»
MANAGEMENT INNOVATION “It’s the same for a business. If you can draw
out the businessmodel it’smore tangible sowe can have a better discussion about the busi- ness. “Now that’s for an existing business. Imag-
ine you’re trying to do something newthat no- body has ever done.”
BUILDING BLOCKS The canvas is made up of nine building blocks needed to describe a business model: Cus- tomer Segments; Value Propositions; Chan- nels; Customer Relationships; Revenue Streams; Key Resources; Key Activities; Key Partnerships; and Cost Structures. “If you start using post-it notes, you can lit-
erally sketch it out very quickly,whether it’s an existing business or a new business model,” says Osterwalder. “Part of its success is that it’s a tool and people use it immediately. It’s simple and straightforward to use.” It may be simple to use, but to come upwith
the framework, Osterwalder says he used a very scientific, academic approach where he took all the methods already in existence and ideas around the term ‘business model’ and tried to figure out what they meant. “I took all of those concepts and synthesised them into one concept,” he explains. “Therewere at least 20 or 30 concepts. If at least half of themwould use specific concepts then we would take it into our approach. “Oncewe had this synthesis,we started test-
‘It’s a bit boring to always mentionApple, butwhat is interesting is that what you see most is the product innovation – that’s the visible part – but at every stage of successful product innovation they also change the businessmodel’
ing it,which involved going into companies and seeing if these really allowedmanagers and en- trepreneurs to describe their businessmodels. It was really trying to figure out the perfect way to help busi- ness people describe their business model. “At the end we had something that was based on other con-
cepts andwas tested rigorously. Once itwas out there, so many people started using it that today we can say it really works.” Describing existing businessmodels is one thing, but of course
coming up with innovative business models still involves lot of work, according to Osterwalder. To generate innovative busi- ness models, the approach combines the canvas with the tools, techniques and processes used by people in the design world, like architects and designers, he says. “If you go to design school you’re trained how to create stuff.
In business, we’re not trained to create new stuff.We’re never trained to create new strategies, new business models. “One concept that we use a lot is prototyping business mod-
els.At themoment,my favourite example is a Swedish company, a very small company that’s trying to tackle one of the biggest issues in theworld,which is lack of access to sanitation – 2.6 bil- lion people don’t have access to proper sanitation. They have a product that works very well, the Peepoo bag, which is a single use toilet bag. “But they know that this is just a product.What they really
64 INNOVATION IRELAND REVIEW Issue 3 Autumn/Winter 2011
need to actually make a difference is a busi- ness model that works. They’re trying to fig- ure out nowwhat’s the right businessmodel to scale up, have an impact and make a profit, while changing the world. “So here you have a product thatworks, but
you can imagine two, three, five, even 10 dif- ferent business models for the same product. One could be putting advertising on the back; one could be simply selling the licences to dif- ferent partners; one could be franchising. “With the tools we describe in the book we
showhowyou can actually start to think of dif- ferent business models in order to find one that’s successful.” Osterwalder says the tools can also be used
within large companies to help themcome up with new business models. “If you take GE, they reallywant to create newgrowth engines. If you have that size and you need to create 5pc to 10pc growth, it means adding several billion dollars in new business every year. That’s difficult to do. Incremental innovation won’t always do it. So one of the paths forward is to try to find new business models.” According to Osterwalder, the approach is
generally used in three different ways. “Some use it just to describe their existing business or to describe new ideas. Now, why is that so powerful? It’s because until now they had no way to describe their business model. “And some companies really started apply-
ing the process to come up with new business
models.That’s the next stagewhen you’re a bit more ambitious and you want to go through prototyping and so on.
“The last stage – and it’s really not done in many companies –
is to continuously come up with new business models, kind of create a portfolio of potential business models and, like a ven- ture capitalist, accept that maybe eight out of 10 will fail. But that’s still pretty rare.”
THE NEED TO INNOVATE These days, somany industries are currently under pressure to change that they’re thinking about business model automation, says Osterwalder. “It started out in centres like music or books or publishing, but now it’s in mainstream sectors. Pharmaceu- tical companies really have to think about newbusiness models because their existing one of pushing blockbuster drugs has ex- pired. That they can’t find newdrugs is one problem. The other problemis that their patents are expiring. Five, 10, 20pc of their revenue will go up in the air. How do you replace that without some deep, structural change?” But,while it’s on the top of the agenda for every company, very
few are systematically doing it, he believes. “The ones that are systematically doing it are the ones that we always mention. “Apple is a beautiful example. It’s a bit boring to always men- tion Apple, but what is interesting is that what you see most is
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80