Course Title:

Entrepreneurship and Innovation

Course Instructor
Dr. Yasmeen Almaleeh

Teaching Assistant
Shehab Mohamed Abdallah
 This course introduces students to the fundamentals of
entrepreneurship and innovation, focusing on the processes of
identifying opportunities, developing business models, and
Course creating value in dynamic markets. Students will learn how to

Description think creatively, solve problems, and apply entrepreneurial

principles to real-world scenarios. Students will also work on a
project. By the end of the course, students will develop a
sustainable business idea, create a business model, and pitch their
solution to a panel of stakeholders.
Course contents
1. Introduction to Entrepreneurship
2. The Entrepreneurial Mindset
3. What is Innovation?
4. Entrepreneurial journey: Idea Assessment and Feasibility Analysis
5. Entrepreneurial journey: Business Model Development
6. Entrepreneurial journey: Design Thinking and Lean Startup Methodology
7. Entrepreneurial journey: Financing Entrepreneurial projects
8. Entrepreneurial journey: Hiring and Building Your Founding Team
9. Entrepreneurial journey: Scaling and Sustaining Impact
10. Entrepreneurial Ecosystems and Ethics
11. Legal and Regulatory Considerations
12. Social Entrepreneurship
13. Course Project Presentation
Lecture 5
Developing and Testing a
Business Model
Welcome to this comprehensive presentation on developing and
testing business models. Throughout this lecture, we'll explore the
fundamental concepts, frameworks, and strategies that
entrepreneurs and business leaders use to create sustainable and
profitable business models.
Lecture Agenda
By the end of this lecture, you will be able
to:
1. Define what a business model is and why it is important.
2. Explain the nine components of the Business Model Canvas (BMC).
3. Understand the process of testing a business model.
(1) What is a Business Model?
Strategic Framework Key Definitions
A business model is a It clearly defines the
strategic framework product or service
explaining how a offered, identifies target
company creates, customers, and
delivers, and captures establishes the revenue
value in the and cost structure of the
marketplace. business.

Why It Matters: A well-designed business model

ensures all business elements align cohesively,
significantly reducing operational and market risks.
Business Model vs. Business Plan

Business Model Business Plan

A high-level overview of how a company A detailed document that includes
operates and generates value. It focuses on comprehensive financial projections,
the core mechanics of the business and how marketing strategies, and execution plans.
different elements interact to create a It serves as a roadmap for implementing the
sustainable enterprise. business model.
Business models are inherently flexible and Business plans are more formalized
evolve as the company grows and market documents often created for specific
conditions change. purposes like securing funding or guiding
implementation.
The Business Model Canvas (BMC)

Innovative Framework Definition Components

Developed by Alexander A visual framework that Comprises nine essential
Osterwalder and Yves allows entrepreneurs to building blocks that cover all
Pigneur, the Business Model develop, test, and refine fundamental aspects of a
Canvas has revolutionized their business models business, helping identify
how entrepreneurs through an intuitive one- key assumptions and gaps in
conceptualize their page layout. business strategy.
businesses.
The 9 Components of the BMC
1-Customer Segments
 A good business model always starts with the customer. The entrepreneur’s first step is to
identify a segment of customers who have a clearly defined need.
 The entrepreneur uses demographic, geographic, socioeconomic, and other characteristics
that add specificity to defining the target market. Narrowing the target market enables a
small company to focus its limited resources on serving the needs of a specific group of
customers rather than attempting to satisfy the desires of the mass market.
 Perhaps the worst marketing error an entrepreneur can commit is failing to define a target
market and trying to make the business “everything to everybody.” Small companies usually
are much more successful focusing on a specific market niche or niches where they can
excel at meeting customers’ special needs or wants
2-Value Proposition
Create a compelling offer that makes your product or service unique and valuable. A strong
value proposition solves a significant problem or fulfills an important need for your target
customers.
Definition
The set of benefits or values a brand promises to deliver to satisfy customer needs. It
answers:
"Why should I buy your brand rather than a competitor's?"
A strong value proposition should be memorable, authentic, and resonate emotionally with
your target customers. Regularly review and refine it based on customer feedback and
changing market conditions.

Formula for Value Proposition:

We help [target customers] by providing [unique service] so they can [key benefit].”

• Example: “We help busy professionals by offering late-evening counseling services so

they can maintain their mental health without disrupting their work schedules.”
3- Customer Relationships
Businesses must choose between personal and automated service models based on their customer
segments and value propositions.
Amazon –for example- uses AI-driven recommendations for mass-market efficiency, while luxury
brands like Hermes offer highly personalized service experiences.

4- Channels
These are the pathways through which products and services reach customers, including both physical
and digital distribution methods. The right channel mix is crucial for delivering the value proposition
effectively.
Apple exemplifies an effective multi-channel strategy by selling through company-owned retail stores,
their online platform, and a network of authorized third-party resellers to maximize customer reach and
experience.
5- Revenue Streams
These represent the various ways a business generates income from each customer segment.
Common models include direct sales, subscriptions, freemium offerings, and advertising revenue.

6- Cost Structure
This encompasses all expenses required to operate the business model, including fixed costs (rent,
salaries) and variable costs (materials, commissions).
7- Key Activities
The critical operations a business must perform to succeed, such as research and development,
marketing campaigns, and strategic partnerships.
& Key Resources
Example: Key Activities for a tech company may include software development, regular updates,
customer support, and cybersecurity measures.

8- Key Resources
The essential assets required for business success, including physical (facilities), intellectual
(patents), human (talent), and financial (capital) resources.

Example: Tesla
Tesla's key resources include battery technology, manufacturing facilities, and a powerful brand
identity that commands premium pricing.

9- Key Partners
Key partners include suppliers, investors, and strategic alliances that enhance business success.
Tesla's partnership with Panasonic for battery production exemplifies how collaborations can
provide specialized expertise and scale manufacturing capabilities.
The Business Modelling Process
Phase 1: Create an Initial Business Model Canvas
• Best done using Whiteboards or Business modeling tools
like Business Model Fiddle.

• At this stage, elements are hypotheses that require

testing and refinement.

Phase 2: Test the Problem

• Conduct primary research with potential customers.

• Ask key questions:

Do customers care about this problem?

Are they willing to pay for a solution?
Phase 3: Test the Solution

One technique to test the solution offered by the business model involves business
prototyping, in which entrepreneurs test their business models on a small scale
before committing significant resources to launch a business that might not work.
Business prototyping recognizes that every business idea is a hypothesis that must
be tested before an entrepreneur takes it to full scale. If the test supports the
hypothesis, the entrepreneur takes the next step of building a business plan. If the
prototype flops, the entrepreneur scraps the business idea with only minimal losses
and turns to the next idea.
To launch a business, entrepreneurs begin with what is called a minimal viable
product, which is the simplest version of a product or service with which an
entrepreneur can create a sustainable business.
Phase 4: Pivots – When to Change Direction

1 2
Product Pivot Customer Pivot
Adjusting product features or Shifting focus to a different
functionality to better align target audience based on
with discovered customer market feedback and
needs and preferences. This traction. Sometimes the
may involve adding, initial customer segment
removing, or significantly isn't the one that finds the
modifying product elements. most value in your offering.

3
Revenue Model Pivot
Changing how the business
generates income, such as
switching from one-time
purchases to recurring
revenue through
subscriptions.