It’s a book for the Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers (The Strategyzer series).
Business Model Generation book provides practical tools for understanding, designing, and implementing a new business model or revamping an old one, co-created by 470 professionals from 45 countries and now practiced by millions around the world and designed for executives, consultants, entrepreneurs, managers, designers and leaders of all types of organizations.
We will make a reservation right away that it is simply impossible to outline the entire book in one article, since the material set forth in it is too original and sufficiently condensed.
The main idea, I'm not afraid of this word, of the textbook is an original approach to strategic business planning. Although the book also shows examples of use in government and non-profit institutions.
Business modeling as a whole is a completely ambiguous process. You never know with absolute certainty whether a business will shoot or not. As part of the discussion of the process, the authors assume the need for a single conceptual "canvas". They propose to formulate an abstract business model concept to facilitate any discussion. The problem with this approach is that it is rather difficult to formalize a simple and specific, at the same time, universal concept. At the moment, several similar concepts dominate in the field of business modeling. And the authors of the book offer us one of the most common.
The book proposes to use a business model template - a general scheme that describes the rules for building a specific business model. This template consists of nine interconnected parts, reflecting the logic of various activities of the company.
The client is the heart of the business model, from which all other constructions are based. The difference in consumer segments is due to differences in offers, requests and distribution channels.
A set of products is assumed that meets the needs of a certain consumer segment and has predetermined characteristics: price, performance, availability, design, etc. Value propositions can be both quantitative and qualitative in nature.
The following stages of promoting the product to the consumer are assumed, while each channel can include both all stages and some of them. The authors highlight partner and own distribution channels, each of which has its own advantages and disadvantages. Finding the right channels can affect the overall success of your entire business. It often happens that changing distribution channels for unsuccessful businesses provides instant growth in profitability.
This block of the template describes all types of relationships with all consumer segments of the company, depending on the motives of the company.
Allows the company to create and communicate its value proposition to the consumer, ensure engagement with targeted user segments, and ultimately profit.
Different business models require different resources. Some companies cannot exist without an extensive logistics structure, others can manage with one website, but regardless of the type of activity, any company is unthinkable without any key resources. You cannot make any product out of nothing.
Also, an important block of the business model template is the types of activities.
Manufacturers develop and market their own products, consulting companies and medical institutions provide services, and some companies that provide services to their platform are busy supporting and developing it. One of the most prominent representatives of the latter is eBay.
In the course of their life, companies acquire various partnerships.
Partnerships can be forged to optimize and save in manufacturing, reduce risk and uncertainty, and supply and collaborate relationships. It should be understood here that almost all companies do not have the entire infrastructure to ensure the functioning of their business model.
Determines all expenses of the company for the functioning of its business model. This includes development and production costs, relationships with customers and partners, etc. The “ideal” extremes of this block describe companies that focus on their own value propositions and to minimize costs. Most often, any business model is between two extremes and differs in proximity to one or another option. The former always strive to ensure the required quality of their products, and the latter, by any means, minimize the costs of providing their value proposition.
Thus, authors receive a complete tool for visual planning of activities. The book describes the cases of applying the methodology to analyze operating business models, and in some cases this helps to find their problem areas, the elimination of which helps to bring companies and organizations to an acceptable level of profitability.
Dr. Osterwalder is an author, speaker, and adviser on the topic of business model innovation. his practical approach to designing innovative business models, devel- oped together with Dr. Yves Pigneur, is practiced in multiple industries throughout the world by companies including 3M, Ericsson, Capgemini, Deloitte, Telenor, and many others. Previously he helped build and sell a strategic consulting firm, participated in the development of a Thailand-based global nonprofit organization combating hIV/ AIDS and malaria, and did research at the university of Lausanne, Switzerland.
