The offer is only one building block to fulfill the value proposition

One of the beauties of the business model thinking is that we learn to see a business totally different if we really apply stringent thinking and dissect a business into its building blocks. And one of the most important concepts is that the value proposition is not the product. Why?All elements of a business model have to fulfill the value proposition

It’s not the product that creates value but the value proposition. The whole value architecture including the product, the revenue model and the team & values all have to deliver the value the value proposition is proposing.

Deadly business with a value proposition that customers and democracies need

A simple, a bit eccentric example illustrates this. Take manstopper ammunition that is for very good reasons banned by the Hague Convention in international warfare.

Manstopper ammunition does not sound like a lovable product and in terms of Alex canvas as a good value proposition?

Actually, manstopper ammunition is the offer and not the value proposition. A good, and even meaningful value proposition depends from your customers, the job-to-be-done and the benefit you create for your customers. Continue reading The offer is only one building block to fulfill the value proposition

Business Model Innovation and Story Telling: How to get the story right!

Framing the business model so it can be quickly but well understood by others is core. So, how do we do it? By Paul Hobcraft

You have come to end of a fairly long week. You have finally finished your Business Model Canvas. Finally you have a working hypothesis of something that is going to challenge some of the existing business models around. You should feel pleased; it took a lot of hard work to get to that point.

Laid out on one piece of paper is something that could have real business value yet although you can see where the dots connect, you begin to wonder if others will see the same compelling value, to invest in it, to back it, to simply support it and encourage you to continue.
Tell Your Story

Completing a business model and identifying its critical parts is only that first step, the hard part is getting it off the ‘drafting board’ and making it something tangible and potentially commercially viable for those around you to engage with.

What is the next step in executing this potential game changing business model

Each new business model needs a compelling story – a narrative..

We really need to learn how to craft a story, to tell the narrative around why your business model idea stands out and is worth other people’s time and consideration. This business model narrative along with your business model you are potentially better placed to test it, to talk about it, to validate it, to make it ‘sing for others’. You are out to get engagement and contributions everywhere, from everyone, as you tell the story, describe your potential new business model you gain from their reaction and improve your understanding of the real need for your idea. Continue reading Business Model Innovation and Story Telling: How to get the story right!

Knowing the Value within your Business Model is vital

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. This a guest post by Paul Hobcraft, an Agility Innovation Specialist.

Business Model Canvasfluidminds 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.

The 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.

Value Proposition on the Business Model CanvasWe 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. Continue reading Knowing the Value within your Business Model is vital

A request for help

Dear readers

You might have realized that I have written just a few post in the last months. The reason is very simple. I have teamed up with Thomas Meyer, a young,  unconventional bestseller author, Gottschalk & Ash, a design agency and Wolfsburg AG, an innovation agency to develop a toolbox for entrepreneurs.

The work with Thomas and the others is absolutely stunning but also very time consuming since we do not like to stick to the first best solution but thrive for the best.

And this means a lot of iterations and testing. E.g. we decided to write in a thought provoking, easy to read and funny style, Thomas is well known for. But of course, this irritated our sponsor at the beginning. They expected a semi-scientific work adapted to entrepreneurs. However, we thought there are enough boring books out there so we decided to be different and hopefully better.

Bringing the whole team behind the same ideas and values takes time. However, this is extremely important since otherwise we cannot shoot for the stars. Later the customers have to decide if they like what we have developed. But of course, we have tested the toolbox with a variety of entrepreneurs. We used it with social entrepreneurs at the Hub Zurich. Students at the University of St. Gallen developed stunning ideas that made already an impact in the life of other students. We tested it at the Entrepreneurship Summit in Berlin, etc. All of this takes time, but makes the tool box better. Thanks for all the feedback and ideas we got.

The bad news for most of readers is: The toolbox will be in German. The reason is very simple. Since we are German-speakers and live in German-speaking countries, we believe that we have to give something back. We believe that in Germany, Switzerland and Austria we need more, better and more creative startups. And if we can make a small contribution to this, that would be awesome. It is striking that the first ideas about the business model innovation concept emerged in Switzerland at the end of the 1990s. Alex is also Swiss by the way. It is fun to see an idea spreading worldwide from a country most people expect watches to come from but not management trends.

And since we want to foster entrepreneurship in all parts of society we decided to write in plain and simple German with little Fachvokabular (technical vocabulary). This is pretty tricky and needed a lot of creativity to explain the most essentials ideas in a very understandable language. Particularly, since a business model describes briefly all disciplins of businesses (marketing, sales, operation management, financials, HR, leadership) on a card. That is a challenge.

Your help is needed

So here come the two requests:

  • For all German speakers, if you like the idea about the toolbox, please enter your mail in our list so we can inform you about the progress.
  • The second request goes to all experts in business model innovation, strategic innovation management, customer insights via jobs-to-be done technique or entrepreneurial design. If you would like to contribute to this blog, we would love to hear from you. This blog is not my personal blog, but a blog about business model innovations. We look for cases, though provoking ideas, reflection but not for PR material. The average post has around 3.000-5.000 readers but this depends very much on the topic. Most articles are typical “long-readers” and reference articles that attract a lot of traffic via Google. A typical article is “Who says paper is dead?” with almost 9.000 visitors. And of course, the article will be published under the name of the other.

In the next months we have many challenges ahead with our toolbox. One is that we need a publisher who is willing to accept new business models in the publishing industry like publishing under Creative Commons or finding creative ways to bundle the books for teams. Will be an interesting journey.

Thanks for all your support and ideas.

