Visual thinking is indispensable to working with business models*. By visual thinking we mean using visual tools such as pictures, sketches, diagrams, post-it notes to construct and discuss meaning. Because business models are complex concepts composed of various building blocks and their interrelationships, it is difficult to truly understand a model without sketching it out.
We help you sketching out your business model in any style you would like to have. See here the example of Sellaband. Why is it so important to visualize your model? Sketching a model transforms it into a persistent object and a conceptual anchor to which discussions can always return. This is critical, because it shifts discourse from the abstract towards the concrete and greatly improves the quality of the debate. Typically, if you aim to improve an existing business model, visually depicting it will unearth logical gaps and facilitate their discussion. Similarly, if you are designing a completely new business model, drawing it will allow you to easily discuss different options by adding, removing or moving pictures around.
The benefits of visualization
Drawings can be more powerful than Post-it notes because people react more strongly to images than words. Pictures deliver messages instantly. Simple drawings can express ideas that otherwise require many words. Let’s examine four processes improved by visual thinking:
1) Understand the essence. The Business Model Canvas serves as a visual grammar. By sketching out all the elements of the Canvas you immediately give viewers the bigger picture. Understanding a business model requires not only knowing the compositional elements, but also grasping the interdependencies between elements.
Talking about business models examples I believe Nespresso is one of the most popular case studies. But why do we always use Nespresso as an example? Nespresso is sexy. Nespresso is hot. Nespresso is easy to understand. And people love to talk about it.
I often use Nespresso in our training courses and client strategy workshops. But what is so special about the Nespresso model? I think that people do not realize that it took Nespresso 30 years to get where it is now. Their patent was registered in 1976 and it was launched internationally in 1991. George Cloony – very strong connected to the brand – was hired in 2006. For me there are on a high level 2 elements of the business model that are remarkable.
1. Nespresso uses different channels to distribute to their clients. Except for the easiest channel: the supermarket. Where nowadays we see supermarkets are becoming more powerful than the production companies such as Unilever and Proctor & Gamble, Nespresso is able to pass the supermarket channel.
2. Nespresso knows everything about his clients. Amazing. They connect you through their Nespresso club and they make it work. An example I experienced myself. I got a second hand machine from one of my clients and I tried to order cups. A callcenter called me and registered all my information. “What is your machine ID?” they asked. “Mmm… that is not your machine isn’t it? It is from 72dpi! Wow! Last month I bought my own machine as the other broke down finally. Their service in the shop was excellent. I took home a huge pack of all kind of coffee flavors. Yesterday I got a phone call from Nespresso club. “How are you, do you like our product?”. Yes I said but at the moment I try to drink the less favorite blends. “No problem” she said. “Just serve it to your guests!” ”And… can I help you with ordering the new blends then?” Fantastic. This is service in optima forma. I love it. That’s why I love to use this example. A lot to learn from Nespresso.
Do you want to read more about this case study? On page 236 of Business Model Generation you can read all details and their next business model!
The visualization was made by Xplane.
Last month Alex Osterwalder gave a 7 minutes talk on Business Model Innovation @ E-day in The Netherlands. See for your self. Alex Osterwalder will give a 188 minutes workshop at Nyenrode University, Breukelen, The Netherlands on the 13th of October.
It all started for me in March 2008 when I found Alex Osterwalders‘ business model presentations on the Web. In my company ULURU we innovated for companies such as Heineken, Tom Tom, ING etc. but we we had a hard time making business plans work. Why? There was no clue about a sound business model methodology. I thought it would be nice to get Alex over for a training for our clients (and for myself).
At that time Alex focused with his Arvetica firm on the private banking industry in Switzerland. “If there is enough interest, I might consider coming over to Holland” Alex said. And yes there was… In no-time we had a workshop full of interested and experienced business modelers from all over the world: New York, Istanbul, Turkey and the Netherlands.
After the workshop in Amsterdam April 22nd me and the participants asked Alex “When will you start working on your book…?” And Alex had to admit that it was about the time. At the end of the summer Alex decided to fully focus on the book. With full mental support of Yves Pigneur. We started to look for producers, designers and financing. More and more we concluded the book needed to be very special. We also needed to find a way to work together… or not. On October 27th we had a session together in Lausanne, Switzerland. We drew our visioning stories together. What would our future be like with or without a business model (book)? After a lovely dinner at Alex family home, we continued our brainstorming and came up with an action plan.
A special business model for the book
What is a business model book without an innovative and sound business model? That sucks! So we came with a special model. No publisher, no financing but a co-created book by people who want to be part of our journey. In december 2008 we started the Business Model Hub (www.businessmodelhub.com) where people could subscribe after a payment of 24 USD. They get access to the content, can comment on design and their name is printed in the book. After a couple of months we saw the number of members rising and so the subscription did as well. The last participant paid 243 USD.
Although strategy consultant Ouke Arts had seen many businessess and business models before – he had a hard time figuring out how the model of Sellaband exactly works. How does their model differentiate from the established music industry players? Who are the clients of Sellaband? What are their activities? How do they sell their services? What are their core assets and how do they make money in the end?
