Your own Business Model Canvas – so what next?
The Business Model Canvas works brilliantly
Yves Pigneur and Alexander Osterwalder’s 2010 book on Business Model Generation has given the whole (business) world a really useful business tool.
This management tool is the result of the marriage between academic research and sound common sense, a combination that has frequently proved to be a successful formula. This is no exception: the Business Model Canvas method not only has broad application but it really works.
Or rather, the method works brilliantly if it is used correctly. And that is where the problem lies in practice.
DIY BMC is very inviting
Pigneur and Osterwalder’s book is a surprisingly easy read (which is a good thing for a book). A great number of entrepreneurs have been inspired to use the tool themselves after reading “Business Model Generation”. More and more entrepreneurs and managers engaged in business modelling haven’t even read the book. There is now a plethora of websites, most of them free, where you can start designing your own canvas online after reading a few lines of explanation and a handful of tips.
And that is a shame. And probably dangerous too.
It is certainly possible to make a start on your first business model exercises by reading a few articles and watching some instructional videos. It is the perfect tool: low barriers to entry and free of charge. And that is all you need to develop simple insights connected to policy decisions with low financial impact with no further influence on the business strategy.
Support is not a luxury
However, if you want to gain a good view of your current business model or a future one so that you can actually base decisions on it that have a major financial impact or that have consequences for your business strategy, you need to be certain that the exercise has been performed correctly. And that does not just mean correctly in terms of content – and even that seems to be far from self-evident. The person who helps you must ensure that everyone taking part in the exercise is on the same conceptual page. That is why a good BMC consultant is not just creatively strong with a good eye for detail, but above all needs to be a good mediator who literally brings everyone into the exercise and keeps them there.
An even more refined skill set is needed to acquire and disseminate insights and to take decisions with a major financial and strategic impact:
a) You need to be able to work with different generations of BMC in which you can test your hypotheses with your team.
b) When it comes to conceptual insights about value propositions, segmentation and full business models, you need to have a good enough business head to lead discussions and guide them in directions that not only motivate the team but are also strategically right in terms of the business.
BMC is the trigger for a change process
Of course, creating a Business Model Canvas is not an isolated exercise. The insights it delivers must then cause something to happen. BMC is a tool for analysing organisations and their environment, for understanding them better and for taking decisions.
But in essence, a Business Model Canvas is always the trigger for a change process. Most entrepreneurs do not realize this when they make a start on their first model. If you are not ready to kick-start a change process, you might as well save yourself the effort of the thought processes involved in creating a BMC.
“But you can still create a BMC to understand your current business model better, can’t you?” Yes, absolutely. But when it comes down to it, it only makes sense to do so if you are prepared to do something with that better understanding. In other words, to change things so that they work better.
These insights delivered by a BMC give you the push for a host of steps to follow. Such a change process may be major or more limited – that depends on the outcome of the BMC exercise.
Entrepreneurs like action. Things cannot move forward fast enough. In the majority of the examples in which we have been involved in practice, the entrepreneurs experienced an irresistible drive to implement the conclusions of the BMC exercise straight away.
However, a good change process starts with testing the objectives of the change: are the objectives actually realistic and if so, what is needed to achieve them? How sure can we be that the result is actually what we expected? What is our timescale for roll-out and when can we expect results?
Radical changes turn your entire business organisation upside down
Once the objectives have been tested, next comes a sort of ‘clinical trial’ phase in which you experiment with a number of options on a small scale. After that is the implementation, probably the most difficult phase in the process, especially for what are known as ‘horizon 3’ objectives in which radical changes will be implemented. Changes with results that might take years to come to fruition. The changes are then so radical that the entire organisation, or at least a whole division of it, will be turned upside down.
The chances are high that a BMC exercise that is implemented seriously will result in a radical change process. The thought process of just a few people will have an impact on everyone in the organisation. A good BMC approach helps you build up, share, check and refine your insights before simply falling into 'doing’ mode, and only then turning them into behaviours.
Following best practice can only improve this thought process. Reading a book is not a sufficiently sound basis. And of course that goes for the change process that follows too.