Business Model Studios: The Designer
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LEARNING OBJECTIVE: To facilitate the design of gamechanging business models with teams, startups and major organizations using powerful visual facilitation tools and techniques.
Every organization needs an approach to systematically rejuvenate its business model. What’s yours? If you’re like most of us, you need tools (visual tools!) to help you recognize your business assumptions, build business model prototypes and stay ahead of the increasingly competitive marketplace.
This online workshop takes you step-by-step through concept and practice to ensure that you leave with an understanding of business model innovation from A to Z.
CONTENT: This course is self-paced online video content, with additional PDF downloads and creative exercises. There are no classes or scheduled webinars to attend. All videos are in English without subtitles. At this time, we do not review student work, grade participants, or moderate online discussions.
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Desktop, iOS and Android.
Certificate of completion.
|Section 1: Building Blocks|
Patrick van der Pijl | CEO, Business Models Inc.
In the course, I will answer many of the questions I am asked by participants in our Business Modeling workshops around the world. Here is a course outline:
01: Understand the Building Blocks
What is Business Modeling and why is it so useful?
Why do we need a Common Language for business planning and strategy?
What are the essential Building Blocks of a business model?
How can a Business Model Canvas lead teams to a deeper understanding?
02: The Business Model Canvas
What are the various uses of the Business Model Canvas?
What is the meaning and source of the Business Model Icons?
What are Common Mistakes when using the Business Model Canvas?
03: Visualizing with Post-It® Notes
What is Visual Thinking?
What is the value of Visual Thinking?
What are the basics of visualizing with Post-it® Notes?
04: Visualizing with Drawings
Why do simple drawings help teams with Business Modeling?
What are the Basics of Drawing?
What are the steps for drawing basic Business Icons?
How to draw the Business Model Canvas Icons?
05: Your Business Model Canvas & Visual Library
What is the Power of Visual Thinking?
How can I share my Visual Story?
How can I create my own Visual Library?
06: Elevate the Conversation
How can I truly innovate My Business Model?
What are some Business Model Innovation techniques?
How can I run a Business Model session?
PLUS: Several case studies in which I deconstruct the business models of several inventive companies and map them on the Business Model Canvas.
REQUIRED TEXT: Business Model Generation created by Alex Osterwalder, Yves Pigneur, Alan Smith, Patrick Van Der Pijl & Tim Clark
What is Business Modeling and Why is It So Useful?
Why are so many people talking about it and practicing it?
First of all Business Model Innovation is not a new concept.
When the founders of Diners Club® introduced the credit card, back in the 1950’s, you could say they were practicing Business Model Innovation.
The same goes for Xerox®, when it introduced the photocopier leasing program and pay per-copy system in 1959.
In this early age, they understood it was not about the product or service; it was about the Business Model.
The scale and speed at which innovative Business Models are transforming the industry landscape today is amazing. For entrepreneurs, 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 in your own business.
In the past, companies had a clear and effective Business Model.
Companies offered products and services, found ways to communicate and deliver them to customers and turn it into revenue and profits.
Today, companies in many different industries notice that their Business Model doesn’t work any more. They don’t know who their customers are, where their customers are, and how they can add value for them.
Companies need to change. But for some companies it is too late.
Take the example of Detroit with the car industry that worked on a model invented in the twenties. Or take Blockbusters®.
Because the rules of the game have changed.
New Rules of the Game
Rule #1: The customer has changed.
The customers are better informed online and they are in charge. They do not believe commercials anymore. They want transparency, easy service and they want it now!
Rule #2: Technology is widely accessible.
Customers have easy and cheap access to technology. We can use free technology such as Skype®, WordPress® etc., to start our own company without spending loads of money. New technology enables us to print on demand and we will soon print our own 3D objects at home.
Rule #3: The Internet is the big enabler.
It enables us to communicate, connect, shop and entertain 24/7. The Internet is a new channel, but also a platform for launching new businesses.
Rule #4: Sustainability is here to stay.
The customer’s mindset has changed considerably. We have entered a new era where social welfare is more important than financial welfare.
Rule #5: Relevance is the new marketing.
We are overloaded by information. It is not about broadcasting anymore, but about just-in-time content delivery. Customers receive relevant and personalized information at the point when they are ready to make a decision to buy.
I would like to emphasize that our current business models cannot adapt quickly enough to survive the accelerating rate of change in the marketplace.
I have mentioned here some of the rules of the new game. Perhaps you are familiar with these rules, but do you know how to play the new game?
Let’s take a closer look at the skills and tools that you need to master in order to play, compete and win as a Business Model Designer.
Next: Common Language
Why Do We Need a Common Language For Business Planning and Strategy?
