Business Model Canvas

with Alexander Osterwalder

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The future includes effective and efficient biz model creation as a profession.

Alexander Osterwalder

Business Model Alchemist, Innovator, Strategyzer Creator

Lessons Learned

Everyone needs to be able to use business tools.

In the future, strategy, innovation, and entrepreneurship will become professions like accounting

Train in business modeling & prototyping like a sport.


Lesson: Business Model Canvas with Alexander Osterwalder

Step #10 Future: The future includes effective and efficient biz model creation as a profession

I think everyone should be taught how to use it. Everybody should be using it. Now, it's dangerous saying that because sometimes if you're good at conceptual tools and you know how to use them, you should be the expert using it.

You don't want to convince everybody to use them because some people are just not conceptual thinkers, yet, you do need this kind of shared language. So my tendency would be to say, everybody needs to understand how to use this and use this as a shared language.

Some people will use it much more in an analytic away to come up with new business models. Some people will just use it as a shared language where they're going to understand what they were told.

Give you very concrete examples. In the companies I work with, I work for large companies, you'll have teams coming up with business models. They use the canvas as a design tool. When they explain the story of their business model, they also use the canvas to explain it to senior leaders.

So senior leaders need to be trained in this approach as well to understand it, yet they won't design business models, but there involved in the decision-making process. Everybody needs to be able to use these tools in one way or another.

Some people will use it in a more in-depth way with other tools. Some people will use it more like a consumption tool. I think in business, everybody will be more tool driven in the future as strategy and innovation entrepreneurship will become a profession like accounting or medicine. I

It's just that we are very early in this process which is why we're not a profession, which is why we're not- there's no certification because we're not taught these tools yet, but this will change. It will become a serious profession with tools that are taught in business schools in any kind of educational institution.

What we need to teach are the tools and the processes. There will also be some people who are better at it than others. I mean take sports, not everybody can break the world record for 100 meters, but a lot of people can get a lot better at it if they train the right way because we learn how to do that.

Today when it comes to business creation, we know a lot of things that we didn't know before. We have a lot of tools that work, business model canvas, customer development, together they work really well. You throw in agile development into that, it really works.

You want to train people in using those tools. Are some people going to be better at it than others? You bet, but we can raise the level. Here's where it's very interesting.

The very beginning when I started talking about the business model canvas to senior leaders, I thought they were going to throw me out of the room because it describes business. These are very senior leaders. They've been building and running businesses for years. Well, it turns out that this tool creates a lot of value for them and they just didn't have anything to describe their businesses in this kind of holistic way on one piece of paper.

These tools allows us to do certain things that we couldn't do before. I also ask entrepreneurs, "You've built a successful business without the business model canvas, without customer develop, do you need these tools? Do you think they're interesting?" Everybody says, "If I had these tools then, I would have been the happiest person in the world," because rather than having a tool and a process, they had to do it in an ad hoc way with a lot of suffering and a lot of failure that they could have avoided.

While a lot of these things are not new, what is new is that we have the tools and processes to do this in a more efficient way. Let me give you an analogy. Take the quality movement. Somebody had to introduce this idea of managing quality. It became more systematic. Take accounting. Somebody had to invent accounting. It didn't always exist, but once we started becoming more systematic, everything became more efficient, more effective.

This is what we're doing now with business creation. We're taking things that we've been doing and we're turning them into a profession. That's the big shift that is happening. Things that we've been doing in an ad hoc way, we're turning into a systematic way. That's the move from something that was very fuzzy into a real profession with tools and processes.

We introduced this idea of levels of business model thinking because we saw a lot of companies focusing so much on products that we wanted to help them get beyond that. We call level zero, companies that just focus on value prepositions.

Great value propositions are a good start, but a lot of companies don't realize that they can do better. Companies like 3M, great product innovators. They're now starting to understand how to do business models.

We move to level one were people start using the tools like the canvas to think business model, but level one for us is the beginners who use the business model canvas to checklist. They fill out the boxes.

That's not enough. At least you have a shared language, but you can do better. That's were level two comes in. Companies that really focused on superior business smalls, better stories. Business models that out-compete others, Nespresso, Nintendo Wii, Dell at their time, right? But here is where it gets interesting.

Those business models are expired and here's the problem, those companies didn't focus on the next step. They relied so much on their great business models that they forgot to reinvent themselves.

They didn't forget, but they were so concerned with the growth that didn't go to the next step, which is level three strategies where you disrupt your own business model or invent new business models while you're successful.

This is a very hard thing to do, very few companies do that today. Amazon and Apple are two great companies who do this while their successful. They introduce new business models knowing that some of those business models will cannibalize the old ones, but they don't want to be a victim of the market. They're proactive.

How you see this progression from focusing purely on value propositions, starting to understand business models, using the canvas as a checklist towards, "Hey, we're able to design great business models here with great stories towards we're not happy with one great business model, but we know it's going to expire. We're going to proactively invent new ones." Which is a topic more for larger companies, right?

Today, companies like Nestle, the biggest food company in the world, is building portfolios of business models. They're used to managing product portfolios and brand portfolios. They're moving towards business model portfolios. Do they know how to do that very well? No, but they're going to be able to do this in 5 to 10 years. Ten years, I'd say this is the new normal. Everybody's going to be managing business model portfolios, like we manage product performance today.

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