Business Model design.
“A business model describes the rationale of how an organization creates, delivers and captures value” – Alex Osterwalder
What is a business model?
The business model was 1st used as a term around the 1990’s when re-engineering and, value chains and many of Michael Porter’s theories dominated the industry. All organizations from private to government and non-profits have a business model even if not explicit. Most do not know how to express it simply, succinctly and in a visually easy way to communicate, relying on heavy business plans instead, gathering dust on shelves.
Adopting the new way of creating business models helps executives not only communicate the strategy but also create it as they explore the models, frameworks and tools we use to define their unique business model, all captured in a 1-page canvas.
According to University of California, Berkeley lecturer, serial-entrepreneur and angel investor Steve Blank “A business model describes how your company creates, delivers and captures value.
Or in English: A business model describes how your company makes money”.
This is how Alexander Osterwalder defines business models: “A business model describes the rationale of how an organization creates, delivers and captures value”. Clayton Christensen offers a similar definition of the business model.
The business model is a conceptual model that represents how a company generates value and captures that value. But, why do we need business model frameworks?
Business model frameworks make it possible to simply communicate the essence of the value creation logic of an organization and how the organization captures that value to its staff, shareholders and other stakeholders. The Business Model Canvas framework relies heavily on the utilization of visual tools and frameworks, shifting participants’ way of thinking from deductive logic to creative innovation. Visualization of business models this way has many benefits; it helps to create a shared language, dependencies are easier to understand and it facilitates seeing the whole picture and how every single building block supports the business model. Visual business model frameworks are unique in helping us organize our thinking.
However, a business model framework is not a recipe for success. The business model stills needs to be executed and managed. There are plenty of opportunities to fail even if you mapped out your business model.
Business Model Canvas by Alexander Osterwalder
Undercurrent utilizes the Business Model Canvas, probably the most popular business model framework in the world right now. Alexander Osterwalder developed the Business Model Canvas framework after publishing his Ph.D. dissertation called “The Business Model Ontology – A proposition in a design science approach” in 2004. The objective of the dissertation was to answer the question; “How can business models be described and represented in order to build the foundation for subsequent concepts and tools, possibly computer-based?”
Osterwalder has now established an international consulting firm implementing his methods across many of the world’s leading companies.
The business model framework developed by Osterwalder and Pigenur consists of 9 interconnected building blocks. Together they constitute the business model canvas.
How do we do it?
How do we do it?
Undercurrent conducts an extensive audit of the business to determine gaps and opportunities. We then run a workshop or series of workshops. Using an innovative visual and creative approach in our workshops, we apply each of the 9 blocks. Visualization of concepts tools and frameworks is an important part of the process, allowing for participants to get more involved, creative, and better approach varied learning styles.
Extensive use is made of our library of tools and frameworks which support each of the nine blocks to ensure participants are not only engaged but shift to utilizing abductive logic (creative, forward-thinking) rather than traditional deductive patterns of thinking, which often use past logic to place constraints on new ideas.