Here’s what a typical business meeting looks like.
What is this Business Model?
Are they talking about clients?
Pricing? New products?
Because of this lack of information, we need a common language when it comes to Business Model thinking.
A common language provides a starting point for describing, visualizing, assessing and changing the key elements of every Business Model.
In order to have a conversation on Business Model Innovation, we need to have a shared definition of what is a Business Model.
A Business Model needs to be simple, relevant and intuitively understandable, while not oversimplifying the complexities of the enterprise functions.
A Business Model should be something that everybody can easily understand, no matter who they are: a partner, an employee, a vendor, or an investor.
A Business Model should also be easy to apply to your organization, to your competitors and other enterprises.
Without a shared language, it is difficult to systematically challenge assumptions about your business model and innovate successfully.
Reference: Blah, Blah, Blah by Dan Roam
Next: The Building Blocks
What Are the Essential Building Blocks of a Business Model?
After years of searching for my own Business Model, I came across the work of Alex Osterwalder. He believes a Business Model can be best described through nine basic building blocks that show the logic of how a company intends to make money.
The nine blocks cover four main areas of business: customers, offer, infrastructure and financial viability. The Business Model is like a blueprint for strategy to be implemented through organization structures, processes and systems.
Each building block is designed to answer a question.
“Who is my Customer?”
The Customer Segments defines the different groups of people or organizations an enterprise aims to reach and serve.
Customers compromise the heart of any Business Model. Without (profitable) customers, no company can survive long.
A Business Model may define one or several large or small Customer Segments.
An organization must make a conscious decision about which segments to serve and which segments to ignore.
“What is my Value Proposition?”
The Value Proposition describes the bundle of products and services that create the value for the Customer Segment.
The Value Proposition is the reason why customers turn to one company over another. It solves a customer’s problem or satisfies a customer need. Some Value Propositions may be innovative and represent a new or disruptive offer. Others may be similar to existing market offers, but with added features or attributes.
“What are Channels?”
The Channels describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition.
Communication, distribution and sales channels comprise the company’s interface with customers. Channels are customer touch points that play an important part in the customer experience.
“What are Customer Relationships?”
The Customer Relationships describes the types of relationships a company establishes with specific Customer Segments.
A company should clarify the type of relationship it wants to establish with each Customer Segment.
Relationships can range from personal, to automated to community. Customer Relationships may be driven by the following motivations: customer acquisition, customer retention or boosting sales (upselling).
“What are Revenue Streams?”
The Revenue Streams represent the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings).
If customers comprise the heart of the business model, Revenue Streams are its arteries. A company must ask itself, “For what value is each Customer Segment truly willing to pay”?
Successfully answering that question allows the firm to generate one or more Revenue Streams from each Customer Segment. Each Revenue Stream may have different pricing mechanisms such as fixed list prices, bargaining, auctioning, market dependent, volume dependent or yield management.
“What are Key Resources?”
The Key Resources describe the most important assets required to make a Business Model work.
Every Business Model requires Key Resources. The resources allow an enterprise to create and offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenue. Key Resources can be physical, financial, intellectual, or human. Key Resources can be owned or leased by the company or acquired from Key Partners.
“What are Key Activities?”
The Key Activities describes the most important things a company must do to make its Business Model work.
Every Business Model calls for a number of Key Activities. These are the most important actions a company must take to operate successfully. Like Key Resources, they are required to create and offer a Value Proposition, reach markets, maintain Customer Relationships, and earn revenues.
And like Key Resources, Key Activities differ depending on Business Model type.
“What are Key Partnerships?”
The Key Partnerships describe the network of suppliers and partners that make a Business Model work.
Companies forge partnerships for many reasons, and partnerships are becoming a cornerstone for many Business Models. Companies create alliances to optimize Business Models, reduce risk, or acquire resources.
“What is Cost Structure?”
The Cost Structure describes all costs incurred to operate a Business Model; the most important costs incurred while operating under a particular Business Model.
Creating and delivering value, maintaining Customer Relationships, and generating revenue all incur costs. Such costs can be calculated relatively easily after defining Key Resources, Key Activities, and Key Partnerships.
Next: A Deeper Understanding
How Can a Business Model Canvas Lead Teams to a Deeper Understanding?
In my work as a Business Model consultant, I see many Business Model examples. I want to give you some insights into each of the Building Blocks.
People have a hard time filling this one out. It seems easy but it is not. You may have customers who are decision makers and pay for your service or product but do not use it. Your customers might also be users, ambassadors or fans etc. A word of caution is to not try to identify all of your customers by segment. This building block is about finding Customers Segments to whom you can offer something of value different for.