Dr. Pigneur has been a Professor of Management Information Systems at the university of Lausanne since 1984, and has held visiting professorships at Georgia State university in Atlanta and at the university of British Columbia in Vancouver. he has served as the principal investigator for many research projects involving informa- tion system design, requirements engineering, information technology management, innovation, and e-business.
Alan is a big scale thinker who loves the details just as much. he's a co-founder at the aptly named change agency: The Movement. There he works with inspired clients to blend community knowledge, business logic, and design thinking. The resulting strategy, communications, and interactive projects feel like artifacts from the future but always connect to the people of today. Why? Because he designs like he gives a damn—every project, every day.
A teacher, writer, and speaker in the field of entrepreneurship, Tim’s perspective is informed by his experience founding and selling a marketing research consultancy that served firms such as Amazon.com, Bertelsmann, General Motors, LVMh, and PeopleSoft. Business model thinking is key to his Entrepreneurship for Everyone approach to personal and professional learning, and central to his doctoral work on international business model portability. Business Model Generation is his fourth book.
Patrick van der Pijl is the founder of Business Models, Inc., an international business model consultancy. Patrick helps organizations, entrepreneurs, and management teams discover new ways of doing business by envisioning, evaluating, and implementing new business models. Patrick helps clients succeed through intensive workshops, training courses, and coaching.
This book will give you deep insight into the nature of business models. It describes traditional and bleeding-edge models and their dynamics, innovation techniques, how to position your model within an intensely competitive landscape, and how to lead the redesign of your own organization’s business model.
Certainly you’ve noticed that this is not the typical strategy or man- agement book. We designed it to convey the essentials of what you need to know, quickly, simply, and in a visual format. Examples are presented pictorially and the content is complemented with exercises and workshop scenarios you can use immediately. Rather than writing a conventional book about business model innovation, we’ve tried to design a practical guide for visionaries, game changers, and challengers eager to design or reinvent business models. We’ve also worked hard to create a beautiful book to enhance the pleasure of your “consumption.” We hope you enjoy using it as much as we’ve enjoyed creating it.
An online community complements this book (and was integral to its creation, as you will discover later). Since business model innovation is a rapidly evolving field, you may want to go beyond the essentials in Business Model Generation and discover new tools online. Please consider joining our worldwide community of business practitioners and research- ers who have co-created this book. On the Hub you can participate in discussions about business models, learn from others’ insights, and try out new tools provided by the authors.
Business model innovation is hardly new. When the founders of Diners Club introduced the credit card in 1950, they were practicing business model innovation. The same goes for Xerox, when it introduced photo- copier leasing and the per-copy payment system in 1959. In fact, we might trace business model innovation all the way back to the fifteenth century, when Johannes Gutenberg sought applications for the mechanical printing device he had invented.
But the scale and speed at which innovative business models are transforming industry landscapes today is unprecedented. For entre- preneurs, executives, consultants, and academics, it is high time to understand the impact of this extraordinary evolution. Now is the time to understand and to methodically address the challenge of business model innovation.
Ultimately, business model innovation is about creating value, for companies, customers, and society. It is about replacing outdated models. With its iPod digital media player and iTunes.com online store, Apple created an innovative new business model that transformed the company into the dominant force in online music. Skype brought us dirt-cheap global calling rates and free Skype-to-Skype calls with an innovative business model built on so-called peer-to-peer technology. It is now the world’s largest carrier of international voice traffic. Zipcar frees city dwell- ers from automobile ownership by offering hourly or daily on-demand car rentals under a fee-based membership system. It’s a business model response to emerging user needs and pressing environmental concerns. Grameen Bank is helping alleviate poverty through an innovative business model that popularized microlending to the poor.
But how can we systematically invent, design, and implement these powerful new business models? How can we question, challenge, and transform old, outmoded ones? How can we turn visionary ideas into game-changing business models that challenge the establishment—or rejuvenate it if we ourselves are the incumbents? Business Model Generation aims to give you the answers.
