10 tips for business model innovation - let's crowd source for more

Dear Hub members,

In the last 2 years we have been working with more than 40 international clients from start-ups, SME to corporate organizations on business modeling. Although we do see a difference in their business model needs, we do see similarities. We put all our experiences together with our team and came to the following list of 10 tips for business model innovation. 

It would be great to hear about your experiences. If you share, we will collect, discuss and update the list accordingly and give it back to you so you can use it in presentations for your client or team. 

Tip # 1 Map your current business model on a large poster with 3M post it notes.
It is important to start with your current business model first. This will create a shared language with your team members AND more than 70% find opportunities for improvement. Post it notes that stick are helpful working on the wall. Sorry, 3M works best.


Tip # 2 Don’t try this alone. Let your colleagues help you!
You’ll get much better and faster results if you map a business model with other people like your colleagues or team members. Different perspectives offer new interesting insights.


Tip # 3 Visualize your business model!
After you have put the post-it notes on the business model canvas, it is hard to explain the results to others. Visualization of your business model will support your optimization and innovation discussions. Look at our business model visualization of FIFA or Sellaband.


Tip # 4 Translate 3 trends into your business model!
We know what’s going on in our market place. But do we translate trends and developments into our business model? Can we transform it into value for our (potential) customers? Translate 3 trends into your business model!


Tip # 5 Learn from other business models!
Do not think you need to re-invent the wheel. Easyjet learned from SouthWest Airlines… If you model other business models in to the canvas, you will be amazed how much you can learn from them.


Tip # 6 Do not rely on 1 model, build prototypes.
The world is not predictable. You do not know if your business model will work. Build prototypes to shorten time to market and learn by doing building business model prototypes.


Tip # 7 Apply business model patterns
What happens if you apply business model patterns to your business model? Does the longtail affect our model? What happens if we we offer things for free?


Tip # 8 Build a (self) sustainable business model.
In this business model from a saw mill in Tanzania, the chopped wood is re-planted. By this means the business model is self sustainable. Can your model be self-sustainable?


Tip # 9 “Show me the money!”
If your business model will not make any money today, it most probably won’t do tomorrow. So, “Show me the money!”


Tip # 10 Consider Beyond Profit
Nowadays there is a new school of entrepreneurs emerging. Profit with a purpose. What is your purpose besides profit?


Ooops! Use the business model canvas ;-)

Try to explain a business model without the canvas… This one might look obvious, but it isn’t. Use the business model canvas for business model innovation.


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Hi all
I fully agree with the experience and made the same or smiliar. I recognized that it often takes more time than you plan. So give enogh time to people. Also, they need to be landed on the subject and have to have free brains (no mobiles, blackberry's ....). And, lots of team members get tired after 2 hours of intensive work. Respect that people need time to digest and to think.

Here is my order:
1) Process the cow-exercise to ease the team and to become confident with the canvas
2) Map the current business model and discuss the output
3) Make breaks inbetween the canvas exercises to let the brain relax.
4) Innovate the future models and as you describe find patterns.
5) Always link it to the economics. So, economize the models and evaluate and value latler. The mechanic matters first.
6) Evaluation takes time
7) Do not do the future modelling on one day but rather on several half days. This eases the operational pressure from the team and they can digest and think at home under the shower what could be future ideas. Many bright ideas start there when you don't expect it. Tell people to write down immediately ideas in order not to forget.
8) Always get the team to be on the same page.

I hope that helps others too.
best regards,
Luzi

www.vonsalisengineering.com
Thanks for your feedback, I will take this into our final document.
Hi Patrick,

