 I'm delighted that our next speaker is Mel Norman, Theme Champion for Business Models and Growth from the Creative Industries Knowledge Transfer Network. Mel, over to you. Hello, as a vegetarian, I've never been described as the meat of the programme before, but that's quite exciting. So welcome. I'm going to, in the next sort of 10, 15 minutes, try and unpack what a business model is. So you have to bear with me. So I just want to just go through a couple of things, just to look, I'm just standing in front of the screen. Just to talk to you a little bit about my sort of two-day jobs. Firstly, I work as a social business consultant. What that means is basically I help companies integrate social and digital media into their business model, strategy and processes. So it's something we're really, really passionate about, media source. And the idea is to try and get, maintain company's relevance in the 21st century. My second day job, ooh, just gone a bit of funny, is I'm currently the theme champion for business models and growth for the creative industries knowledge transfer network. Try saying that after a few glasses of wine. So what that really means is I get paid for doing a certain amount of activity this year to try and actually help the creative industries understand their business models better and to try and knowledge share across different industries. So looking at ways that we can actually sort of understand emergent business models a little bit better. And the knowledge transfer network are very excitingly have decided that this is something that they should actually put some money into this year to try and see if we can actually make some change. Okay. I'm going to start off not talking about business models, but I'm going to tell you a little story. So I did humanities course at university and so I studied things like the culture of Coronation Street and the mythology of baseball. I don't know if anyone else studied courses like that. All right. Basically that meant I was pretty unemployable at the time and I didn't really have any useful skills that would benefit me when I left. I really hate saying that in university, but it's true. So what I decided I was sort of really inspired by people like Anita Rodrick, Richard Sempler and other sort of business geniuses. And I really wanted to learn to run my own business to have this kind of dream and I realized I didn't actually have the skills to do that and make that happen. So when I was at college, I found this program which basically teaches you how to run a business and I was like, that's perfect. That's just right for me. I can do that. So that program meant I was sent to America at the age of 18 along with thousands of other college students and I was giving lots and lots of business instruction and sales instruction and I was sent knocking door to door in Edinburgh, Indiana, which is like this tiny, steel mining town and I would go round and see if someone wanted to buy my books. So it was 100% commission. There were homework guides to help kids with college and I was like, I can do this. This is really going to help me. It was quite challenging. So I did everything that you would do in a business. So deal with rejection, get orders, actually deliver to customers, deal with customer complaints, do my budget, do my cash flow, do all of that within a three month period. And in order to be able to have enough guts to knock on door to door, we would do strange motivational dances outside diners in the morning. And the idea was that this looked really, really stupid. So if you could do this, then you could knock on a door and that was the kind of idea. So why am I telling you this story? The reason I'm telling you is is I thought at the end of my three summers because I did it again and again. It must be a glutton for punishment. I thought I knew how to run a business. So my final summer when I did it in three months there was our organization. We grossed $120,000 in three months, which is not bad for a bunch of students who study humanities. So I thought at the end of that I knew how to run a business. So I started working in film, the film industry and the TV industry. And I was like, great, I'm going to take all of my business skills because I've got loads of them now. I can deal with rejection. And so basically I thought I'm going to take all of those into the film industry and I'll be fine. So it worked quite well for a few years. I learned how to apply business skills to producing. I worked in Scotland. And so everything was going well until the film industry started changing. Digital cameras started coming into play, which meant the whole process of making you feel was completely different. And then the internet started coming in as well. So then distribution became very, very challenging. Now I was not alone at this point because myself and other producers and directors working in film and TV thought that we knew how to run a business. But we didn't. We knew how to run a business but we didn't know how to deal with this because it involved a different layer of business that none of us had been taught at that time. What we found was that everybody had inherited their business model from the industry. So you set up a production company and you did it in a certain way because that's what everybody did. So then suddenly it was very, very challenging because you needed to figure out new ways of actually earning money, new ways of implementing all of the stuff that we know today. So this, I love this quote I have to say. I know you shouldn't really refer to slides but I do love it because I think this is still true today and we've come really, really far on the creative side when you're talking about digital technology but I think the business model side is still really quite lacking. Basically you go into any kind of conference in any industry, not just the arts, but