategic
Profit
Model
Management:
Ques?ons
Note:
The
above
ques6ons
are
based
on
John
Mullins
and
Randy
Komisar’s
book,
“Gefng
to
Plan
B”

15.
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
h^p://businessmodels.ning.com
&
h^p://twi^er.com/RodKuhnKing
VALUE
CREATION
MODEL
(“Build”)
VALUE
PROPOSITION
MODEL
(“Discover”;
“Plan”)
Inputs/Partners
q Materials/Supplies
q Informa6on
q Investment
Capital
q Strategic
Alliances/Partners
q Co-­‐creators/Contractors
Internal
Resources
(Physical/Intellectual/Emo?onal/
Spiritual
Resources)
q Employees
q Machinery/Infra’
Facili6es
q Technology/IP
q Brand/Culture
Processes/AcLviLes
q Discover
q Plan
q Build
q Measure
q Learn
Product/Value
ProposiLon
q Value
Proposi6on
Requirements
q Value
Proposi6on
Statement
q Product/Service/Tool:
Features
Channels
&
RelaLonships
q Online
Channels
q Offline
Channels
Customer/Job-­‐To-­‐Get-­‐Done
q Customer-­‐Protagonist
q Cri6cal
Problem
q Task/Job-­‐To-­‐Get-­‐Done
q Constraints/Obstacles
q Success
Criteria
(Outcomes)
Cost:
(Structure/Metrics)
q Cost
of
Customer
Acquisi6on
q Total
Cost
q Opera?ng
Cost
q Working
Capital
Revenue:
(Streams/Metrics)
q E:
Engagement
q A:
Acquisi6on
q A:
Ac6va6on
q R:
Reten6on
q R:
Referral
q R:
Revenue
Value:
Profit
q High
Profit
Margin
(Price):
Low
Volume;
Low
Velocity
q Low
Profit
Margin
(Price):
High
Volume;
High
Velocity
q Gross
Margin
q Customer
Life6me
Value
PROFIT
MODEL
(“Measure”)
Profit
Model
Management
(Checklist)
PROFIT
MODEL
STORYTREE
(“Learn”)

16.
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
h^p://businessmodels.ning.com
&
h^p://twi^er.com/RodKuhnKing
VALUE
CREATION
MODEL
VALUE
PROPOSITION
MODEL
PROFIT
MODEL
ENVIRONMENT
PROFIT
MODEL
STORYTREE
…………………………………………………..
Generic
Profit
Model
Management:
Visualize
the
Abrac?veness
of
Your
Profit
Model

17. Past
Profit
Model
Present
Profit
Model
Future
Profit
Model
Profit
Model
(PM)
PLAN
Profit
Model
Design
Toolkit
for
Thriving
in
a
Vola?le,
Uncertain,
Complex,
and
Ambiguous
(VUCA)
Environment
Profit
Model
(StoryTree)
Profit
Model
(StoryTree)
Profit
Model
(StoryTree)
Industry
Ecosystem
Market
Ecosystem
Profit
Model
(StoryTree)
Macro-­‐Economic
Influencers
Key
Trends
&
Complementors
Mission/Vision/
Purpose/Ideals/
Ideal
Final
Result
For
Profit
Model
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
h^p://businessmodels.ning.com
&
h^p://twi^er.com/RodKuhnKing

18. Past
Profit
Model
Present
Profit
Model
Future
Profit
Model
Nespresso’s
Profit
Model
(PM)
PLAN
Profit
Model
Design
Toolkit
for
Thriving
in
a
Vola?le,
Uncertain,
Complex,
and
Ambiguous
(VUCA)
Environment
Profit
Model
(StoryTree)
Profit
Model
(StoryTree)
Profit
Model
(StoryTree)
Industry
Ecosystem
Market
Ecosystem
Profit
Model
(StoryTree)
Macro-­‐Economic
Influencers
Key
Trends
&
Complementors
Mission/Vision/
Purpose/Ideals/
Ideal
Final
Result:
“A
Passion
for
Quality,
Innova1on
and
Privileged
Rela1onships
With
Cus-­‐
tomers”
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
h^p://businessmodels.ning.com
&
h^p://twi^er.com/RodKuhnKing

19. Contact
Dr.
Rod
Kuhn
King
rodkuhnhking@gmail.com
VDD
University
for
Profit
Model
Design
&
Management
hGp://businessmodels.ning.com
hGp://twiGer.com/RodKuhnKing
“No
Entrepreneur
LeT
Behind
(NELB)”
#VPGen.
Dr.
Rod
King.
rodkuhnhking@gmail.com
&
hGp://businessmodels.ning.com
&
hGp://twiGer.com/RodKuhnKing