A Unified Tool for Business Model Innovation, Strategic Planning, and Performance Management

What do Blockbuster, Borders, and the Newspaper Industry have in common? They are all victims of a revolution in business model innovation. Blockbuster was squeezed out of business by Netflix’s innovative business model. Borders fell victim to Amazon’s business model; Barnes and Noble survived by developing in 2009 a new business model based on their Nook e-reader. The traditional newspaper industry is under fire from the creative destruction of innovative business models based on social media and mobile devices such as the iPad. As Yogi Berra once said, “The future ain’t what it used to be.”

Nowadays, competition is mainly taking place between business models rather than just between products and services. Apple’s competitive advantage seem to lie in the seductive design, simplicity, and great functionality of their products. Apple’s sustainable competitive advantage, however, lies in developing highly innovative, scalable, and defensive business models. IBM describes business model innovation as the new route to competitive advantage. A few years ago, an IBM study stated, of tools available to CEOs, business model innovation provides the greatest Return On Investment. But, how does one consistently develop a highly innovative and profitable business model?

Many tools in Strategic Planning Management are associated with the development and management of business models. Popular tools in the recent past include Porter’s Value Chain and Kaplan & Norton’s Balanced Scorecard. However, these tools have limitations with regard to documenting, envisioning, and managing business models. Although Porter’s Value Chain is comprehensive – especially when combined with his ‘Five Forces’ tool – it is relatively complex to understand and difficult to apply especially for (scalable) startups. By focusing on four perspectives in business, the Balanced Scorecard is simpler to understand and use. However, the traditional focus of the Balanced Scorecard is performance management rather than the conception and description of business models.

Approaches to developing business models are getting a lot simpler. Two popular approaches are Alexander Osterwalder and Yves Pigneur’s Business Model Canvas and Mark Johnson’s Four-Box Business Model Framework. Johnson’s model is initially presented from a high level, strategic perspective. Thereafter, elements of each box are listed at an operational level. Nevertheless, one glaring omission from Johnson’s Four-Box Business Model is the item or topic of “Customers.”

Osterwalder and Pigneur’s Business Model Canvas (BMC) is the most comprehensive visualization of a business model to date. The BMC’s 9 building blocks comprehensively describe a business’s value chain as well as business model. However, the visual structure of the BMC is “fixed” and non-linear. This structure creates difficulties when one wants to use the many tools of Strategic Management in conjunction with the Business Model Canvas. For other criticisms of the BMC, see a list of criticisms by Mark von Rosing in:

http://en.wikipedia.org/wiki/Business_Model_Canvas

In order to eliminate the “pain” associated with the Business Model Canvas as well as to meet some of its unmet needs, I’ve presented the Business Model Canvas within the story (narrative) framework Business DNA Map. See below for a presentation on “A Business DNA Map of the Business Model Canvas” at:

 

 

With the platform of the Business DNA Map, the Business Model Canvas can be used as a tool for Business Model Innovation and Management as well as for Visual Strategic Planning and Performance Management. My vision is to provide a framework and eliminate enormous waste in Strategic Planning and Performance Management.

I hope that you find the presentation interesting.

Best,
Rod.

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