Our learnings relate to the following topics:
-How much time does it take to stick post-its on the canvas?
To understand a business model of a company (other than our own) and see some obvious paths for extension/transformation/etc. sticking post-its to the canvas with a couple of colleagues (e.g. group of 3-4 people) takes about 1 hour. This is a good way to prepare oneself for a client meeting. Having said this, when involving a company representative, it takes 1 day to cover tip 1 and 2 from the tiplist.
-How many potential improvements/extensions/tranformations can the canvas take?
Again when drafting a business model as an outsider, the canvas does not end up as overloaded and can take different "to be" ideas. When the canvas is made with insiders, the "as is" model is comprehensive and the number of "to be" vizualizations reach the capacity limits of the poster. E.g. I recall a case where the "to be" options concerned the business models of the parent company, sister companies, daughter companies which left the options to limit ourselves to 1 company or to start drafting the business models of all companies (which was not possible in the avalilable time).
We have used colour post-its and color markers to improve visibility (i.e. 1 color for "as is" and 1 color for each "to be") but this has also limitations as some notes go for different scenarios. We have used numbers to connect "to be" scenarios where 1 pots-it can have multiple numbers (i.e. valid for different "to be" options).
-We feel that the canvas is extremely useful to draft business models as a kind of outsider. It is suited very well to draft business models of your customers (segment by segment), your key partners, etc.

Thanks for the tiplist. I see the value of it especially to go beyond tip 2 (we feel that often the excercises stop at tip 2 without e.g. having taken tip 4 into the process, etc.)

BR Marc
Thanks Marc!
I have a protyping concept that has been fantastic to me in building products and services.

The model can be referred to as a High Fidelity Prototyping.

Do verything in the business model rapidly QAD (Quick and Dirty). Make it work. then sell it to one or more customer!
Be open about the structure.

Then after three months start from SCRATCH throw everything away and rebuild it. This is the difficult part. Very often engineers or top management want to build on the existing platform - DON'T! It has been been built as a Prototype - it will never scale!

I have applied this methodology in the service and the software industry multiple times. Always with success.

Magnus Billgren
Founder Tolpagorni
www.productmanagement.se
Hi Magnus, interesting view on prototyping. You might consider working on these prototypes with a complete different team ;-)
Although participants have been, to some extent, evangelized once they're in the workshop, I've found that it really helps (particularly with medium size and large organizations) to really focus on the WIIFM (What's In It For Me) factor. Similar to the bottom of the customer empathy map (pain and gain), I've found that it really pays to do this exercise from an organizational perspective. What would happen to our organization if we don't innovate at the business model level? Even better, what kind of experience will I have at an organization that continues on its present course and how will my experience change as part of an organization that is innovating?
The idea is basically to clarify for each participant why they need to put all of their effort into these exercises resulting in a higher energy environment.
Hi Alan, putting the WIIFM in there is nice. It makes them understand in a much more concrete way. Another thing we do is having the customer walk through the business model, that gives interesting vieuwpoints on the process and the completeness of the building blocks elements. Cheers Patrick
All: I love the 10 steps. The one thing I feel was missing is to remember the customer. I know the customer comes out in the canvas, and maybe this is a caveat instead of a tip. Too often I still see people so caught up in the their own solution (product or service) and how hard they have worked to develop/deliver it that they are afraid to map the customer for real. It is tough to realize the problem you solved wasn't one that was interesting to any customer.
Thomas
I don't know what kind of customer segments you are referring to but there are 100's of segmenation possibilities. Use demographic user profiles, customers size (B2B), industry sectors/branches, customer buying behaviour types, etc. etc. Light it from different angles. I am sure you are innovative.
cheers Luzi
I was even considering more carefully the customer's problem. There's the famous old Levitt quote, "A customer doesn't want a 1/4 inch drill; what they want is a 1/4 inch hole." A customer doesn't necessarily want "office software", what they need is the ability to:
1. Capture information for ... (Is this a wiki or online docs or MS Office or OpenOffice?)
2. Create and share documents electronically between ... (Is it a traditional document like a report?)
3. Produce "page-ready" documents for ... (PDF? Print? Government constituents? Archiving?)

So what is the problem the customer has, not the solution you built.
Hi Stephen,

Agree. If we ask our clients "Do you know your customers?" they say "yes". "We know what they have been ordering in the past, that's all documented in our CRM". Well, that's not interesting. I would like to know what customers want now, that's relevant. That's when you add value and are able to understand his/her needs.

Cheers Patrick

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