What is it we are offering? Is it a product? A service? Is it a problem we solve? What is the product itself? What are the characteristics? What are the benefits?
This building block is about communication and delivery. In Channels we see that there are more customer touch points than only one Channel. Customers can be touched through a website, a shop, a location etc.
People find Customer Relationships to be the most difficult building block. Do you have a relationship with your customer? Relationships can be amongst others, personal, automated or a community.
Each Revenue Stream might have different pricing mechanisms like asset sale, subscription model, licensing, value-based, by use and sometimes for free. So, what are your customers really willing to pay? What do they currently pay? How are they currently paying? How would you prefer that they pay? How much revenue does each Revenue Stream contribute to the overall revenues?
This is not an exercise to just write all your resources down. No!
What are the Key Resources you have? What is key to running your Business Model?
What are the exact activities that are required for running the Business Model? Do you develop software? Sales? Problem solving? Production? Or do you run a platform?
Whom do we need to put in here? Are your suppliers also your partners? Key Partners are those essential relationships you can’t operate your Business Model without.
You’ll often find a summary here of cost elements. More interesting is to study the behavior of the costs and the relationship with the other building blocks. For example, do you know the costs of your Channels?
So, this is a little more insight for you as a jumpstart to understand the Business Model Building Blocks.
Next: Module 02 - The Business Model Canvas
|Section 2: The Canvas|
What is "Nespresso"?
Nespresso is the brand name of Nestlé Nespresso S.A., an operating unit of the Nestlé Group based in Lausanne,Switzerland. Nespresso machines brew espresso from coffee capsules, a type of pre-apportioned single-use container of ground coffee and flavorings.
Nespresso capsules (aka. "pads") are sold exclusively by Nespresso and are more expensive than portions of ground coffee purchased "loose". The cost per serving is up to three times higher than that of alternative brewing methods.
What Are the Various Uses of the Business Model Canvas?
As you look at the canvas, think about what it is Nespresso is offering.
One part of the Value Proposition is the Nespresso Machines.
The Nespresso Machines are offered to two different Customer Segments; households and businesses. The two Customer Segments are distinctive because the Nespresso Machines for households is different from the machines for businesses.
In looking at Channels, you understand how the Nespresso Machines are delivered to the Customer Segments. One of the Channels is retail, as there are outlets where you can purchase a Nespresso Machine.
Another Value Proposition is the Nespresso Pads; a slightly different model. They still offer Nespresso Pads to households and businesses, however they use different Channels. These Channels include Mail Order, Call Center, Nespresso.com, or Nespresso stores.
How does Nespresso maintain Customer Relationships?
If a customer would like to order Nespresso cups they cannot order them until they are members of the Nespresso Club, allowing Nespresso to maintain their relationship with customers.
Using this business model, how do they make money?
One method is by selling the machines to households and businesses, resulting in a one-time machine sale.
In addition, the Nespresso Pads are sold through the various Channels, including households and businesses, resulting in repetitive pad sales.
Once you have a Nespresso Machine in a customers home or business, the money machine is running because they will continue to drink coffee.
How do we pull this Business Model together?
Start by looking at Key Activities.
One of the Key Activities is Marketing. Nespresso noticed a difference when they hired George Clooney for their advertisements.
Another Key Activity is Business-To-Consumer distribution (B2C). This is key in the business model for Nespresso because they don’t sell all their products through a super market channel. Instead, they sell everything themselves.
Production of the Machines and Pads is the last Key Activity.
What are the Key Resources of Nespresso?
Patent on the machine, Brand of Nespresso coffee, which has completely different packaging than other coffee, Production Facilities and Distribution Channels.
Who are their Key Partners?
In the beginning, Nespresso tried unsuccessfully to produce their own machines. As a result they now have a third party manufacturer producing all the machines.
What are the Costs?
B2C, Production and Marketing (George Clooney) are Costs. After a short time you can now understand the Business Model Canvas of Nespresso.
You will see that I used different colors in this model. The reason why, is because I see two different patterns in this model.
One pattern is around selling the Nespresso Machines. The machines are sold to specific Customer Segments and we have a partner for this process, as well as a patent.
The other model is around selling Nespresso Pads. They are sold through different Channels and it is key to understand the information about the customer.
If you think the Business Model for Nespresso is about coffee, then you’re wrong. Actually, the Nespresso Club, where they know everything about their customers, is a very big Key Resource.
Next: The Business Model Canvas with Icons
What is the Meaning and Source of the Business Model Icons?
Here are some ideas of how we can translate some of what we’ve gathered in each building block on the Business Model Canvas into a visual icon.
