Business Model Design & Innovation
What is a Business Model?
Your business model is how you – “Create, Deliver, & Capture Value.”
In today’s world, you can’t just focus on your proudct or service – you must focus on your entire business model. No longer is the “idea” the key thing to worry about. Ideas are Free! You can only create value in your business if you can also deliver that product/service to the customer, and do it at a profit.
Your customers needs have changed – sometimes overnight (think Covid)! You need a way to better understand your customer and how you can find unmet demand, as well as create a competitive advantage. Business models provide you deeper insights to customers and how you can create, deliver, and capture value from them.
Benefits of Business Models?
Create a Shared Language
The concept of business models has become common knowledge. It is taught in most business schools, used by the biggest companies in the world, and used by the leading startup accelerators and investors. The terminology is understood by most people in business. Your employees and stakeholders will understand the meanings you are trying to convey.
Communicate Your Idea Clearly and Concisely
A 1-page business plan enables you to tell your business story in very simple terms that anyone can understand. It helps you pass the “Mom Test.” If your mom can’t understand your business idea, it’s to complicated!
It is an executive summary of your buisness idea that discusses all of the major areas in your business. From your solution and the customers you are targeting, to channels, to your internal operations, and your finances.
Simple, Visual, and Practical
1-page business models (like the Business Model Canvas) are simple for your employees and stakeholders to understand. You can pull up the Business Model Canvas and create a discussion around any of the elements that will be easy for all to understand.
You can even use pictures to enhance the mesage. It is a document everyone can pull up on their laptop, or paste on a wall, that enables diaglogue from a common starting point.
The Uber business model canvas to the right shows both pictures and words to describe how the company operates and creates value. This is a “multi-sided” business model.
Business Plans are Dead!
Business models are the new business plan. Neither your employees, banker, nor stakeholders will read your business plan. By the time you spend months creating it – it is out of date and irrelevant.
It is ok to have research documents and more in depth analysis of your plan. However, you need to create dynamic, real-time, and succinct business models that everyone can understand. The speed of learning is the real unfair advantage.
A business model is a 1-page diagram of your business idea.
What is the Business Model Canvas?
How Do We Use It?
Business model design and innovation processes starts with deconstructing your business idea onto The Business Model Canvas.
In these processes, we also incorporate other leading buisness concepts and frameworks such as Design Thinking. In the old days, it was all about the idea, and how well you could sell it to others. In the current environment, it is all about reducing risk in your business model and providing evidence that the entire model will work.
One of the first steps we take with the new idea is to view it from the 3 lenses of design thinking so that we can identify our riskiest assumptions that we need to work on. The 4th lens is a bonus that helps us understand how long the model might last. We ask ouselves the following questions:
- Desirable: Does anyone want it?
- Feasible: Can you build it?
- Viable: Can you make a profit?
- Adaptable: Can it be evolved?
The Business Model Canvas is the original 1-page view of your business model. It was designed by Alex Osterwalder and his company Strategyzer.
- The left side is the Supply Side view, or vendor side.
- The right side is the Demand Side View, or customer side.
- The Value Proposition, or your offering, is in the Center.
There are other adaptations of the Business Model Canvas that can be used asd well. The Lean Canvas is used by many startups and some large firms as well. You can read more about it in the Startup Coaching section of this site.
How Do We Innovate Our Business Model?
Examine External Forces
By examining the external forces that affect our business model, you develop a better, and shared, understanding of of completely new opportunities and avenues for the development of new and innovative business models.
We recommend a brainstorming workshop session that looks at:
- Industry Forces
- Market Forces
- Key Trends
- Macro Economic Forces
A visual map of your business model’s environment will make things more tangible, and it will allow you to uncover new associations, discover new patterns, and lead to new opportunities to pursue.
Discover Opportunities in Our Current Model
We can use the Business Model (or Lean) Canvas to innovate our business and continuously stay ahead of the competition.The most innovative companies in the world continuously examine their business models to find new opportunities. Most large firms have more than one business model. A startup, or small-mid-sized firm might only have one model.
We can examine each of the 9 boxes in our Business Model Canvas. Each of these could illuminate a new idea from your team, or from customer feedback. Some ideas can be very different from your core capabilities, and some could be internal in nature that provide efficiencies.
Business Model Workshop Program
Learn the skills, processes and tools needed for unearthing new value
The business model workshop process is your key to empowering participants, by using the tested Business Model (or Lean) Canvas to identify areas of business growth, by following an approach used by the leading organizations.
Workshops are run virtually and in person, allowing you to build a program that suits your situation.
Baseline Business Model
- Design and document how you create, deliver, and capture value now
Deep Understanding Of The Business Model Environment
- Examine the external forces that affect your buisness model so that you can minimize threats and take advantage of opportunities
Development of High Growth Models & Opportunities
- Identify new areas of opportunity within your model, and adopt an innovation process to continually create competitive advantage
- Develop new perspectives on how you look at customer problems, your solutions, and how you create and capture value with your business model. Move your thinking from ‘product/service’ focus to ‘business model’ focus.
- Si2 will coach your team through the journey, but they will learn new skills by doing. The goal is to accelerate your teams learning so they can use these tools, processes, and frameworks in the future without the need for external help.
Business Model Canvas Examples
Airbnb is an online marketplace that connects travelers in a specific area, with hosts that have an extra room or home to rent. Airbnb is as an intermediary, bringing these two customer segments together. This is called a ‘multi-sided’ business model. Airbnb must bring both sides (the ‘hosts’ and the ‘travellers’) to the platform for it to be successful.
Netflix is a pioneer of subscription-based content. Subscribers pay for a monthly plan and are given access to a vast library of media that is streamed to the user via the internet. The company originally mailed physical DVD’s of content to customers in the mail. They are considered a ‘direct’ business model since they sell directly to the customer.
Amazon is one the largest and most innovative companies in the world. They originally started as an online bookstore and then evolved their business model to become digital. They have since developed many business models under the Amazon name. They operate as a ‘marketplace’ business model, which means they bring products to their platform to sell to customers.
Included in the Innovation Process
Define Your Value Proposition
A major part of the business model design process is defining your value proposition. We’ll get to know you, your product, and your customers—and then we’ll help you come up with a value proposition that’s sure to satisfy. We offer in-person workshops, remote workshops, and consulting services within your business.
Testing Business Ideas
Your business is innovative and unique. But how do you know what customers want? How do you know which options are the right ones to pursue? Testing helps you reduce the risk of investing in business models that might not work out, while also helping you find the best route to growth.
Other Services Used With Business Model Innovation
Also known as Human Centered Design, Design Thinking has been the leading methodology driving ideas for businesses over the last 20 years.
What makes Design Thinking unique is it helps you to dream up scores of ideas about new products and services from the user’s point of view. Creating innovative new solutions rooted in people’s actual needs.
Jobs To Be Done
You need to understand your customer’s problems better than they do. To solve problems, customer’s ‘hire’ products and services to “get a job done!”
Brian is an expert and certified coach from Strategyzer in Business Model Canvas, Value Proposition Canvas, and Testing Business Ideas
(Picture on the right) Alex Osterwalder, CEO & Founder of Strategyzer, and Brian during a Strategyzer Masterclass.