in 111 Books in 2011

#45/111: Business Model Generation

What is it about?

In the last twenty years business model innovation became an important term. Some examples are Amazon, which decided to sell a larger variety of books than usual or Google, which improved PPC advertising. Alexander Osterwalder and Yves Pigneur wrote about these and more companies in Business Model Generation and explain how to come up with a new business model.

What can I learn?


The Business Model Canvas: Here you can see the Business Model Canvas which is quite self-explanatory. You can download a larger version (with explanations) directly from their site. This is the basis for the whole book and method. You can see that the right side focuses on the customer (Customer Relationship, Channels, Revenue Stream, Customer Segment, Value Proposition) and the left side focuses on your internal work (Key Partners, Key Activities, Key Resources, Cost Structure, Value Proposition).

Let your mind wander: One great thing of the Canvas is that you can start collecting individual ideas for every panel. Try different combinations and be crazy. That is a great way to explore business models you never thought of. After your brainstorming session it’s time to reduce the model to a few realistic ones.

Use your waste: If you look on the left side, you got your internal background for offering the right side. Amazon, e.g. needs a sophisticated IT infrastructure for lots of items online. They used their waste to build Amazon Web Services which offers cloud computing and storage for everybody. What’s the waste in your industry and how can you use it?

Conclusion

Actually, I wasn’t really overwhelmed after reading this book. I thought that It’s a nice canvas but not overwhelming. Then I used the Business Model Canvas and it was pretty good. I saw people modifying it for their industry and this was impressive. In conclusion, I think it is sufficient if you download the Business Model Canvas, study on some existing Canvases of Facebook, Zynga or Kiva and then go straight creating your own.

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