Key Partners: a factory and coffee machine
Key Activities: George Clooney on a billboard
Key Resources: the patent that is approved
Value Propositions: complete coffee experience at home
Customer Relationships: club card
Channels: Nespresso® shop
Customer Segments: someone at work drinking a Nespresso coffee
Revenue Streams: a bag (small or large)
These are just some simple visuals to help understand the business model better. They will also generate more ideas and bring the business model alive.
Next: Common Mistakes
What Are Common Mistakes When Using the Business Model Canvas?
As a consultant, I have been running many training courses and workshops all over the world. And even though it seems that the Business Model Canvas is easy to use, people still make mistakes. So I would like to share with you one "golden rule" and twelve "common mistakes".
THE GOLDEN RULE:
Don't write on the canvas!
12 COMMON MISTAKES
1. Don’t try this alone! Do it together! The more brains, the higher energy and the better the outcome!
2. Working too small!! Be Willing to Go BIG! Print out a large canvas, put it on the wall, and use large post-it notes. Your ideas are gonna rock!
3. Using fake Post-it® Notes. Use 3M Post-it notes…they are the only notes that really stick.
4. Don't write small or with bullet points. Write clear and BIG with a Sharpie® and capture the ideas BIG! If you want to kick ass, then make a cool drawing to really engage your team.
5. Don't be rigid with your model. Be flexible with your model and be willing to move ideas around freely.
6. Starting randomly in your Canvas. Start at the Value Propositions or from the Customer Segments.
7. Skipping around using too many Post-it® Notes. Don't use too many Post-its. Go step-by-step through the Business Model Canvas.
8. Don’t go crazy on Customer Segments. Including geography, income, lifestyle etc. You only define NEW Customer Segments if you offer a DIFFERENT Value Proposition.
9. Mixing Up the Value Propositions. It is important to identify your products, services, functions and benefits and/or the job you get done.
10. The Business Model Canvas is not a purpose in itself. It is for discussion purposes. There is no right or wrong. The value is in the discussions you have with your team.
11. Trying to model it all. Impossible. It is best to un-model the products and services one-by-one. Later on, you can synthesize the model.
12. Not knowing how to use Post-it Notes properly. Note the difference in peeling them off so they lay flat on the canvas, rather than curl.
Next: Module 03 - Visualizing with Post-it® Notes
|Section 3: Visual Thinking|
|What is Visual Thinking?
A Business Model is a complex, adaptive system in which each element influences the other, often with unexpected outcomes. Generating Business Models requires holistic thinking.
What is the best way to see the BIG PICTURE?
I am asked all the time to define visual thinking, so here it is:
Visual thinking is a process of critical thinking that leverages the power of visuals to access all regions of the brain.
What I have found is that visual thinking is indispensable to working with Business Models. By visual thinking, I mean using tools such as pictures, sketches, diagrams and Post-it Notes to construct and discuss meaning.
Business Models are complex concepts composed of the various building blocks. The relationships between the building blocks can be very difficult to truly understand without sketching it out.
There are a few principles at work when using visual thinking for Business Modeling:
1)Understand complex systems in order to decide what to do next
2)Provide a system for navigation
3)Stimulate associative thinking to integrate the left and right hemispheres of the brain
4)Provide effective communication for an outside audience
Visual thinking enables people to have a conversation and then forces people to make decisions.
In this module, we will explore the different ways you can capture, create, populate, build, draw, explain and understand your Business Model. Each activity is designed to give ‘life ‘ to your Business Model.
Next: The Value of Visual Thinking
What is the Value of Visual Thinking?
By using visual thinking, you improve your Business Model by showing the gaps in your model; where you need to add or remove data.
By using visual thinking as a team, you allow for the power of Group Genius. In other words, wisdom of the group because it is built by them. They have a snapshot of the process.
Collective Learning occurs when we attach emotion to information. Joy, enthusiasm or surprise, like an ‘a ha’ moment. Using the visuals is a shortcut to that ‘a ha’ moment.
Memory; being able to quickly understand and track ideas as they move around the canvas. It is about processing speed. It is easier to glance at an icon instead of reading text.
Businesses today already use lots of visual tools such as diagrams and charts, which are great for reporting and planning. However, visual techniques are used less frequently to discuss, explore, and define business issues.
When was the last time you attended a meeting where executives were drawing on the wall? Yet, it is in the strategic process that visual thinking can add tremendous value.
Visual thinking enhances strategic inquiries by:
1. Making the abstract concrete
2. Illuminating the relationship between elements
3. Simplifying the complex
Next: Visualizing with Post-it Notes
What Are the Basics of Visualizing with Post-It® Notes?
In case you are asking, “What is the use of Post-it Notes while working with the canvas?” or “Why should you use Post-it Notes?”
