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.
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!