What I’ve Learned from Alex Osterwalder #1

For those of you more distracted Alex Osterwalder is the creator of Business Model Canvas and evangelist of Business Model Innovation. I have just been in a 2 day Workshop & Master Class* with him and would like to share some of the leanings.

Hugo & Alex Osterwalder photo

Hugo & Alex Osterwalder

I will not go into de basics of what is the Business Model Canvas and BM Innovation – you can get most of this concept in Alex presentations here and in this video here.

1. Innovate the BM before you Innovate your product

As a Marketeer I have a bias on thinking about the consumer first. That is also why I resonate with all the Design Thinking approach when it comes to consumer emersion and understanding. But Alex explained me that sometimes starting with the consumer in mind – for example starting with the Value Proposition Canvas – you will lock your creativity and exploration space and focus only on the product-market fit. So when you go to develop your Business Model you easily go into a check-list approach – the most basic approach to Business Models. What it means is that after drafting your Value Proposition based solely on the consumer you address the Business Model Canvas as only a way to make sure you have all the blocks sorted out.

But we know that true impactful innovation today comes from Business Model Innovation – and if you do not start by considering all the parts and figure out what you can innovate as a whole you are probably missing opportunities.

Lets look at some textbook examples:

Skype – the product itself is basic – be able to make internet calls all over the world for free! – what is key is the underline BM – leverage on the available internet infrastructure without relevant costs, grow a huge user base and from that some % will use Skype to call phones (at a fee) – but lower than roaming or international operator calls. Skype is competing with the Capital Intensive Telecom industry with a capital-light model (is just software!).

Nintendo Wii – there is some genius and product innovation with the user interface and positioning the console to the non-hardcore-gamers – but what is key is that it developed a non-state-of-the-art console with cheap technology at a budget price but taking profit on each console sales. By reducing production and technology licence/R&D costs it achieved both competitive pricing and profit. So while Sony and Microsoft where loosing money on each console sale, Nintendo was profiting.

Amazon Cloud Services – it leveraged on existing internal infrastructure and technology and created an offer to developers and anyone that wanted Cloud Services.

Ryanair – is not only about low cost price/structure – is about exploring other sources of revenue like extra-services, airport subsidies and other

Audible.com – it sells audiobooks but with a subscription of one book-month – they transformed a transational into a recurring revenue.

The question is :

When we look at all the pieces that make the business model what can we change that changes the game?

It is not a linear process and definitely not a recipe, it is non-linear process of trying different setups, mixing, exploring and experimenting. Try setting up “artificial” constrains:

  • If it is free for the consumer, can we get the revenue from other source?
  • Can we transform the B2C into B2B2C and become a platform business?
  • How can we put others working for us? (content, marketing, sales, reviewing, moderation, support,…)
  • Can we transform a transactional on-off revenue into a recurring revenue?
  • Can we operate without our “main” asset? Telecom without network?

So the Marketeer learned a lesson!

I knew that Innovation was not only about the consumer – but what I was missing was that by focusing on consumer first I was making myself blind to other innovation drivers!

PS: I just started to write in english so I can share this with international friends – so, sorry for any mistake and bear with me 🙂

*Beta-i supported this trip as part of the Beta-Innovation initiative to bring innovation and entrepreneurship back to corporations – thanks!

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About Hugo

Consultant, Trainer, Facilitator and Mentor. I discover and develop market opportunities using my experience and knowledge of marketing, digital business, product development and strategy and leveraging on my leadership and team management skills. I have a broad experience in creating new products, new business ventures and knowledge of many different areas such as sales, legal, finance, IT and HR to be able to turn ideas into solid results.
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4 Responses to What I’ve Learned from Alex Osterwalder #1

  1. Well done Hugo. Great reading. Thank you for sharing.
    Strategy innovation or business model innovation have been addressed long ago by the Blue Ocean theory and is still my favourite type of innovation.
    I truly believe that this concept can help companies and businesses in achieving long lasting success.
    Best,
    Antonio

  2. ClientVox says:

    Hugo, nice one. The holystic approach is great and does bring a balanced scorecard type view to the design and not just the management of a business.
    The examples are great too, however, going back to the balanced scorecard, I think the jury is out on the long-term sustainability of the Ryanair model. Is it possible to piss-off and half cheat your customers forever and keep on getting rewarded? As soon as another airline catches up with their operational excellence and savvy route planning I bet you’ll see them crash…
    So sure we need to look at all the pieces without over-foucssing on just one but let’s never forget who generates the sales: the customer. We should empower them to let us know easily and frequently their feedback, monitor what they say and take tangible steps to change and improve. ClientVox.com does just that and it’s now relaunching as a free web based platform…
    Since you were its first mentor I thought you’d like to know and share.

    Ciao
    Daniele

    • good point, and I think this is what Hugo is saying. to keep on innovating your business model! so if Ryanair is focused on reviewing its business model of today it may come up with a new one tomorrow to keep it ahead of the pack. then again it may not!

  3. Very Nice! I also relate to that!

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