Facebooks' Business Model Visualized



On January 4th 2011 Alex Osterwalder reinversed the business model of Facebook. On his blog he reconstructed together with his smart and loyal followers the model of Facebook. We thought it would be great to build on the work that has been done by visualizing this business model. We started as follows. We analyzed the Facebook business model based on the building blocks that Alex sketched out. We discussed with Alex how to visualize the model. 

The visualization challenge

The challenge in visualization is to really nail down the most important elements that determine Facebook. Why? Otherwise you'll end up in a canvas full of post-it notes and nobody would understand it anymore. For each building block our designers Erik and Joeri looked at the essential elements. They chose for one aspect per building block. 

So what is the real value of Facebook? And how can you visualize that? We thought Facebook is about the social aspect, the enormous userbase and scalability. This resulted in the following visualization of the value proposition. Our designer is working then on some iterations and tries to make a clear, fun and emotional picture. With Alex we were in doubt whether this visualization explains Facebook best. What do you think? Give us your comments... We'll get back to you. 

 

Cheers Patrick

Tags: business, facebook, model, visualization

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Replies to This Discussion

Permalink Reply by Ricardo Zapata Lopera on March 29, 2011 at 5:31pm

I think the value proposition is well visualized. When you enter Facebook, you face with a whole bunch of offers, and it only makes sense to take them because your friends are on it.

I'll add to the canvas that enterprises are not only entering Facebook to advertise, but to converse with people, to get ideas and valuable information right from their clients with no intermediaries. Also into the revenue streams a good question is how much is Facebook earning (or are they earning something at all) for the specialized information about customer segments that they can sell to Fortune 500 companies?

Permalink Reply by Patrick van der Pijl on April 3, 2011 at 6:35pm
Hi Ricardo, thanks for your input. You are right, companies also use it as a source of inspiration and direct contact. Cheers Patrick
Permalink Reply by Marc Borremans on March 30, 2011 at 10:26am

Your visualization is again a piece of art and now that the 'Wincklevi' are again after Facebook, your timing is right.

"What are the most important elements?" Thank you for bringing this up again. I experience that often companies want to develop a specific/tailored value proposition for each customer segment. In this case, one might argue that the value proposition for advertisers is different compared to the value prop. for developers and again different for the social network community. When applying NABC (Need-Approach-Benefits-Competition) or other models to clarify value propositions further, value propositions will differ, as well as the customer relationship (i.e. is the described customer relationship with a developer or a Fortune 500 the one described in the model?). This leads us to the question whether one business model canvas can support different customer segments. For sure, the value for all segments is the 600 million community and thus basis for all value props to all customer segments.

I also experienced that it seems easier for "outsiders" to draft the business model. Insiders focus more on differentiation (differentiated value) and thus the important elements are in the details. Details, which often are not visible for outsiders. E.g. in this, what are the differentiating elements compared to other social networks, e.g. Netlog, etc.?

Permalink Reply by Patrick van der Pijl on April 3, 2011 at 6:39pm
Hi Marc, the value proposition is a difficult part. Mostly in the canvas we differentiate the various propositions for different customer segments. However, this canvas is not meant to be complete nor we want to compare it with other social networks. We tried to understand the real differentiators and visualize that. Cheers Patrick
Permalink Reply by Erwin Fielt on March 30, 2011 at 4:30pm
A wonderful visualisation, and a very down-to-earth explanation of Facebook. But maybe missing some of the aspects of Facebook with respect to its (intended) role in the wider ecosystem and as personalisation platform?
Permalink Reply by Patrick van der Pijl on April 3, 2011 at 6:39pm
Hi Erwin, that is interesting. Can you explain or explore a bit more to see what you exactly mean? Cheers Patrick
Permalink Reply by Erwin Fielt on April 9, 2011 at 9:49am
I am not that familiar with Facebook when it comes to its B2B side, but I expect there is a lot more happing there.

In addition, as far as I understand it, Facebook is wanting to become the infrastructure/platform for the social web.

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