Capitolism

Independent in All Things, Neutral in Nothing

Review: Business Model Generation

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Knowing the recent developments at Chiefist, a friend recommended I read Business Model Generation, a book sitting idly on my Amazon Wish List for about eight months. With his prompting, I purchased it and read it across the past week.

While reading it, I couldn’t help but think about the similarities between this book and Dan Roam’s Back of the Napkin. They have similar looks and feels, and advocate a visual – and visually compelling – path to business problem solving. Business Model Generation has a specific business problem in mind—namely, that of designing the proper approach for a company or firm.

The authors and collaborators on the book “are convinced that the tools and attitude of the design profession are prerequisites for success in business model generation” (125).

They advocate that approach because of its benefits, and ultimately, its relatively efficiencies in arriving at a business model. “The attributes of design attitude include a willingness to explore crude ideas, rapidly discard them, then take the time to examine multiple possibilities before choosing to refine a few – and accepting uncertainty until a design direction matures. These things….are requirements for generating new business models. Design attitude demands changing one’s orientation from making decisions to creating options from which to choose” (164).

A tool they call the Business Model Canvas serves as the fulcrum of this approach. It has nine building blocks: Customer Segments; Value Propositions; Channels; Customer Relationships; Revenue Streams; Key Resources; Key Activities; Key Partnerships; and Cost Structure (16-17). Through use of the Canvas, business owners (in the inclusive sense of the term) can iterate and experiment to arrive at the right business model, or at options on which they can run experiments.

In the book, the authors then demonstrate the Business Model Canvas ‘in action’ in dissecting a host of business models, and what they term ‘patterns,’ or well-defined and ‘archetypal and reusable’ models (54). They then highlight a number of exercises business owners can employ to design their own models. Those approaches include: Customer Insights; Ideation; Visual Thinking; Prototyping; and Scenarios,

This book fits is so well with Steven Gary Blank’s Four Steps to the Epiphany. Blank articulates the ‘what’ of entrepreneurship: the process, the steps. Business Model Generation describes tangible and engaging practices for doing those activities. Both books include insightful and humbling diagnostic questionnaires.

I wish I’d read both books earlier on in developing Chiefist. Curiously, when we started, we took a broad, sweeping look at potential business models, or what we then termed a “taxonomy” of models we could pursue. But we used Excel, and so naturally our process did not visually engage us – and the results likely reflected that lack of a visual, and even more iterative, process. In the end, our initial product idea began to drive the entire model. Fortunately, we have iterated that product and others across the last year, and have taken some of the design principles from the book to heart, before even learning about the book. Now that I’ve read it, we can inject much of its sound advice and practical exercises into our continued client engagement and product iteration activities.

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Written by Russell S.

February 2, 2012 at 9:37 pm

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