A Business Model Canvas Set to Explode

I’d just finished a workshop on Business Model Canvas about gaining clarity in large organizations, when suddenly the flood gates seem to have opened up a day or so later, for me to see beyond and piece more of it together in my mind. After swirling around in this maelstrom of articles, tweets, new publishing, advanced announcements I had to gain some high ground to recover my breath and think a little more. Catching my breath, here is my clarity take and prediction for the BMC.

Ignoring lots of early warning signs

Maybe I should have seen this coming earlier but sometimes you hear a distant rumble but you simply shrug your shoulders and get on with your own work. This week it hit me so I spent some time piecing together different aspects around the shifts taking place on the Business model canvas that have been going on in different parts of the world for my prediction:

2012 is the BMC tipping point year

From what I can see is the Business model is about to go through a really important (further) tipping point and cross that chasm (thanks Geoffrey Moore) into mainstream adoption. Why?

The convergence of so many things seem to be coming about to make this about to explode. Let me try and piece these together. Those on the inside will knowingly just smile while those that didn’t know they were on the inside and those positioning themselves to ride on the crest of this wave will all just nod their heads and recognise their parts in this pending explosion, but it is a set of events that is bringing this all  together.

Firstly the Macro events- those outside our own control but happening now.

  1. Key Trends- the foresight part. Society, Technology, Socioeconomic are all shifting or altering shape. We use technology more, we are being challenged more in society and the rapid behavioural interactions of individuals and groups through social capital and social “markets.” The formation around the new social norms of Facebook, twitter and numerous other social media is disrupting much of the existing norms
  2. Macro-economic forces have changed dramatically. Global market conditions are very much living on the edge, capital markets are drying up by the day, money is going under the mattress more and more, banks are stopping to lend to business, Economic infrastructures are tottering on the brink, commodities and resources are dramatically dwindling or becoming more scarce that prices are rising way out of the old norm (gold for instance).
  3. Industry forces- the incumbents in many markets are being challenges. The difficulty of letting go, of being ruthless, of radically altering the existing business models is moving to slowly. New Entrants, those insurgents, are beating at the door and blazing new paths. The supplier and accepted value chains are being attacked and altered. Stakeholders are demanding more and more and the amount of substitute products and services abound.
  4. Market forces are altering. The traditional market segments are altering before our eyes, new needs and demands are expected to be satisfied at break neck speed. Market issues rise and fall catching many slow to respond in the net of destruction. Switching costs are falling, like stones around organizations necks dragging them down and dramatically altering the revenue attractiveness of many.

Now let’s go climb into the micro stuff- getting down and dirty.

The current business model everywhere is under these powerful macro attacks. Business models need to become slim lined, leaner, rapidly ready to be bundled and then quickly unbundled, to react at speed. They need to be quickly seen for what they offer so they can attract the attention of others and show you (or me) where the value is. Business models need to shout “show me the money”  and “show me the reason” in these times so we do a swift sweep of the approaches to Business models and the Business model canvas comes quickly into view to help in this.

Each business model has its time- BMC is entering its time.

So why do I think we are entering a new tipping point for the BMC? A ‘potted history’

The amount of seeding that has already taken place

If you follow Alexander Osterwalders travels you will see he has been on a crusade to spread the gospel of the Business model and why his (and Yves Pigneur’s) canvas works. It has been going through a classic adoption curve. Firstly the curious who worked on a collaborative book with him (about 470 people from 45 countries) in different shapes and contributions with an amazing end product on the revolutionary design of these labours- the Business Model Generation book, published in 2009. This was firstly self published and then picked up by Wiley (smart move that).

Alex is spreading the word according to the BM gospel, that the Business model needed a common voice, a common language. He demonstrated everywhere the ease of the BM canvas so ‘all around’ were recognizing the value of this tool in many different situations as valuable, so a BM can be understood, easily and quickly. He demonstrated this could be a major advance on what we presently use in having to explain our business models and took his message out across the world last year and seemingly continuing in 2012 but perhaps a little more focused.

Finding a common language is one of the critical tenets that Alex has been arguing with his Business Model Canvas approach- I think we are getting close on this. Here is some of the events merging to make this happen.

