Classroom Companion: Business

 
Chapter 19 · Digital Business Models

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19
organization disseminates its value proposition to the customers and how the cus-
tomers generate revenues for the company.
Value generation includes the building blocks of key partners, key activities, 
key resources, and cost structures. More specifically, it describes what is needed in 
terms of resources, activities, and partners to create the value proposition and the 
costs associated with these activities. Value generation should also specify—either 
directly or indirectly—the value model (see 
7
Chap. 
8
) used by the company and 
whether the platform is single-sided or multisided (
7
Chap. 
10
).
The BMC of specific organizations is a thorough description of each of the 
nine building blocks and the relationships between them. 
.
Figure 
19.2
shows an 
example of these relationships.
The steps in the analysis are as follows (the numbered list refers to the numbers 
in 
.
Fig. 
19.2
):
1. The analysis starts with defining the set of value propositions the organization 
delivers to the customers. This includes the goods and services that the organi-
zation delivers and the value and benefits they may have for the customers.
2. Identify the various customer segments and the value proposition each segment 
receives.
3. Describe how the product is provided to the identified customer segments 
through specific channels, for example, over the Internet or by postal services.
4. Describe how customers directly and indirectly generate the revenue stream for 
the organization, also including customers or users receiving the product for 
free (i.e., those with zero average return per user (zero ARPU)) because their 
contribution may be significant through indirect revenue channels.
5. Identify the relationships between the organization and the customers.
Key partners
Key activities
Key resources
Value proposition
Cost structure
Customer
segments
Revenue
streams
Customer
relationships
Channels
1
2
4
6
7
3
8
5
9
. Fig. 19.2 Relationships between the building blocks in the BMC. (Authors’ own figure)