Since practicing is better than preaching, we adopted a new model for writing this book. Four hundred and seventy members of the Business Model Innovation Hub contributed cases, examples, and critical com- ments to the manuscript—and we took their feedback to heart. Read more about our experience in the final chapter of Business Model Generation.
Business Model Generation examines the challenge of building a business model through the web of a business model. The canvas provides a matrix of nine essential "bricks". While most executives and entrepreneurs are already familiar with these categories, this book provides a systematic approach to business modeling. A number of exercises and methods are also available from external sources.
It is more than a mosaic of randomly linked external ideas. By following the steps outlined in the book, the development team can protect itself from chaotic prosperity from one methodology to another. The process presented is organized and logical: it is useful to understand the architecture of business models. For entrepreneurs and managers tasked with developing business models, this could be a useful guide.
This book is aesthetically interesting. Writing is used as a strong design element and comes in many vibrant, basic colors. (Publisher John Wiley & Sons has created other monographs with high design standards.) However, for some readers, the work may be oversized and the form may obscure function.
The business model should consist of nine key elements: customer segments, value propositions, channels, customer relationships, revenue streams, core resources, core business, core partnerships, and cost structure. Consider them in turn.
Customer segments are groups of people (or organizations) that a company wants to target. In some cases, groups should be divided into several segments, for example, when:
Mass market business models do not focus much on customer segments; rather, they treat all customers equally. (This model is quite common in the consumer electronics industry.) On the other hand, niche markets have very narrow and concentrated customer segments. There are many different types of segment models that serve different segments of related customers. Companies with different models serve several unrelated customer segments. Companies with different platforms need to identify segments on each side of the platform.
Value propositions are what the customer values and includes products and services as well as availability or quality. Several features can create value for customers. Better performance can also create value, as can customization. Almost any feature or service can be part of the highest design and value proposition, prestigious brands, affordable prices, availability and convenience are just a few of the features that can make a customer value a product more than competitors.
The company reaches its customers through channels that facilitate the customer’s knowledge of the product and the customer’s understanding of the value proposition. Customers buy the channel and get post-transaction delivery and support. Some companies reach customers through their channels; sometimes they have partners who face it. There are many types of channels - such as wholesalers, websites, brick-and-mortar stores, and more.
Customer relationships define how a business interacts with a customer segment, and these relationships can have a strong impact on the customer experience. They can be used to build customer loyalty or increase sales - businesses benefit from a variety of methods.
A business is about making money, so every business needs income. There are several ways to generate revenue - such as subscription fees, licensing costs, and advertising.
Core resources are the important physical, intellectual, human, and financial resources a business needs.
The core business is the steps a company must take for the business model to work, including not only manufacturing activities, but also things like troubleshooting and knowledge management. (Platform companies in particular are powered by their own networks; their maintenance is a key activity of this model.)
Companies do not exist in isolation; they need suppliers and other partners to run smoothly. These very important partnerships can optimize business models. Partners can help reduce risk and acquire resources.
Finally, the cost structure includes the costs necessary for the business model to function. Some companies are trying to cut costs, while others are more interested in creating value.
Together, these elements form the canvas of the business model.
" If you're going to read a business book on design, innovation, and business models, this one. I intend to give a copy to each of my adult children.
Business model generation combines a simple yet compelling business model organization system with a variety of systems and methods from strategy and design thinking. This includes important ideas across multiple platforms (bilateral markets for you, economists), application of design thinking, scenario planning ... It is a powerful integration of these ideas that many people will be able to implement. The book also has a great website [...] and the collaboration in the development and validation of the book is fascinating: around 470 people from all over the world contributed to the book.
I read this in parallel with Cory Doctorow's new novel, Makers Makers, and the two books shoot each other in interesting ways (the fictional company Kodacell can be seen as the ladder of a business model generation method). It is worth thinking about what is happening in Makers, creating new business models.
I have some questions about the book and some reservations.