Then we had a set of different Epiphanies

The realization by Steve Blank (www.steveblank.com) that the Business model could be incredibly useful for his area of work on the customer and venture capital investment sides. The BMC suddenly was manifested into something of more meaning and value. He went about wanting to find a solution stack for Entrepreneurship. He combined his work on customer development and Business Model Design. He argued the canvas needed to be moved beyond a tool for brainstorming hypotheses and it needed more formal ways to test them. He then alongside Alex, saw the canvas could be a wonderful scorecard for visually tracking iteractions as they changed. Others not so deeply involved could use this as a change dashboard of seeing real learning as a Business model evolved.  Lastly, when you are pitching for funds the canvas provides a top picture that others can quickly see and appreciate the why and how- they ‘see’ the value and the $$ potential and how it constantly evolves as the entrepreneur learns from exposing the business concept.

Then enters Eric Ries and the famous “pivot” that enters our main stream thinking for business and political explaination of what we are doing and why we made a change. Eric Ries is the creator of the Lean Startup methodology and the author of the popular entrepreneurship blog Startup Lessons Learned and provided us one of the more exciting books “The lean start up”( http://theleanstartup.com/book  ) on how today’s entrepreneurs sse continuous innovation to Create Radically Successful Businesses.

As Eric explains the concept of the pivot, is the idea that successful startups change directions but stay grounded in what they’ve learned. They keep one foot in the past and place one foot in a new possible future. Over time, this pivoting may lead them far afield from their original vision, but if you look carefully, you’ll be able to detect common threads that link each iteration. By contrast, many unsuccessful startups simply jump outright from one vision to something completely different. These jumps are extremely risky, because they don’t leverage the validated learning about customers that came before.

So these events have brought together customer development, start-ups, the entrepreneurial environment and the lean/agile movement- a set of giant leaps and validations for the BMC but we needed more.

Continuing in our convergence

Then we are faced with the arrival of ‘plug-ins’ – a beginning of a set of toolboxs for working with BMC. Firstly for the iPad that combines “the speed of a napkin sketch with the smarts of a spreadsheet”. This app enables you to map, test, and iterate your business ideas — fast. As the iPad app was released and is now available on the iTunes App Store and for those with questions, challenges or comments, Alex and his team have created a forum for discussion around the iPad Business Model Toolbox to learn from and develop beyond.

As an additional add-in post post I forgot to mention that AO and his team have shifted their (software) company name to Strategyzr. The reason is that they have a vision beyond the business model: the goal is to integrate all the best (visual) tools and weave them together to an integrated toolset. Something that Steve Blank would call the solution stack. That’s their breaking vision.

The site of Alex’s is www. http://businessmodelhub.com and it is been undergoing a quiet reconstruction to structure the different aspects of the BMC concept to make it more ‘holistic’ where you can go for tools, knowledge, about the book, forthcoming events, blogs, a forum and a place for a growing community. For example back on Dec. 31, 2008 they had 148 members. By book publishing that grew to 470 members and recently they welcomed the member # 5’300 on Nov. 19, 2011! All busy contributing to the evolution of the BMC, all building knowledge and getting involved.

Michael Lachapelle, an administrator on the Business Model Hub but actually far, far more,  recently commented  that for some time now he has been experimenting with a couple of plug-ins to help clients work out the details of their value proposition in the business model. He has used the Value Mapping tool from the Board of Innovation, and the Whiteboard value map that is described in Cooper & Valskovitz’s Entrepreneur’s Guide to Customer Development. He also experimented with some of the approaches in Ash Maurya’s Running Lean; in particular, identifying three key problems and three solutions. So ‘Apps’ are rapidly becoming the new muscle for BMC.

He goes onto comment “one of the best approaches I have plugged into the customer-value proposition analysis is the ‘job-to-be-done’ approach of Clayton Christensen and Mark Johnson”.

Then we enter late 2010 and early 2011 and connect some seperate parts.

In early 2010 Mark Johnson, a cofounder of Innosight published an alternative book for solving Business models, called “Seizing the White Space”. It is a very different book to Alex’s but it comes from a very different perspective- one that is written by a strategic consultant that looks at the challenges from a larger organizations perspective to Business models.

Mark offered a most helpful four component model for every successful business model exploring a compelling customer value proposition (CVP), a winning profit formula and key resources and processes. He raised the critical area of jobs-to-be-done and why it was important to focus on unmet jobs customers want to get done. He linked existing core space in existing enterprises and offered thoughts and approaches to exploring these white spaces.

Recently I heard that Alex and Mark have been exchanging thoughts on how and where there are fits and ways to collaborate together. That piece of convergence was or is important. It brings some excellent skill sets together if it can be worked out.