A set of Post-it Notes is an indispensable tool that everyone reflecting on Business Models should keep handy. They function like an idea container.
Here are some clear benefits for using Post-it Notes when mapping out the Business Model:
Post-it Notes can be moved when you make mistakes. This is great because it allows you to be flexible. Sometimes people working on a canvas do not immediately agree on text or place where the Post-it is placed.
Post-it Notes can be moved to trigger out-of-the-box thinking. When you move a Post-it Note from your Customer Segment to Key Partner you may trigger new Business Model ideas.
Post-it Notes provide structure. If you use different colors of Post-it Notes, you can clearly show relationships or different Value Propositions and Customer Segments.
Post-it Notes help you focus. You can’t write endless texts on a Post-it Note. You need to be short and clear.
Post-it Notes create maps and stories. You can create a powerful narrative as you map ideas that tell the Business Model story.
Here are four simple guidelines to remember when using Post-it Notes:
1. Use thick marking pens. This prevents you from writing too much.
2. Write only one element per Post-it Note.
3. Write only a few words per note to capture the essential point.
4. Use visual icons. You will learn more about these visual icons in our next module.
Next: iTunes Case Study
In 2001, Apple launced a new media player, called iPod. During this video we will explore the busness model of iTunes.
Next: Module 04: Basic Drawing
|Section 4: Basic Drawing|
Why Do Simple Drawings Help Teams with Business Modeling?
When I work with teams all over the world on Business Model Generation and visual thinking, I see that people have a hard time understanding and applying visual thinking. In designing this course, I thought it would be cool to do with someone who is a specialist in visual thinking, Peter Durand.
Peter will help you with visual thinking in this course by beginning with the basic skills for creating shapes, icons and simple images.
This is not about ART; it’s about IDEAS and making them concrete so people can understand them quickly, navigate through the canvas and the Business Model process and communicate them when the process is over.
We are bringing together basic visualization skills with the process of Business Modeling to help people through developing clarity in Business Models. When you leave this course, you’ll be able to draw icons and your own Business Model.
Next: The Basics of Drawing
What Are the Basics of Drawing?
Peter is going to walk you through a couple of techniques on how to make some basic shapes.
1. Make a circle, square and triangle.
2. Let’s make the shapes three-dimensional; first, add a light source, create a shadow and add some hash marks, making a circle into a sphere, a square into a cube and a triangle into a pyramid.
When working on the canvas, it’s important for people to be able to see and understand the words that you write. Apply the same clarity you use in your basic shapes to your writing.
Thus, making BIG, CLEAR letters.
The triangle is made of three points. Use this as the foundation for making arrows. Add some interest and turn them in to three-dimensional arrows.
Use some of the basic shapes to draw a person. See tricks on how to draw arms, making a star person, bean person, ice cream cone man/woman, and crowds.
Next: Drawing Basic Business Icons
What Are the Steps for Drawing Basic Business Icons?
Let’s draw some basic business icons based on the basic shapes:
Download attachment below.
Next: Drawing the Business Model Canvas Icons
How to Draw the Business Model Canvas Icons?
Peter will take us through how to draw the Business Model Canvas Icons. He will show you step-by-step how to draw them in detail. Then he will show you a more basic drawing of each icon.
Download the attachment below.
Next: Module 05: Your Business Model Canvas and Visual Library
|Section 5: Visual Library|
What is the Power of Visual Thinking in Business?
Now that you know the basics of how to populate a Business Model with Post-it™ notes and how to add simple drawings to your model, it is time to create a Business Model sketch. A Business Model sketch is a visual representation of the Business Model goals. The sketch drives home the key differentiators about your business.
CAPTURING THE BIG PICTURE
By sketching out all the elements of the Canvas you immediately give viewers a big picture of the Business Model. A sketch should provide the right amount of information to allow the viewer to grasp the idea, but not too much detail to get distracted. The Business Model Canvas visually simplifies the reality of an enterprise with all of it’s processes, structures and systems.
Understanding a Business Model requires not only knowing the elements of the Business Model but also their relationship with and without each other. A complex relationship can be expressed easier in a sketch than in words.
COLLECTIVE REFERENCE POINT
A Business Model sketch also provides a way to test assumptions. Typically parts of a business are “in someone’s head”. A sketch allows you to get those ideas and to see if they truly make sense by putting them into something tangible.
By using the Business Model Canvas as an organization, you are creating a shared language full of reference points and vocabulary to help you better understand one another. Once people are familiar with the Business Model Canvas, it becomes a powerful tool for discussion to help people see how everything “fits together” to support idea exchange and build teamwork.
