The innovation of change

October 12th, 2010 by hoha Leave a reply »

So yesterday I was listening to the analysis of a start-up and it was recommended that they change their business model and my first thought was “to what?” My mind then flashed back to a book I’d seen called, “Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers” written by Alex Osterwalder.

He starts off by defining a business model as something that “describes the rationale of how an organization creates, delivers, and captures value.” Then Alex introduces 9 building blocks that make up most business models. They include:

  1. Customer Segments-Who will use the product or service?
  2. Value Propositions-Why would they use the product or service?
  3. Channels-How is it delivered to the customers?
  4. Customer Relationship-How will relationships be developed and contact maintained?
  5. Revenue Streams-How does the company make money?
  6. Key Resources-What unique assets are required to create and deliver the product or service?
  7. Key Activities- What actions are needed to create and deliver the product or service?
  8. Key Partnerships- Who will help you do it all? (suppliers, outsourcing, distributors, etc.)
  9. Cost Structure- What are the main sources of cost required to create and deliver it?

They’re arranged into a tool titled “The Business Model Canvas” pictured below.

The remainder of the book gives examples of common patterns, strategy, and how to use the tool.

If you’re interested in more business model innovation you can check out a blog by Patrick Stähler who references some academic work that has been done. Another resource is a blog by Anders Sundelin-check out this visual representation of the evolution of business models.

What kind of new business models can you come up with and what is missing in this discussion?

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