film, TV, gaming. You'll hear people using the word business model, disruption of business model. But what the bugger do they mean? I mean seriously. I mean if I go to another one that just someone just talks about it superficially I think I will scream or I'll have a very strange reaction because actually it's not, there isn't that much knowledge within the industry about what one is. So that's what I want to do with you today is to try and describe one. So hopefully at the end of it you will actually be further along to try and figure out how you can actually change your business model. So this is a business model canvas and now I'm going to see if I can try and put a video on. Is it on this computer? Let me just get rid of this. Okay, I'm going to explain it instead. Okay this is a business model canvas. So there's an organisation who have created this wonderful book called business model generation and the idea is to try and make it more accessible for creative organisations to understand their business model better. So hopefully you can see it. Right, over here we have customer segments and then we have customer relationships, channels and value propositions. Now the first thing that people usually see when they talk about business model which is about the way an organisation captures, creates and delivers value. That's kind of like a standard definition for a business model. So we as creative organisations sometimes we find it hard to even just sell our services or our products or our content and that's sort of like a step beyond what we're used to doing. So this is kind of taking a step further. But basically when you talk about things like low hanging fruit which I know we're going to be talking about today, you know what things people will pay for. It's what they will class and what they will think is valuable and it is different to every industry and also to every organisation depending on who your customers are. So what is valuable to your customers? What are they willing to pay for and what they're not willing to pay for? So the bit of a business model you usually see when you integrate with a company is the customer segments. So like who are your customers and also what are you offering them which is your value proposition and then also the channels which is how you actually can deliver what you offer to your customer or service. And the customer relationship bit up here is you know what kind of relationships do you have with your customer? Is it something you know are you moving into co-creation in which case you will have a very different relationship with your customer? Are you building a community than if you're just asking someone just to pay for us for something? At the bottom is one of the important bits which is the revenue streams. So with this this is you know how are you you know what kind of revenue streams what are you offering to your customers that they will actually pay for? Is it a whole thing or is it a part of something? So this is the side which we usually see. On this side I'm going to move over here. This is the side that's pretty much hidden. So we've got cost structure here. We've got your key activities, resources and partnerships. So when people are saying oh I'm having to re-change and develop my business model it's not necessarily that you're changing your how you price something. It might not be that you're changing the way you work with customers or it might be but it also might be internally. So is it that you work for a large organisation and nobody really speaks to each other in different silos so you're actually going to break down that? Is it that you're actually going to build something you haven't built before and that's basically a key activity? Or is it that you're offering and you have key resources that you can offer to your clients? And also how much it costs? Because you could actually keep your pricing the same but if you can figure out a way of reducing your costs then that might be a way of you developing and changing your business model. So you can actually I've given you the link here so you can download a copy of this from their website so to be able to play with it. Oh, am I going to? Right, I'm not used to. How do I get it back? Okay. What I wanted to do now was actually wanted you to I was going to give you some different examples of business models and I've purposely chosen ones which aren't in the arts industry because I think one of the greatest ways of learning is actually learning from other industries about how they do things and repurposing different business models from other industries onto the arts organisation. So, for example, this is a company called Better Place. I don't know if anyone's ever heard of them before but they do electric cars and one of the challenges when you're selling electric cars I'm not an expert. But apparently one of the challenges is that the infrastructure is really expensive and actually it's very expensive for people and they have to buy the car in the first place and it all becomes, it's a barrier to entry basically into the market. So what they've done is they've actually put a mobile pricing plan with electric car. So basically you don't pay, you pay for the car a reduced cost but you pay per mile that you use the car. So if you think about with your mobile phone you're paying for the minutes. So if you knew when you bought your mobile phone and you had your upgrade and you maybe only paid 25 pound or 50 pound for it if you think and compare that to how much your mobile phone bill is over a course of a year it's a lot of money. And if you were asked to pay that cost up front for your mobile phone maybe we wouldn't be using mobile phones in exactly the same way. So what they've done is they've actually took that model. Now it's early days yet. They're working in Israel, they're looking at going into other places within Europe. And they're going