Creating a Business Model as a group is the most effective way to achieve collective understanding. People from different parts of an organization may deeply understand their parts of a Business Model but lack a solid grasp of the whole. When experts jointly draw a Business Model, everybody involved gains an understanding of the individual components and develops a shared understanding of the relationship between the components.
The Business Model Canvas is a lot like an artist’s canvas. When an artist starts painting he has a vague idea of what he is going to paint – not an exact image – in mind. Rather than starting in the corner, he starts to paint organically. As Pablo Picasso once said,“I begin with an idea and then it becomes something else.” Crafting a business model is no different. Ideas placed on the canvas trigger other ideas. The canvas becomes a place where ideas are shared, moved, and iterated into new ideas.
A visual Business Model also provides an opportunity for play. With elements of the model visual on the wall in the form of Post-it™ Notes, drawings and sketches you can begin to really play, move and build on each others ideas. For example you could play with the idea of starting a service line, developing a new product or thinking about what you might need to eliminate. A visual Business Model helps you think through the systemic impact of modifying one element or another.
CREATE COMPANY-WIDE UNDERSTANDING
When it comes to communicating your Business Model, a picture really is worth a thousand words. Everyone in your organization needs to understand your Business Model, because everybody can potentially contribute to it’s improvement. At the very least, everyone needs a shared understanding of the model so they can move in the same strategic direction. A visual model is the best way to create a shared understanding.
In organizations, ideas and plans often need to be “sold” internally at various levels to gather support and obtain funding. A powerful visual story reinforces your pitch and can increase your chances of winning understanding and backing for your idea. Using images instead of just words to share your story makes your case even stronger, because people identify with your images. Good visuals readily communicate your organizations status, needs, desires, growth plan and more.
Just as employees must “sell” their ideas internally, entrepreneurs with plans based on new business models must sell them to other parties, such as investors or potential partners. Strong visuals substantially increase your chance for success when communicating your Business Model to others.
NEXT: Different Types of Visualization
How Can I Create My Own Visual Story?
A powerful way to explain a Business Model is to tell the story one image at a time. Presenting the full description within the Business Model Canvas can be overwhelming.
We are now going to go through a simple storytelling activity:
1. MAP YOUR BUSINESS MODEL
Begin by mapping out either by yourself or with a group a simple Business Model, using only Post-it™ notes and text.
2. DRAW EACH BUSINESS MODEL ELEMENT
One at a time, take each Post-it™ note and replace it with a drawing or icon. Make sure to keep the images simple. The quality of drawing is not important as long as the message is conveyed.
3. DEFINE THE STORYLINE
Decide which Post-it™ notes you will use when telling your story. Think about the path of the conversation. Do you want to start with the customer segment? Or maybe the value proposition?
4. TELL THE STORY
Share your Business Model story one drawn Post-it™ note at a time. (Once you have completed your story you can also build your Business Model in powerpoint, prezi, Keynote or Slidware)
NEXT: Creating Your Visual Library
How Can I Create My Own Visual Library?
Look at your Business Model and the message and goals that you are trying to communicate. What is the overall theme for your company?
Brainstorm a list of business buzzwords that you use within your organization or industry.
Draw a simple icon for each buzzword.
Now, you have a visual library that you can use to communicate your Business Model more effectively.
NEXT: Spotify Case Study
What Does the Business Model of Spotify Look Like?
This is Martin and Daniel. They wanted to “…provide music to everyone (anytime, anyplace) for free in a legal way”.
What does a Business Model look like if you offer services for free?
Global Music Fans
access to music, via streaming and download services, to the fans.
advertising opportunities to the advertisers
They maintain their customers in a smart way.
Automated Online Relationships
Customers organized into communities
Third Party Affiliate – opportunities to design new services, like playlists
Pay for mobile use
Monthly subscription for music without advertisements
Advertisers pay advertising fees
Understanding high quality programming of streaming services
Maintaining the code
Working with Key Partners who are the Rightholders of the music
The key in this Business Model is the concept of Free Drives Paid. When you see Business Models offering services for free, somebody has to pay. However, it is very hard to convert customers who get services for free to paying customers.
Spotify knows how to play the game of the free Business Model. Because of the annoying advertising or the ease of use on your mobile, they drive customers to pay for the services.
That is why we call their Business Model, Free Drives Paid.
NEXT: MODULE 06: Innovation
|Section 6: Innovation|
How Can I Truly Understand Any Business Model?
Now it’s time to innovate your Business Model.
But how do you do that?
When I first came across Alex’s Business Model Canvas, I was running my own innovation company, ULURU. We worked with business leaders and creatives. We invented great new concepts and Business Models.