Cheers Patrick

Leaving blanks blank: The art of accepting blanks on the canvas

Recently, I spent time at the most international and diverse university of Germany, the Jacobs University in Bremen with Prof. Steven Ney. I did a seminar on entrepreneurial design. The students were trained already to use the canvas and the course was great. However, their inability to leave blanks on the canvas was striking. What do I mean by this?

We do not like blanks. Long pauses in a conversation confuse and stress us. And since we do not like blanks we fill them. In a conversation, we do small talk. On the canvas, we just fill in the blanks with a kind of small talk as well.

We just don't like blanks! by xkcd (Source http://xkcd.com/608/)

Small talk on the canvas is to just fill in something which sounds good, but has no base, no facts supporting it, not even being a smart idea. If we do not know exactly who our customers are, we wirte Business-to-Business customers or advertising in the box to communicate with our customers. B2B sounds sophisticated but for an entrepreneur who wants to build something on top of her canvas, this is useless at best, dangerous at worst.

While small talk is socially accepted and even expected, filling the blanks on the canvas is dangerous since it pretends we have solved this problem and we move on to another building block to fill. That is deadly if you really want to execute your idea into reality. Continue reading Leaving blanks blank: The art of accepting blanks on the canvas

Markets vs customer driven business model design

Do you have to be market-oriented or is this again one of the buzz words that hides more than its reveals? Or should you be customer driven? Let’s take a look at the two words and concepts and see why Alex and I have chosen not the term market but customers for our canvases.

I just return from a workshop for entrepreneurs in Wolfsburg, the birthplace of Volkswagen. We used the business model canvas to focus the entrepreneurs and their coaches on the core building blocks of a business models.

Interestingly, most participants of the workshop always talked about markets, that we need to be more market oriented, that we have to conquer new markets. But is this true?

Customers pay your bill not "markets"

Markets, top-down approach

Markets are the sum of customers that spent money and therefore have shown a demand in the market. But a market is abstract and impersonal. You can not sell your product to a market. There is no Mrs Market to write a bill to and that is exactly the problem for entrepreneurs. You might be in a great, growing and profitable market but that does not mean you have one single customer who pays your bills.

Markets is a top-down approach very well suited for analyst and consultants. The market is great for analysis but not good to sell something to.

Customers, bottom-up approach

Let’s take a look at customers. As a business you need an individual client that is willing to pay for the service or product you offer. Continue reading Markets vs customer driven business model design

The Art of Painting on the Business Model Canvas

We have a great tool for visualization of a business model: the canvas. There is a hype on visual thinking and business model design. But can the tools deliver?

In the last years, I have seen many uses of the business model canvas to real cases. Some showed astonishing results, others were disappointing. Why? Any tool is only as good as the user. A fool with a tool is still a fool. But also: A genius without the right tool might be a fool. So let’s see, what makes the difference.

Visual Thinking = Thinking with Visual aid

Visual Thinking is often mistaken as nice visualization. A bad idea does not become better by visualization. Visual Thinking is great since you think in pictures. Visualization can help to make your thinking better, to see more options and see the interdependencies among all components. But you still have to think!

There was a reason why god gave us two brain hemispheres: Visual Thinking is the combination of analytical and creative thinking. So do the thinking.

Be precise in your thinking

Due to the limited space, people tend to be pretty imprecise when filling out the canvas. They fill the canvas as if it is just a form, not the master plan for a venture or for the future of your firm. That happens particularly often in large corporations where the people are so stuck in their old thinking. Continue reading The Art of Painting on the Business Model Canvas

What business are you in? Business models as social constructs

“What business are you in?” sounds like a simple question. But it’s not. How you define your business determines which direction your firm can go. Based on your answer, you define and limit your strategic options.

In a company, the business model is defined by a dominant group of people. They have a common understanding of what business they are in and how they create value. However, the business model is not an absolute reality. It’s a social construct of dominant opinion makers, e.g. your top management. This is important to understand.

By taking a different look at your business, and thereby challenging your dominant logic, you can identify more and different strategic options for your firm. But beware; by doing so, you are also challenging the top dogs in your firm.

Life is not that simple. Changing perspectives by xkcd.com

How you define your business depends on the dominant logic of your management

Considering the definition of what a business model is, it seems easy to describe the business model of a company. You can use  the business model canvas (Alex Osterwalder‘s or mine) and then you describe how value is created. Often we assume that regardless of who describes the business model, we will end up with the same description. This is a mistake.

Continue reading What business are you in? Business models as social constructs

Design thinking, Ideo and disruptive business model innovation

To be honest, I get a bit bored about the mantra that design thinking will solve the problems of large corporation. Well, when I go through the case studies at Ideo I am extremely impressed by their client list but not about the output. I have seen several design thinking sessions and I am not impressed at all with the output. The results are very often: More-of-the-Same but with fancier design.

Wer hat es erfunden? Novo Nordisk insulin pen

Where is the invention from design thinking that changed the industry? Where is the iTunes or the Kindle of Ideo? The problem with design thinking starts very early in the process with the problem definition phase. And that is where large corporations fail. They define the scope too narrow and than you get nice new things that sustain your current business but not new business models that rock your industry and yourself.

Ideo is a very good (self-) marketing & design firm but not an industry rocking firm. Large firms just love Ideo because Ideo just offers such a well designed process to solve the big problem of “being not innovative”. You hire Ideo for comforting yourself for not using your own common sense and your own customer insights. You just outsource your understanding of the customer to Ideo.

And how innovative are Ideo’s ideas?

Let’s take the example of the insulin pen Ideo describes on its homepage as a case [update 22nd Oct 2010, case is not available on IDEOs homepage any longer due to redesign of page]. Continue reading Design thinking, Ideo and disruptive business model innovation