to see if actually this means that people are going to be more likely to use electric cars. So what they've done with this is if you look back at the previous one they've actually changed their pricing model. So they've actually changed how they bring their revenue stream. And that is very, very different from other electric car companies. Has anyone ever heard of Gifgaff before? Hands up. Okay. Gifgaff I think they're great because they're basically they're doing something very different than other mobile phone companies. And what I think is one of the one of the solutions for different organisations is there isn't I'm going to talk later about there's not just one solution for a particular industry and business model. So Gifgaff what they do is they actually subvert it by actually putting the customers in control and building a community of customers which means they need a very, very small team in order to deliver their service. But their customers will literally answer questions. They will be on the they will be their customer service. They'll be there actually helping other people and they get some sort of rewards and bonuses for doing that. But it's been working for them very, very well and they've got a very big community and they just decided they want to do things very different. So with them if you look back at the this slide what they're doing differently is a customer relationship bit. They're turning their customers into sort of advocates customer service. They're very, very passionate and believe in the company. Now that particular change means that they actually can do things very differently than another mobile company. This is one of my favourite ones. So this is a company called Man Packs. So what they decided to do was they actually put sort of like the clothing retail model and added a subscription service to it like you would do for something like Greys or you know with Love Film. Basically to deliver men's underwear, socks, razors every three months. Now what's really clever about this is two things. They've got two different kinds of customers. Their first kind of customer is the man. So the man who just can't be bothered with that and just think well you know it's automated it will just make life easier for me. The second customer is this girlfriend approved kind of little thing here is the partner of said man because if you think about it you know it's an ideal present to buy as a gift and it will save sort of moaning at you know sort of any horrible kind of things to do with underwear. I'm not going to go any more. This is a company called Green Man Gaming. Again I don't know if you've heard of them before but they are really really interesting because what they do is they take an old model and add it onto their new digital model. So they're a company they sell games but what they do is they sell not physical games but they sell the code to the game which you can download and then play and they've got a very clever system which I really don't understand but it's very technical and what they do is then you can actually set when you don't want to play that game anymore you can send the code back to them which they will sell in a marketplace which means you can't play anymore but for then someone else to buy that code. Now that is fantastic so what they're doing is they're taking that second hand market and actually transferring it to code which they're using an old model but jazzing it up for the digital age and even better what they're doing is depending on supply and demand of code the price will go up or go down. So if lots of people are fed up with playing a game and they send it all back then the price will be lower because there will be lots of code there and if a game is really really good and not so many people are wanting to give it up if there's one that comes back on the mining market then the demand will be huge. So that goes up. So there's just some examples for you and what I wanted to end with was a couple of sort of thoughts about business model. Firstly is I mentioned that I've seen in different industries depending on the industry example publishing at the moment a really really sort of like oh my god you know what's going to happen to us what we're going to do to actually solve our problems. Now most people are sort of looking to other people and go I want the answer someone give me the answer I'm going to probably be a bit controversial here and say there probably isn't necessarily one answer for every industry but what there is is there are many many different ways depending on the organisation that you are in order for you to develop your business model. So a very smart guy works at Capgemini called Guy actually he talked about I went to a talk with him last week and he talked about a playbook and how companies need to create a playbook for dealing with customers and sort of don't look to what everyone else is doing think about you and your brand and I'd like to extend that to think about your business model you know you are all very very different organisations you have a passion you're passionate about very very different things and you stand for different things and you have very very different branding so your business model needs to come from that so if you're an organisation that is very very ethical you might decide you want to engage with more people you want to do things in a certain way and there may be things you don't want to charge people for but that might be different for another organisation who just desperately needs money and that isn't a priority for them so I would say you have to create your own playbook that's the most important thing and there are tools like this that can help you do that the other thing is I'm not an MBA student I am a creative company and I've learnt a lot by doing and consulting and working with organisations over the last 17 years the biggest skill you