Friday 26 May 2023

Business model process

"Business Model Generation" is a book by Alexander Osterwalder and Yves Pigneur which introduces the Business Model Canvas, a visual tool for creating and analysing business models.

The book is divided into five parts:

  1. Canvas: section introduces the Business Model Canvas and explains how to use it to design, test, and iterate on business models.
  2. Patterns:  section describes business models with similar characteristics, similar arrangements of business model building blocks or similar behaviours. Theses similarities are referred to as Business model patterns.
  3. Design: section delves into various design techniques which one can use to better create a value added business model
  4. Strategy: section deals with reinterpreting business strategy through the lens of the business model canvas, it helps constructively question established business practices while examining the environment in search of new opportunities.
  5. Processes: section proposes a generic business model design process, which is adaptable to to an organisations specific needs.

Overall, "Business Model Generation" is a practical guide for entrepreneurs, innovators, and business leaders who want to design and optimise their business models to create value for customers and achieve sustainable growth. 


Creating a business model may seem like a daunting task, modelling an existing business may seem more approachable however there are actually four broad instances when creating a business model is appropriate:
  • Satisfaction: the aim of satisfying an existing but unanswered market need.
  • Newness: to bring new technologies, products or service to market that do not yet exist.
  • Disrupting: leveraging a better business model to disrupt the market.
  • Creation: to create an entirely new market that did not exist before.
regardless of which of the overarching four goals of creating a business model you are pursuing there are five key phases to developing a business model:

  • Mobilise: This stage involves building a team, clarifying goals, and establishing a shared understanding of the business model design process. during this phase we set the stage for designing our new business model.
    • Establish project legitimacy by involving respected and visible member of upper management, respected by all in the organisation
    • Manage vested interests by identifying those who will benefit from a business model change, there will be parts of the organisation that will be threatened by change
    • Cross-functional team, ensure that various organisational perspectives are involved in the business model design, the greater the breadth of perspective the better.
    • Orientating decision makers, ensure that they are aware from at least practical perspective how the proposed changes will benefit the organisation as a whole.

  • Understand: In this stage, the focus is on gaining a deep understanding of the customers, market, industry, and competitive landscape. This involves conducting research, gathering data, and analysing insights to inform the design process. Be wary of analysis paralysis, keep the team focused and leverage a hypothesis based approach rather than strictly focusing on data-analysis driven approach.
    • Modelling existing business models, leveraging organisational experts to understand the as-is business model, this will provide an understanding of the existing strengths vs weakness and serve as inspiration for the and improved version/model
    • Look beyond the status quo, it is very difficult to look beyond we've always done it that way, leverage cross functional nature of your team to gain fresh perspectives.
    • Search past the current client base, identifying an untapped market segment is often far more valuable then expanding an existing one by 10%
    • Demonstrate progress, excessive analysis runs the risk of losing management support due to a lack of perceived progress, be sure to share insights and knowledge gained.

  • Design: This stage involves using the Business Model Canvas framework to design the key components of the business model, including customer segments, value proposition, channels, revenue streams, key resources, key activities, key partnerships, customer relationships, and cost structure.
    • Defend bold ideas, in established organisations often times ideas are watered down to ease implementation, this is a delicate balance, defending a bold idea while simultaneously ensuring it's feasibility.
    • Co-design, By involving a diverse breadth of organisation representation on the design team, the team can anticipate and circumvent potential implementation roadblocks.
    • Integration, one of the most important decisions is to whether integrate new business models or to establish new ones, 
    • Long term focus, when inviting new ideas focus your efforts on long term goals, not on quick quarterly increases we are looking to change the way business is done and look for 100% increases not annual 4% ones.

  • Implement: Once the business model has been validated and refined, this stage focuses on implementing the model and executing the necessary actions to bring it to life. 
    • Proactively manage roadblocks, before the implementation phase of the business model, by leveraging a cross-functional team in previous phases most implementation roadblocks should have been identified and mitigated, before the implementation phase.
    • Project sponsorship, an important success element is to maintain visible support from a respected senior manager, this sponsorship will legitimatise your endeavours. 
    • Old vs New business model, figuring out whether to integrate the new model into an existing one or to create it's own separate model, integrate into an existing business unit or to spin off a new one? creating the right structure is essential for success.
    • Communication Campaign, to counter 'fear of the new' a multi channel internal campaign announcing the new business model and creating excitement as well as interest is essential to gain mass buy in from the organisation.

  • Manage: Adapt and modify the business model in response to market reaction, Continues monitoring and updating the business model to changing market forces:
    • Governance, establishing a cross functional governance group, whose responsibility is to track and manage business models across the organisation, with the aim of ensuring that each model is up to date with current market forces.
    • Synergies & Conflicts, one of the responsibilities of the business model governance group would be to manage any synergies between models as well as mitigate and conflicts which could arise.
    • Portfolio, document and maintain a portfolio of all the organisations business models and the impact/influence they have on each other.
    • Beginner's mindset, do not fall into it's always worked this way mindset, regularly take a fresh look at each model, challenge everything. Market forces move suddenly and you may need an overhaul sooner than you think.