Early January 2012 a new plug in prototype

In the first few days of January of this year Alex provided his next step where he has been thinking even more about “plug-ins” that complement the Business Model Canvas for a while. One concept he had been looking at more closely over the last few weeks is the invaluable “jobs-to-be-done” approach. In his work-in-progress he is wanting to turn this concept into a visual approach like the Business Model Canvas (BMC). The result is a prototype conceptual tool, the Customer Value Canvas v.0.8., that he present in this blogpost  http://bit.ly/zXiTb7

He explains that he originally set out to design an ultra applicable, simple, and visual Canvas for the (customer) jobs-to-done-concept with his  motivation to create a dedicated and complementary Canvas that helps organizations sketch out and analyze the fit between their value propositions and the customers they target in a more granular way than the Business Model Canvas mapping does.

The result is his endeavour at a prototype conceptual tool, the Customer Value Canvas v.0.8. He has been testing this out over several iterations of prototype concepts, test runs with workshop participants, try-outs students, applications with my own team, and several conversations with my #bmgen site buddies and co-author of the book Yves Pigneur.  It seems he has arrived at a result turned out to become a mash-up of several approaches from various different thinkers but trying to absorb the JOBS canvas concept, where he started.

So far so good- now to moving more into 2012 and the ongoing BMC roll out

Saul Kaplan of Business Innovation Factory fame (http://businessinnovationfactory.com ) or BIF has written his book, due out in April 2012. Saul suggests Business model innovation is the new strategic imperative for all leaders. Today, all organizations must be capable of designing, prototyping, and experimenting with new business models. His book The Business Model Innovation Factory provides leaders with the survival skills to create a pipeline of new business models in the face of disruptive markets and competition

Saul’s observation is exactly right. Business models don’t last as long as they used to. Historically CEO’s have managed a single business model over their entire careers and that is just not going to be the case in the future or even know.

Self-reinvention is the new imperative

As Saul pointed out in October 2011, in his article “Five Reasons Companies Fail at Business Model Innovation (  http://bit.ly/r1xCJX ) for the Harvard Business review blog where he suggests companies routinely fail at self-reinvention because they are so busy pedalling the bicycle of their current business models they leave no time, attention, or resources to design, prototype, and test new ones.

Saul & Alex are combining on Friday Friday, September 21, 2012 following the BIF-8 Summit, so those that participate in the BIF can get their hands ‘dirty’ with Business Model Innovation collaborators, Saul Kaplan and Alex Osterwalder, in an exclusive Workshop digging into the challenges and opportunities of business model innovation, “an emerging but still poorly understood discipline” as suggested by the promoting of this event.

Their aim here is for developing and experimenting with new business models that  transform how a company delivers value (while continuing to drive the performance of your current business model) as this is one of those real exceptionally difficult points.

The argument is to compete in a world where the “shelf life” of business models is shortening, leaders need the tools, skills, and experience to envision, test, and implement new business models. Moreover, successful organizations will establish an ongoing process to explore new models for delivering value—even those that are disruptive to current operations.

Business Model You hits the stands! Get your copy.

Changing Times, Changing Business Models- enter Business Model You. Much of today’s job market turbulence is driven by factors beyond our personal control: recession, sweeping demographic changes, intensifying global competition, environmental issues, and so forth and enters the one page model for re-inventing your career. Go to the preview here http://t.co/gZy4CiUF

Then we have the meeting in Berlin in November  2012 (dates to be fully confirmed)

This is ‘billed’ as the Business Design Summit. This is where a group of invited (?) parties come together to understand, design, rework and find better ways to implement Business models. The emphasis will be on greater use of new web applications, the growing input of design into BM’s and perhaps where the Business model generation comes together, to create the future.

So I just see much is merging, combing and making BM the talking point of 2012.

The arguments for BMC are getting compelling; there are a lot of forces at work. We are moving well beyond mobilization of the Canvas we are in the era of the buy-in. Of course we all have to get comfortable before any ‘bar’ is lifted. The reality is the goal posts have dramatically shifted on the need for new Business models than ever before. Just go back and read the macro analysis here again.

The build will occur thoughout 2012 and this meeting in Berlin will consolidate as well as push out I’m sure.

Reality will dictate we are facing multiple industry breakpoints in 2012.