can have when you're changing your business model is creativity IBM did a report recently and they interviewed 1,500 CEOs of different companies around the world and they said that innovation and creativity are the most important skills that people needed to know in order to develop their business model and I found that really interesting because I know the creative industries are having a hard time because they've been disrupted more than most but we've actually got all the skills that we need within the industry and actually changing your business model you don't need a business education to do that you need to be a bit experimental you need to play with it you need to be innovative and you need to use your creativity not everybody some of these things there aren't the solutions for oh I think something's gone wrong with your presentation anyway the other thing is we're talking about Marcus is going to be talking about the idea and I would say that the idea is the key and is the most important thing you need to start with that you need to start with something that you feel passionate about and the business model should follow on to that if you think you don't have a business model you do but it will be a partial business model so you'll be doing some of the things that we saw in the framework but you won't necessarily be doing all of that in order to to sort of maximise your idea or your product or service as much as you can do then you do need a business model and it can be an organic process you might not get it right first of all it might be something that's quite iterative but I just sort of put this quote here because I think it's a balance between the two and it needs to work together and that is a challenge because we're all pretty we're stuck for time and energy anyway and once you've actually made your thing then you have to bloody well go and sell it and now you have to do all of this as well so it is a pain but I think once you can get over that hurdle then there is more freedom and more possibilities and just to sort of round up just talking about a sort of a group basically on the connects website all the knowledge transfer networks are part of this sort of big have this online presence that the technology strategy board have built and what we've done is we've created a business model group so if you're interested in finding out more or keeping up to date on that or even some information about the internet things because there's a theme champion for that as well we did with Moo and IBM we created a leap day business challenge where we've created a worksheet which has 15 questions on it which will help a company actually develop their business model or review their business model the leap day has now passed so you won't get any lovely move out just for taking part but if you go to if you basically you join connect and then join the creative KTN group and then the business model group the bits of knowledge about how you can adapt your business model we're going to be doing events we've got a business hack day happening later in the year and we're also doing round table discussions so it might be something that might be useful for you and that's pretty much me so I just want to say thank you right ladies and gentlemen the plan was to do Q&A with Mel and Marcus after Marcus has finished his presentation we've got to sort the Skype call out so what I'm going to do is I'm just going to ask while Dave's sorting that out there was a couple of minutes of spare unexpected time in the program so anybody has any pressing questions for Mel right now that they want to ask this would be a good time to do so typical isn't it I've got a creative spare opportunity for you on that just nobody wants it so I'm just going to ask Mel a question that I had prepared earlier you see as I thought this might happen and I'm going to say so Mel I was really interested in what you were saying about skills in developing business models because I think people feel that that you need to have business skills to develop business models what you're saying suggests that's not necessarily true I think it's part of it obviously you do need to have some kind of business knowledge but I think when we're thinking about actually brainstorming anything in the brainstorming process it's actually a very creative process and I can't believe I'm saying this but you do have to think outside the box and think a little bit differently and that's something that creative people are very good at and I think it's something that you can actually do either yourself or one thing I've sort of noticed is if you work with someone like an extra or work with another company you work with another company and maybe you can spot things in another person's company and help them better than you'd be able to help your company and that's something I do quite regularly with different organisations it's really easy to see the kind of things that you could do if it's not your company that makes sense oh no no those are questions questions yes yes you hi my name is Sheila I run a short film kind of networking platform called Rotor Reliefs I just wanted to know you know the canvas I couldn't really see all the labels on each of the boxes but are the relative sizes of those boxes kind of indicative of the amount of importance that each of those has within your overall business model that's a very good question I didn't design it so I don't know but I think what the idea for the canvas is that you will use it to write down bits of information within the boxes so the key activities box is quite small compared to the revenue stream box because maybe you'll maybe have one or two activities that would deal with your business model but you may hopefully have more things to write about in your revenue streams or your customer segments ok we're going to now move on to Marker so Mel thank you very much indeed