Business Model Generation

By: Paul Hobcraft

In this book review Paul Hobcraft looks at Business Model Generation- a book written by Alexander Osterwalder & Yves Pigneur, along with 470 co-authors, published in two editions, one self published the other by John Wiley & sons.

This is the second book on Business Model Innovation that help us work through this really topical subject- along with “Seizing the White Space”- Business Model Innovation for Growth and Renewal -a book by Mark. W Johnson, published by Harvard Business Press.

As I had previously mentioned in my review of “Seizing the White Space” these two books are distinctly different in approach, styles, layouts, emphasis and suggestions, in the often different ways they seem to tackle Business Model Innovation, but they are complementary. This is why I am reviewing them both as they both provide real value to read and absorb in any Business Model Innovation thinking.

Business Model Generation- my review of the book

With the claim of “You’re holding a handbook for visionaries, game changers and challengers striving to defy outmoded business models, and design tomorrow’s enterprise” on the cover, it sets itself up for the imaginative, the person(s) striving to alter the status quo. Its appeal will be more to the aspiring, full of entrepreneurial spirits ready to take on the world.

Immediately you notice this is not your typical business management book. It starts fast, dives straight in and takes you through the journey of “Business Model Generation” in multiple, clever, stimulating ways. You just want to have a go.

Its premise is that countless innovation business models are emerging. Upstarts are challenging the old guards as they themselves struggle to re-invent themselves. It looks at the nature of business models offering traditional and bleeding-edge models and describing the dynamics that make up these emerging business models. It throws the challenge down “an intensely competitive landscape”.

So what is a business model?

In this book it simply explains this as creating value, for companies, customers and society. The book is all about replacing outdated models that respond to emerging user needs and pressing environmental concerns. A business model describes the rationale of how an organisation creates, delivers and captures value.

A truly descriptive, visual book that will stimulate you in the essentials of BMI

Without doubt this book is an imaginative, even unique collaborative book that weaves design throughout the book, to give you a visual feast through its canvas approach. It leads by example in wanting to replace or alter the more established business book with its style. It is a beautifully designed book to enhance the pleasure of reading as it combines all the stimuli.

It is not a typical business book, it conveys the essentials that you need to know quickly, simply and in a highly visual format.

I think this book does a great job of describing the building blocks and begin the thinking through of a business model and its essential needs. The book is packed with helpful tools, well designed and excellent explanations on how to use them and get going in designing your BMI. As s I have mentioned earlier and in my separate review of “Seizing the White Space” I see real value in combining the two books, even though at times they might seem incompatible, they are not, and so you can have the depth and breadth of thinking this through from two very different approaches.

Delving through the “Business Model Generation” book is fun and rewarding

Business models from this books perspective are described through nine basic building blocks that show the logic of how a company intends to make money. They cover four main areas of the business: customers, offer, infrastructure and financial viability. In “Seizing the White Space they had a four box framework of Customer Value Proposition, Profit Formula, Key Resources and Key Processes. Close enough to each other but the divergence begins once you get into the books….

“Business Model Generation” divides the book into five step-by-step sections: the Business Model Canvas– the tool for describing, analyzing and designing business models, Patterns based on concepts from leading thinkers, Techniques in Design to really stimulate and help you work creatively through the design thinking of BM’s, then a section on re-interpreting Strategy through the business model lens and finally, a generic Process tying it all together. It finishes with future exploration topics and a ‘peek’ into the making of this book.

The Open Community Challenge Encourage You to Join-In

The challenge the team of 470 co-authors across 45 countries took up was to deliver a concept that had to be simple, relevant and intuitively understandable but not oversimplifying the complexities of how enterprises function. They want this to be a living community and encourage anyone to join in the journey. This handbook begins your thinking and sharing these will only strengthen the movement towards designing more of tomorrow’s enterprises.

In “Seizing the White Space” there is an argument presented for a shared language and sets about this in a systematic building block way, in “Business Model Generation” they are closer to this goal of achieving a shared community. Clearly the benefits of 470 people working on the book, means they have gone through considerable pain to get to this point to show the true power of collaborative working. A story within itself and described partly within the book but on countless sites that support the ‘generation’ movement

You only need to additional explore You Tube to see the multiple, creative Business Model maps and see the way others seem to easily engage around the canvas and quickly realise you can do thisequally; although I get a little hung up on my drawings, I just wish I had the experienced illustrator to hand as it just gets more fun and rewarding.

You want to ‘scratch’ or ‘sketch’ a Business problem immediately with this book

The book is a visual feast, no question. It is set out from the very first page to capture, stimulate and prompt your brain, moving you through an exciting concept that invigorates and wants you to pick up a pen or pencil and start to formulate a business plan for something that was, perhaps lurking in the back of your mind or confronting you, today at work.

I think this ‘just wanting to get involved’ touches on a really important point: team involvement, collaboration, this shared language just creates a more ‘electric’ environment. It is the vehicle to get engagement within companies. I mentioned within my review of “Seizing the White Space” the leader  in the existing organisation decides on Business Model innovation cannot find a better ‘playbook’ than this one, despite arguments to the contrary. This book intent is to be a working, living handbook, a companion on your journey, which is what it does achieves, in my mind.

For the budding Entrepreneurs

Entrepreneurs will love this book. I can see venture capital assessment moving into using this nine block model more and more. The conflicts and clashes between expected presentation styles (spread sheets, business plans) and ones made on the Business Model Canvas will be an interesting space to watch. Sharing a language building up the Business Model is totally different than when it comes to convincing others to part with their money from those that are steeped in that, dare I say it, schooled in that more traditional approach.

The bridge to reduce the divide between different business styles is partly shown in this book, to understand new and totally innovative business models you need to compare and contrast with existing ones visually. The person or persons that master all the aspects of Business Model Innovation that can show the strategic differences will have a real edge for funding new ventures and shifting some of that entrenched thinking in larger, well established organizations.

The other exciting point to this book, it strips away the need for a higher degree in formal business education, it does not replace it, but it allows everyone to contribute and that is where leaders will see in this book, to compliment “Seizing the White Space” they can ignite passion, gain identification and care through the delivery of change from the dual use of these two books on Business Model Innovation.

A concern is do take care

My major concern in using this book “Business Model Generation” as a standalone, ignoring all others is the complexities, the dangers, the risks in challenging the incumbent’s needs ingenuity and recognition that any change has its complexities and these are perhaps understated in this book. “Seizing the White Space” lays out in greater detail the parts of the unknowns that need rigorous analysis often required when you are about to disrupt an existing model within the same four walls.

I would highly recommend this book……

The deep thinking through of Business models in “Seizing the White Space” is why I recommend that as companion book for an equal read it offers clear Blueprints. “Business Model Generation” offers the Canvas.  Together they provide a solid appreciation of what makes up a Business model innovation. Different reads, different approaches but much can be combined, understood and used by applying both books in your thinking when you are working through new Business Models. “Business Model Generation” provides the communication language to constructing Business model innovation- a terrific book that stands out in many ways, a must to read.

By Paul Hobcraft