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Business Model Generation is a handbook for visionaries, game changers, and challengers striving to defy outmoded business models and design tomorrow’s enterprises. If your organization needs to adapt to harsh new realities, but you don’t yet have a strategy that will get you out in front of your competitors, you need Business Model Generation. Co-created by 470 -Business Model Canvas- practitioners from 45 countries, the book features a beautiful, highly visual, 4-color design that takes powerful strategic ideas and tools, and makes them easy to implement in your organization. It explains the most common Business Model patterns, based on concepts from leading business thinkers, and helps you reinterpret them for your own context. You will learn how to systematically understand, design, and implement a game-changing business model–or analyze and renovate an old one. Along the way, you’ll understand at a much deeper level your customers, distribution channels, partners, revenue streams, costs, and your core value proposition.

Business Model Generation features practical innovation techniques used today by leading consultants and companies worldwide, including 3M, Ericsson, Capgemini, Deloitte, and others. Designed for doers, it is for those ready to abandon outmoded thinking and embrace new models of value creation: for executives, consultants, entrepreneurs, and leaders of all organizations. If you’re ready to change the rules, you belong to -the business model generation!-

Takeaways

Canvas

  • A business model describes the rationale of how an organizations creates, delivers, and captures value Pasted image 20231028213530.png

Key elements

  • Customer segment: An organization serves one or several customer segments
    • CS defines that different groups of people or organizations an enterprise aims to reach.
    • Needs require a distinct offer; require different distribution channels; require different relationships; substantially different profitabilities; willingness to pay for different aspects of the offer.
    • Types: Mass market, Niche market, segmented, diversified, multi-sided markets
  • Value Propositions: It seeks to solve customers problems and satisfy customers needs with value propositions.
    • VP are the bundle of products / services that create value to a customer segment
    • What value do we deliver to the customer? Which one of our customer’s problems are we helping solve? Which customer needs are we satisfying? What bundles of products are we offering to each CS?
    • Elements of a VP: Newness, performance, customization, GSD, design, brand/status, price, cost reduction, risk reduction, accessibility, convenience/usability
  • Channels: Value propositions are delivered to customers through communication, distribution and sales Channels.
    • CH describes how a company communicates with and research its CS to deliver the VP
    • CH help raise awareness, help customer evaluate, allow customers to purchase, deliver the value prop, and provide post-purchase support
    • CH types can include those that are internally owned versus partnered, plus direct versus indirect type. Examples include SalesForce, Web Sales, Physical Stores, Partner Stores, Wholesalers
  • Customer Relationships: Customer relationships are established and maintained with each customer segment.
    • CR describes the types of relationships a company establishes with specific CS;
    • Drivers for CR include customer acquisition, customer retention, and upselling
    • Expectations for CR include personal assistant, dedicated personal assistance, self-service, automated services, communities and/or co-creation.
  • Revenue Streams: Revenue streams result from value propositions successfully offered to customers
    • RS represents the cash a company generates from each CS
    • For what value are our customers will to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each RS contribute to overall revenues?
    • Types of RS: Asset sale, Usage fee, Subscription fee, Lending/Renting/Leasing, Licensing, Brokerage fees, Advertising
    • Fixed Menu Pricing: List Price, Product feature dependent, Customer segment dependent, Volume dependent.
    • Dynamic Pricing: Negotiation, Yield management, Real-time-market, Auctions
  • Key Resources: Key resources are the assets required to offer and deliver the previously described elements…
    • What KR do our VP require? Our CH, CR, RS?
    • Types of KR: Physical, Intellectual, Human, Financial
  • Key Activities: …by performing a number of Key Activities
    • Describes the most important things a company must do to make the business model work.
    • What KA do our VP require? Our CH, CR, RS?
    • Types of KA: Production, Problem solving, Platform/Network
  • Key Partnerships: some activities are outsourced and some resources are acquired outside the enterprise.
    • Describes the network of suppliers and partners that make the business model work
    • Types of partnerships
      • Strategic alliances between non-competitors
      • Coopetition: strategic partnerships between competitors
      • Joint ventures to develop new business
      • Buyer-supplier relationships to assure reliable supplies
    • Who are our KP? Who are our key suppliers? Which KR are we acquiring from partners? Which KA do partners perform?
    • Partnership Motivations:
      • Optimization and economy of scale
      • Reduction of risk and uncertainty
      • Acquisition of particular resources and activities
  • Cost Structure: the business model elements result form the cost structure
    • Describes all costs incurred to operate a business model
    • What are the most important costs inherent in our business model? Which KR are most expensive? Which KA are most expensive? Are you cost-drive or value-driven?
    • Types of Costs: Fixed, Variable, Economics of Scale, Economics of Scope Pasted image 20231028213911.png

Patterns

Unbundling Business Modules

  • Unbundling the corporation derives from the concept of three types of businesses: customer relationship business, product innovation businesses, and infrastructure businesses
  • Ideally, the types of businesses are unbundled into separate entities and do not co-exist in a single corporation

The Long Tail

  • Selling many niche items where a small number of bestsellers account for most revenues
  • Low inventory costs and strong platforms to make niche content readily available to interested buyers.
  • Examples are selling books and Legos

Multi-sided Platforms

  • Brings together 2+ distinct and interdependent groups of customers
  • Value is derived from one group only if the groups are present thereby facilitating interactions between different groups
  • Grows in value to the extent that more users are attracted to the platform (aka network effect)
  • Examples include Game consoles, App store, Social Media

Free as a Business Model

  • At one substantial CS is able to continuously benefit from a free of charge offer.
  • Non-paying customers are financed by another part of the business model or by another CS.
  • Freemium, Open Source, Advertising