Modeling the Future

Business Model Generation

Models are great! Admittedly, the recent obsession with finding the killer business model has not necessarily produced the results the obsessed may have hoped for. Business modelling—compared to business strategy-making or business restructuring—looks like another technique for trying to out-think competitors in pursuit of market share and market dominance. Like strategy and structure, business modelling needs to be taken for what it is: an art as much as a science; a tool for ordering our thinking and helping us explain the way things are as we try to discover and create new ways of working.

A creative landscape of models

Business Model Generation is a well-structured and attractively designed publication, reflecting the conjunction of order and creativity needed to understand the present while attempting to reshape the future. Its landscape format and extensive use of hand-drawn illustrations brings a creative feel to its message of order, reason and structure. Of course, the way many—perhaps most—highly successful business have been structured has come about through the intuitive genius or good luck of their founders. People find themselves in the right place at the right time, and the rest (as they say) is history. For us onlookers, Business Model Generation helps us understand why Apple and Google have succeeded, how LEGO has re-invigorated its plastic-bricks-based business, or what makes it possible for Red Hat to survive as an open source software provider.

How does understanding other's models help us to understand and improve our own businesses and organisations? Business Model Generation offers a generic model for mapping an organisation's resources, activities and relationships, opening up ways of understanding how things are working and how they might be improved—or even re-invented. The concrete examples from other organisations expose us to possibilities we may otherwise not consider: obscure sources of revenue, unexplored relationships with partners, new ways to deliver services to clients.

Design sits at the heart of Osterwalder's and Pigneur's book. The three core sections of the book—"Patterns", "Design" and "Strategy"—take you from an understanding of the generic business model itself, through techniques for teams to use in design workshops and, finally, ways of analysing, testing and manipulating strategies. Many of the design techniques will be familiar: ideation, visual thinking and prototyping, for example. However, it's a stimulating resource that is sure to come in handy when you're planning your next workshop.

From modelling to strategy

Modeling the Future

The "Strategy" section of Business Model Generation contains the expected references to Porter's Competitive Strategy and the ubiquitous SWOT analysis. More helpfully, it suggests a way to use the generic business model to apply Kim and Mauborgne's Blue Ocean Strategy. But this is a book of how, not why; of techniques, not theory; acting, not philosophising. And if its take on strategy implies success through planning and market differentiation, then this is balanced by the smorgasbord of design techniques that suggest successful strategy can also be emergent, as Henry Mintzberg has pointed out ("emergent success—hurrah for learning"). For example, while the authors use their generic business model to explain Cirque du Soleil as a case of blue ocean strategy, that doesn't mean Guy Laliberté designed his circus using Osterwalder's and Pigneur's business model tool. Rather, success (and failure) comes out of a mysterious mix of creative thinking, intuition, analysis, planning and execution.

So the aim of Business Model Generation is to get you doing it. The practical icing on the design cake comes in the "Process" section that gives a clear approach to leading your team through business design from go to woe. The five-step process is tabbed back into the previous sections so you can apply the book's many resources at appropriate points in your project.

From business to enterprise

In their afterword ("Outlook"), the authors suggest further applications for the generic business model. They propose the term "enterprise model" when applying the model more broadly to "beyond-profit" organisations such as charities and governments. For the board and senior management of a charity, the model can help make sense of current activities and reveal new ways of working, such as: new ways to meet the needs of clients, new modes of service delivery, more effective use of resources, creative new sources of funding, and re-defined external relationships and partnerships.

Models are great! A good business model brings new insights and suggests new ways of working. If you want to understand, change and grow your enterprise, then you and your team will certainly benefit from this attractive and stimulating book.