There is a once-in-a-decade or our lives set of events heading our way. Can you spot the signs? There is a growing possibility that there will be falling demand for standard and existing products, they will need some radical overhauls. The pressure on declining margins and sources of sustaining profit are drying up, competition is going low cost, low price in many areas. The application of new technologies continues to disrupt existing approaches to business, we have more (over supply) of sources of supplies and new entrants are pushing new value curves supported by completely different economics. It all is getting disruptive and this will cause new behaviours that will make it even more disruptive.

There is a time, a certain time, when we all have to reach for the napkin, sketch out as new business model or dozens of them and then set about validating them. As the speed of disruption ‘kicks in’ even more the Business Model Canvas and all the growing associated tools, techniques and methods will be needed more than ever.

I’d recommend getting going on knowing this BMC framing device inside out to keep in pace and touch with considerable change in the need for new business models.

Shifting perspectives

We have seen the significant shift from internalizing to externalizing through open innovation. In seeking differentiation, businesses have had to loosen up and give up some of their ‘control’ in these face changing times. The world is heading for an even  more dynamic and complex place where you have to find a unique position in the market, and one that quickly builds on competitive advantage seen through the eyes of your customer not from within your four walls.

For me there is something intuitive about the BMC approach.  We all must simply empower everyone, to go out and seek increased value from new BM’s, often seen but not captured in its interpretation. We need to simply communicate this quickly, on one page and well that’s the real power of the Business Model Canvas, for any organization, large or small.

Business Model Canvas will become adopted as a main stream need, it will explode (or implode) in our thinking- one way or another in 2012- as we deal with so much change about to occur.

About paul4innovating

I simply enjoy researching innovation, applying this to provide novel solutions and advice, coaching and consulting to individuals, teams and organizations through my business, Agility Innovation Specialists (www.agilityinnovation.com.) As an advisory business we aim to stimulate and deliver sound innovation practice, researching topics that relate to innovation for the future, as well as align innovation specifically to organizations core capabilities. I was voted into the top three contributors for 2011 on leading Global Innovation Community www.innovationexcellence.com. Go to http://bit.ly/tWE1oX
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7 Responses to A Business Model Canvas Set to Explode

  1. Excellent overview of what has been brewing for a while! Now is the time to change the way we create, deliver and capture value!

  2. Agreed with all of the above – as Alex says, an excellent overview.

    Another key theme is that the structure of BMC provides the base for a kind of ‘plug-in’ architecture, both of conceptual tools such as Alex’s new Customer Value Canvas, and of software-based tools that implement it or build upon it. I’ve seen quite a few enterprise-architecture toolsets that implement BMC already – Sparx Enterprise Architect is one that comes to mind – and I know that there are several web-based implementations too.

    (For what it’s worth, my work on Enterprise Canvas uses a service-based model to link BMC with the detail-layer in mainstream IT-oriented enterprise-architectures and business-process models, but I won’t go into any detail on that here.)

    BMC is oriented to commercial organisations, but I’ve also seen several variants for government or for non-profits, and likewise the Business Model You version, which brings it down to the level of ‘enterprise-of-one’. So there’s a lot more possibilities there.

    What I’d like to see happening soon – and definitely sooner rather than later – is some kind of collaborative work on a shared file-format or XML-spec or the like, so that all of these different tools and perspectives can talk to each other and share information. (For example, a means to take a model from the BMTBox app and import it into an EA toolset.) Do you know if anyone’s doing this as yet? And if not, do you know anyone else who’d be interested in this?

  3. Pingback: Eight Models of Business Models, & Why They’re Important « Innovation Leadership Network

  4. Karl Burrow says:

    Paul,

    A great and excellent detailed explanation of the BMC history from beginning leading up to the future. Yes indeed the mindset for building model thinking is shifting at a rapid pace. The new tools/plugin truly compliment the canvas perfectly and show how the business models enforce a shift to understanding customer value, spur creativity, ideation, co-creation and design thinking and innovation.. I see enormous growth in the area in Japan through my ongoing seminars and workshops.

    Good work.

    Karl

  5. Absolutely. I’ve done one year of dedicated research on the topic of opportunities and barriers for enabling business model innovation. Let me know if you’d like to read some of it.

  6. Pingback: Zakaj je Kanvas poslovnih modelov tako popularen? | Oblikovanje novih poslovnih modelov

  7. Pingback: Juggling Innovation around Business Model Design | Paul4innovating's Blog

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