Why is there no index? An index is needed in such a book and designers could use it as an opportunity to create an innovative visual index, perhaps using mind maps.
Design. I have long advocated such a visual design for business books. While reading this I had some reservations. The book is influenced by PowerPoint and web design, it has some shortcomings, cf. Cognitive PowerPoint Style: Presenting the Corrupt Inside, Second Edition. I had to work hard to incorporate information and ideas into the story of the book. I'm glad the authors and designers followed their approach, but you need to put a lot more work into that book approach before you really understand how to use it.
Depth and originality. There is little new here. Powerful is the way to integrate so many current ideas. I am not an expert in all of these areas, but where I have in-depth knowledge such as pricing, the content has proved to be sparse and somewhat misleading. For example, it's not about pricing based on price and its role in differentiation. See Pricing Strategy and Tactics (5th Edition) (alternative electronic text formats). I also felt that design thinking is treated with too much acquired wisdom and there is no question about the paradigm or innovation (I know that is not the purpose of the book).
The Business Model Generation PDF book is a bit weak in execution and I hope the site will be able to track how people use the business model building method and what experience they have in business model management.
But I hope to come back to this book and use it in my own businesses and teaching others. So despite my reservations, you are six stars!"
" This is a great book. For maximum benefit, a physical version of it is required. For best results, I use both a Kindle and a physical copy. It would be nice to see this book reviewed, as many of the examples are now old companies, even if the concerts are valid. The technology has also changed a lot, it will be interesting to see how it has developed new models."
" This book is available to anyone who works closely with business models and their respective design, evolution or touchpoints. I like the fact that the BMC gives the "system" a lot of ideas of depth, size and usefulness ... even on the Kindle it works very well. I wasn't clear on the format of the hard copy, but that's okay."
" A simple, clear, unconscious approach to creating and building a business model. Don't waste time with multi-page books and analytics - first learn the basics using the business model canvas. You can find the canvas and many online resources for free if in doubt, but the stories, examples and explanations in the text are great!"
" This book has really filled my niche with understanding. I don't have an MBA and haven't read many books on designing and updating a business model generation PDF. So I have nothing to compare. As a beginner to the comparison, I really enjoyed the simple clarity of concepts, designs and descriptions. Most of the case studies were excellent. Although they are linked to very large companies, I have felt that they have helped me understand the concepts and learn the lessons. There were some points where the circumstances seemed a little far from mine - a little harder to connect, but the concepts are much more important. This is a guide, not a cookbook."
Today, business model and strategy are among the most sloppily used terms in business, but these are separate concepts with enormous practical value. And when it comes to concepts so fundamental to success, no organization can afford fuzzy thinking. The term business model emerged when personal computers and spreadsheets became common says Joan Magretta, a longtime editor at Harvard Business Review.
Managers could use these tools to literally run the numbers to see models of how various decisions might affect the bottom line.
A new business model generation PDF canvas might hinge on either a different way to make something or a different way to sell something. Take discount retailers like Kmart and Walmart, for example.
These pioneers applied supermarket logic to the conventional department store and developed a discount retail model which involves slashing costs by eliminating chandeliers, carpets, and personal service in exchange for lower prices. While business model is a description of how your business runs, a competitive strategy explains how you will do better than your rivals. So for example, part of Walmart's unique strategy was to prioritize rural customers.
In founder Sam Walton's own words, he put good sized stores into little one-horse towns which everybody else was ignoring, and it worked. Focusing on rural areas let Walmart buy up land for cheap, target customers no one else was going after, and preempt other discount stores from entering the market in those areas.
Their customer strategy thus reinforced other parts of their competitive strategy. In contrast, Kmart tried to appeal to everyone, and that's not a distinctive strategy. While they may have a good business model, without a clear strategy they've struggled to stay competitive.
To get ahead of your rivals, you not only need a good business model and a clear strategy. You also need a clear understanding of the difference between the two.