Knowing the Value within your Business Model is Vital

Last year I provided a guest post to Patrick Stähler’s Business Model Innovation blog and wanted to add this to my own site as I think it does place the focus on finding value within any business model design.

I think Patrick’s business model lends itself to this constant focus on value. Patrick runs fluidminds, based in Zürich, Switzerland. fluidminds helps its customers to think by challenging existing business rules, offer structured thinking and different perspectives on the strategy process and support the execution.

Patrick wrote his thesis about Business Model innovation in the digital age and from this emerged his unique ‘take ‘on working through the business model. Patrick has been dealing since 1997 with questions around how the web changes Business Models and how Business Model innovation should and could look in the digital economy.

fluidminds wants to create new businesses and to shape industries with business model innovation, with a large part of Patrick’s practice centered  on German speaking markets but he has consulted across numerous English speaking ones as well.

So in my guest post I put forward this three point view of value.

The Business Model design canvas of Patrick Stähler of fluidminds.

The Business Model design canvas of Patrick Stähler of fluidminds.

Knowing where to start in designing a business model or simply just even trying to describe it to others can be difficult. You need to explain its value. The great advantage of explaining this through a business model canvas that looks for value constantly does help.

fluidminds approach to exploring and explaining the business model does just that- it focuses on focusing the mind –  on the value within the business model.

The first value point is in the Value Proposition

Naturally we all look to the Value Proposition to explain the business model but like a car you should always look ‘under the hood’ to see the engine and what gives a car its performance. Equally you should stand back from the proposition and ‘take in’ all that makes this up. For a car it is the styling, the design, the promise and what or who is behind it. We look to buy on a given ‘promise of value’ and in having the benefits explained it allows us to believe and ‘see’ the potentials. A business model, well designed and described, does just that. It confirms the (new or existing) value that makes up the new business model.

Value Proposition on the Business Model CanvasThe value proposition shapes much; it identifies and defines where this business model is providing new offerings that advance on existing benefits to customers. The fluidminds business model canvas seeks out the customer and the customer benefit- it is looking to provide value by identifying where there is a clear fresh, new proposition.

We do have to recognize a value proposition is not just looking to resolve the known jobs-to-be-done. In many new business models can be bringing together often fragmented parts of existing offerings and combining them in new ways, or deliberately and completely disrupting existing businesses through adapting new insight, technology advancements or understanding, into new business models.

We only need to think of Apple and how it combined different technologies, revolutionary design and applied new materials into stunning, game changing products that changed our thinking of the actual jobs we thought about into totally different ones, which totally undermined existing business value or perceptions. Those become game changers.

Equally, a value proposition can emerge from those creative minds; again think Steve Jobs, where totally new business models become constructed upon a strong, clear vision or even different strands or inklings that something can be simply changed as the elements that were needed became available to make this happen. Yet they only happened from the dedicated hard work that came from purposeful design and detailed understanding of the possibilities.

No, value propositions come not just from known jobs-to-be-done but also from the unknown that can be identified through observation, research or ethnography how something is being completed. These come often from fertile, inquiring mind to see new combinations, different discoveries and then piece them together, in a business model that delivers new promise. So think beyond ‘just’ product and services, think always new business potential and then set about its design as the starting point, don’t constrain yourself initially.

Using a business model design approach that offers us a ‘fresh’ canvas structure where we can construct or even deconstruct the existing, might lead to completely revolutionary thinking when it comes to seeking out clear and exploring new value in any business propositions.

The second value point is in the Value Architecture.

For me, the architecture of the Business model is what and where something is going to deliver on the promise identified in the Value Proposition. Although much of the architecture of any business model is not seen, it is the ‘heart’ of what delivers the value. We can’t ignore or gloss over the value architecture, we must address it fully.

Fluidminds business model approach devotes much of its ‘canvas’ to this part. The initial questions of clarifying the offer, the value chain, the need for identifying core capabilities, for explaining the distribution and communication channels and who the (potential) partners are, all are initially raised specifically within the canvas to be addressed.

Value Architecture in the Business Model CanvasSo many of these begin as open ended questions, not just when you are building from scratch a new business model but when you want to ‘challenge’ an existing one. Architecture will always ‘raise its head’ to be fully addressed. It is vital.

It might not be the sexist part of a business model but it is the ‘guts’, the performance engine, which can deliver the respective parts for ‘the promise’.

Addressing what makes up this part might leave some open questions to be resolved later but I’d recommend starting on the architectural design purposefully from the moment you begin, this makes for better and valued on-going conversations. You don’t need to get bogged down in the actual nitty-gritty of the exact design but you do need to sketch out the design and that is the role of the business architect, the orchestrator of design.

This is the place you seek and clarify understanding for that value. You operate often in three thinking minds here, to be fluid, agile and adaptable. You need to layer into your thinking a strategic view, a business design one and begin to work through the implementation actions and possible implications. You design and sketch. You need to begin to think layers of abstraction, a flow cycle approach.

The thinking around each part of the Value Architecture needs to grow within your thinking – the purpose, the performance you need, the possible processes that can support this, the level of preparation this will require and the level of commitment your people need to apply to this, so as to underpin and support the emerging business model or needed to change the existing one, all arise.

This is where the real value comes into play within the Value Architecture part. The deepening of thinking to achieve a shared thinking of what is possible, what needs further work to achieve the ‘value’ being looked for out of the business model.

So value architecture is the place for identifying the ‘value creation’ points, the rules and emerging governance that needs to be put into place. It is a large part of the fluidminds canvas as it requires multiple conversations to continually build the design to deliver on the ‘promise seen’.

The third value point is in teams and values

Anything new has controversy as it is pushing the known and accepted into the unknown. It raises fears, it whispers possible failure but for those that ‘unite’ and can see new possibilities a shared business canvas becomes the bonding point, the point where ideas come together and form within the team.

The canvas becomes the focal point where the energy flows. The value of bringing into any discussions on designing or redesigning a business models early enough those different opinions, is of huge value. This brings you around the canvas to agree where you are going to spend your energy, your days in the future, your commitment, your passion.

Team and Values on the Business Model CanvasYou begin to identify the strengths and weaknesses of the group; you begin to explore each other’s known and often surprisingly unknown competencies.

You also begin to spot gaps but you are working ‘collectively’ in resolving each other’s values and understandings of what ‘makes up’ the essence and worth that you perceive the new business design can bring, that ‘collective difference’ that allows you as a team to keep constantly questioning where the value lies by combing the efforts. You together as a team design-in value.

Having ‘value’ as central to your business model design is critical.

The design of the fluidminds business model canvas purposefully ‘looks’ for the value points. It provides a structure that asks for a value proposition, seeks out the value architecture and looks to the team to define their values and what values they need to pursue.

So why should your new business model exist? Because it seeks out new value, pure and simple, irrespective if you are an entrepreneur, someone just starting out for the first time or an existing business questioning its existing business approach. A new business model in its design, in its proposition, in its approach does need to seek out the value points constantly to get the best out of any new emerging business concept.

Are you exploring value constantly within your business model approach?

5 thoughts on “Knowing the Value within your Business Model is Vital

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