However, I could not train or help our customers on HOW to do that. Why? Because it was a fuzzy process. When I saw the simple structure of the Business Model Canvas, I could finally explain to our clients how to do innovation well.
In my workshops and training courses, I have found it is important to do innovation exercises. Participants worry that innovation will be difficult. But actually, it is not so difficult. I use over twenty different techniques in my workshops. For this course I wanted to share with you the most common used techniques.
Please note that the brainstorming phase of Business Modeling consists of two phases; generation and synthesis. In the first phase you need to expand your thinking.
Explore several routes.
Ask yourself crazy questions.
Make sure you look for as many options as possible.
Remember, options do not necessarily have to represent disruptive Business Models NOR do they need to represent the final Business Model. They may be innovative because they expand your thinking!
NEXT: Business Model Innovation Techniques
What Are Some Business Modeling Techniques?
Once you understand the building blocks of the Business Model Canvas, Business Model Innovation is easy to master. The canvas will give you insights on how to start thinking out of the box. So, let’s look into the following Business Modeling techniques:
Trigger QuestionsFRESH WATCHING
Understanding current Business Models is a great way of exploring new Business Model options. There is no need to come up with the most disruptive Business Model for your concept.
In practice, I see more than 50% of new business ideas come from carefully analyzing other Business Models. You can learn from the way SKYPE® is offering their services. You can learn from Nespresso®, who have great insight into their customers or explore the Business Model of Easyjet® to understand if you could offer something similar.
This is how you do it:
Try to model the Business Model of a competitor or a company you admire in a different industry. Put this model over your own Business Model.
What would this new Business Model look like?
Could you come up with a new concept or idea?
Ideas for Business Model innovation can come from anywhere. The Business Model Canvas helps you to explore Business Model routes. We can distinguish five epicenters of Business Model Innovation:
Epicenters is a technique I use often. I love it. It can quickly reveal the hidden treasures in your Business Model. Wow!
Applying patterns is a great way to stretch your thinking on Business Models.
In Business Model Generation, Alex and Yves wrote about various Business Model patterns such as The Longtail, Multi-Sided Platforms, FREE and Open Business Models. In practice, I see companies follow new patterns that transform their business. One of these patterns is moving from products to services. Companies like Philips, Hilti and others find a hard time selling only hardware and staying profitable, given the pressure of production, rising costs of raw materials and the power of the retail channels. As a result, companies will start exploring services.
A great example is Hilti.
I will explain the case study later, executed by Mark Johnson’s team at Harvard.
Another example of companies operating in a new pattern is telecom companies. They used to give consumers and businesses access to their network. Nowadays, they find themselves not being a telecom operator anymore, but an Internet company that runs a platform for services to both customers and suppliers. Telecom companies operate a Multi-Sided Platform. They have two distinct customer groups with different value propositions. They offer consumers and companies access to their network and services. The other side of the platform consists of suppliers like Spotify or Pathe, who can offer their products to the customers of the telecom company.
How can you apply this technique?
Use the overlay of a Business Model pattern for your own Business Model.
What would happen if we ran a FREE Business Model?
What would happen if we run a Multi-Sided Platform?
The power of “What if…?”
We often have trouble conceiving innovative Business Models because we are held back in our thinking by the status quo. The status quo can stifle imagination. One way to overcome this problem is to challenge conventional assumptions with “What if?” questions.
“What if” questions help us break free of constraints imposed by current models. The questions should provoke and challenge your thinking.
Here is an example of how I apply Trigger Questions in my workshops.
Look at all the ideas we were able to generate in just twenty minutes with just fifteen people.
NEXT: Running A Business Model Session
What is Your Own Business Model Strategy?
I want to share with you some important ingredients you need for the success of running your own Business Model session. Usually people think if you put some creatives and business people in the room, great things will happen. However, you need to carefully design your workshops if you want to achieve great results. Here I share some of my experiences.
Make sure you clearly communicate how you are going to run your Business Model Innovation session. Often, you will hear people start to say: “No, that will never work!” or “We tried this before and it never worked.” Instead, start with a short list of Brainstorm Rules:
Start with a well-honed statement of the problem at hand. Ideally, this should be articulated around the customer need. Don’t let the discussion stray too far. Always bring it back to the problem statement.
Clarify the brainstorming rules upfront and enforce them. The most important rule is to defer judgement. Have one conversation at a time, go for quality, be visual, and encourage wild ideas. As a facilitator, your role is to enforce the rules.
Write ideas down or sketch them out on a surface everyone can see. A good way to collect ideas is to jot them down on Post-it notes and stick them to a wall. This will allow you to easily move the ideas around and regroup them.
Prepare for brainstorming with some sort of immersion experience of the problem at hand. This could be a field trip, discussions with customers, or any other means of immersing the team in issues that relate to your problem statement.
