Are You Having a Business Model Breakdown?
Business Model Generation
Your car has been making some unusual noises so you decide to take it in for some servicing. As the mechanic is trying to figure out what the problem is, he pulls out a swiss army knife and begins to tinker with your engine.
Later that day, you’re having coffee with a friend. You’re relaying the crazy story about the swiss army mechanic when her phone rings and she pulls out a Motorola DynaTAC 8000X.
How do these stories relate to your business model? Alex Osterwalder - author of Business Model Generation - uses these examples to illustrate the point that when it comes to working on our businesses, we’re using outdated and incorrect tools.
Business Model Innovation Tools
Business models are nothing new when it comes to business planning and strategy. In their simplest form, business models provide rationale as to how an organization plans to create, deliver, and capture value.
But, the problem isn’t with business models - it’s with the tools we use to build them.
The majority of businesses - whether they're startups or members of the Fortune 500 - still spend way too much time pulling together their SWOT analysis, marketing plan, customer segmentation model, industry analysis, operational plan, and financial forecasts (oh the financials!). We then take all of these parts and package them up into a lovely business plan.
Too often, all of this happens before we’ve actually spent any time talking to potential customers or validating our assumptions. I’ve definitely been guilty of doing this in the past, but...no more!
In his book, Osterwalder has combined proven business concepts with design thinking models to create a suite of powerful and practical innovation techniques and tools.
With these new tools, techniques, and models we now have the opportunity to better understand, design, and implement innovative new business models.
I’ll take more in depth about the specific tools and processes around them in subsequent posts. For now, I’ll direct you to a great video that gives you a quick overview of the main tool: the Business Model Canvas.