I found applying the Six Thinking Hats of Edward de Bono very helpful. Give people in your workshop the Green Hat first (creativity) and when you present your final idea, give the Black Hat to understand why this Business Model needs to be challenged. You will see your teams are more productive and they leave their judgement for the very last part.
Time and space are also an important element when you work with your team on Business Model Innovation. In our resource guide, we show a visual on how you could optimize your Business Model space.
ASSEMBLE A DIVERSE TEAM
Sometimes when I am asked to facilitate Business Model workshops, clients only want to work with their management team. Well, that’s a pity. You will miss a great opportunity to connect brains in your company and generate new ideas.
The task of generating new ideas should not be left exclusively to those typically considered “creative” either. Ideation is a team exercise. In fact, successful Business Model Innovation requires the participation of people from across the entire organization.
Business Model Innovation is about seeking to create value by exploring new Business Model building blocks and forging innovative links between blocks. This can involve all nine blocks of the canvas, whether Distribution Channels, Revenue Streams or Key Resources. Thus, it requires input from people representing multiple areas.
I prefer working with large teams that include a mix of people. You will see a difference if you do not challenge your management team or client to expand and be diverse in their thinking.
reference material: (see here http://en.wikipedia.org/wiki/Six_Thinking_Hats )
NEXT: Hilti Case Study
I would like to share with you a very interesting Business Model case study.
This case study is performed by the team of Mark Johnson, he is the author of the book Seizing the White Space.
This case study explains how you can innovate with the Epicenter Technique, starting with the Customer Segment.
In the 90’s, Hilti had a huge problem, new competitors came to the market with much cheaper products. Customers wanted to pay less and at the same time expected much more from the Hilti company. The prices were under pressure, leaving Hilti with lower margins.
Imagine yourself as the CEO of Hilti…What Would You Do??
These are interesting solutions, but maybe we can think of something else.
Here is where the Epicenter Technique comes into place. We point the Customer Segment as the Epicenter of our solution.
What would the real solution look like if we look into the real demands of our customer?
So, here we are, the guys are the customers of Hilti. We see construction workers who use the products and we see contractors who buy the products.
We learned from the construction workers that they:
This all results in the breakdown of construction. The former CEO of Hilti found that it is not about the tool itself, it is about management of the tools.
Hilti decided to help the construction workers, and the contractors, manage their tools, which they call Fleet Management. Hilti supports them with improvement of the tool management process in order to boost production. They supply them with 24-hour best tools, full maintenance, on-line access to their tool inventory, tools with their own logo and inventory code.
Let’s have a look at the Business Model.
Traditional Business Model
Tool Fleet Management Services
What is the impact of the new model on the traditional Business Model?
Reference: Seizing the White Space: Business Model Innovation for Growth and Renewal by Mark W. Johnson
NEXT: The Designer Wrap-Up
We’ve reached the end of the first Business Model Studios Course, The Designer.
I hope that you are finishing this course with a richer view of how to use The Business Model Canvas as a facilitator, as a designer, and most important, as a co-creator with other people.
Just to review what we went through together.
We covered the basics of the Building Blocks and the need for a common language in order to guide teams to a deeper understanding of business as a dynamic system.
We walked through the elements of The Business Model Canvas, the meaning of the icons, finishing with The Golden Rule & Common Mistakes people make when using the Canvas.
We asked the question: What is Visual Thinking? I showed you some deceptively easy tricks of visualizing business models with Post-it Notes and did a walkthrough of the iTunes Case Study.
MODULES 04 & 05
This is when I invited Peter Durand to show you how to Visualize with Drawings. He demonstrated how to quickly re-create the Business Model Canvas Icons, plus many other useful symbols and drawings. Then we looked at the power of visuals, creating a visual library and sharing our visual stories.
We moved beyond the Canvas to elevate the conversation exploring different facilitation techniques and processes designed to lead groups through the business model innovation process.
And, we concluded with a look at how Hilti moved from a producer of products to a provider of professional management services.
All of this, of course, barely scratches the surface of Business Model Generation.
Our next course The Generator will dive even further into the process of Business Model Innovation.
Thank you and I look forward to seeing how you use these skills to re-invent business.
As an illustrator, painter, traveler and graphic facilitator, Peter has been an innovator all his life, with a varied career combining visual learning, systems thinking, storytelling, collaborative solution design and information graphics.
Peter has taught workshops on graphic facilitation for the Curb Center for Creativity, Baltimore Community Conferencing Center, the Maryland Institute College of Art, PopTech Social Innovation Fellows Program, the International Forum of Visual Practitioners and frog design.