Ouke could not imagine he was the only one trying to put the pieces of the puzzle together. Would it be an idea to visualize the business model? Ouke contacted Sellaband owner Johan Vosmeijer to arrange a meeting to explore their business model. I (Patrick) joined Ouke and together with Johan we put the post-it notes in the Business Model Canvas. Interesting. We understood the business model is a Multi Sided Platform. This means that Sellaband brings together two or more distinct but interdependent groups of customers. Such platforms are only of value if the other group of customers is also present (source: Business Model Generation book by Alex Osterwalder and Yves Pigneur). In this case the Believers, Artists and Music Buyers. Johan got excited about the results of the session and said: “I would love to put the visualized model in my room so I do not need to explain it all the time.”
Today in the Dutch newspaper “De Telegraaf” an article was posted about the fall of revenue of Notaries/Solicitors of 30 to 40%. ”A big war” is going on between Notary offices who lower their rates in order to keep up with the competition. Or in other words… in order to survive. “200 notaries united to fight the battle because the market enforced the prices going down!” “The New Stamp” will put an end to lower prices. Anyone who charges lower prices will be friendly asked not to do so. AMAZING. Mmm… do Notaries wear sunglasses? Are they too blind to see what their clients really want?
But where have we seen strong decrease in revenue before? CD-sales? In the music industry? Where established firms like e.g Warner was outperformed by newcomers with new business models like Sellaband? In the car industry? In the airline industry where Ryanair and Easyjet rule the market nowadays?
What should Notaries do nowadays… ? I think they should understand that they can not change the market but rather themselves should adjust to the changes. Why? Clients do not see the added value of their services as contracts are available on the Internet. Their services are not transparent. Why paying € 1.400 for setting up a company? Or € 1.200 for wedding papers? Can Notaries do something about it? YES they CAN! Take off their sunglasses and do BUSINESS MODEL INNOVATION!
Have you ever experienced the wonderful feeling of driving an electric scooter bike? Today I did. WOW! During the lunch break of our Business Modeling session with the Dutch based company QWIC run by Taco Anema and Michiel Hartman I had the opportunity. Sailing on your bike with no sound at all through the busy streets of Amsterdam-Zuid. Wonderful. I’d love to have one! See how Jan Selen (JAM) visualized my moves in this picture here…
During our session together with Twenty Twenty – Minnemijn Smit en Foris Croon – we explored different models. Strange. People are still afraid that they are not able to reload their accu. But how many fuel stations do we have near our home? Do we have the opportunity to get fuel at home? No! So? Afraid to do something environmental friendly? And what about the models? Freemium? Charge for accu’s only? A subscription or lease?
Anyway, I don’t care. My next car is a QWIC!
Great conferences, high energy, great speakers and dito audience. Do you see all the stickies on the participants? We did a physical tagging exercise. A must for every event! And… the book is ready for sale.
Last Friday 60 participants from more than 12 countries came together to talk about “Business Models” in “Hotel De Goudfazant” in Amsterdam. The 1st Business Model Knowledge Fair was organized by Business Models Inc. in order to stimulate business model thinking. Cool was that Alex Osterwalder used this occasion to soft launch his book “Business Model Generation.” A photo album is created by JAM here.
The day started with a vision on Business Models by Alex Osterwalder, where are we today and what do we need to do in the near future to make Business Models work for us! He also assessed with the audience what works and doesn’t work with the Business Model Canvas. Then an interview was held with the book team incl. Yves Pigneur, Alan Smith, Tim Clark, Alex Osterwalder and Patrick van der Pijl. A beautiful video was shot by Fish-eye click here.
In the Business Model Carousel, real life practices on business model implementation were presented amongst others DSM by Bas van Oosterhout, Seats2meet.com by Marielle Sijgers and National Archive by Harry Verwayen.
Collectors item! Finally the BOOK arrived! A courier brought the fresh prints from the print house. We printed a limited edition of 200 copies in black and white. BUT, what happened?!@# The book pages were not printed the way Alan designed it. Now the effect of strong relation between left and right hand print is gone… Lessons learned on prototyping! The book will be launched in September and can be pre-ordered with 25% discount here.
Many companies had a proper working business model with a revenue model included. Actually, more and more companies understand that there models become obsolete due to changes in their environment. Credit crisis, the changing behavior of the consumer, the role of Internet and (unlimited) access to knowledge and information has resulted in traditional models becoming meaningless and that we have to find new models.
But how do we cope with the changing environment? McKinsey found that the lifecycle of companies is becoming shorter from 90 years in 1935 to 15 years in 2005. The credit crisis will have a big impact on this. Every organization should evaluate their business model in a continuous basis.
And how do we come up with new business models? Can we find new revenue models? How do we find a model that suits our company? First, we can learn from other companies. But by means of copying a model does not mean it will work for you.
This fall we look into this subject together with C.K. Prahalad, Professor of Strategy University of Michigan, and Alex Osterwalder, PhD Business Modeling at University of Lausanne. Their books “The new age of innovation” and “Business Model Generation” (this book is to be launched in August this year) will serve as a basis for our college serie at Nyenrode University (Breukelen, The Netherlands). Look here for more details (Dutch).
The colleges combine strategic, practical, organizational change, design, Internet and theory information on Business Models. Business Models Inc., Patrick van der Pijl, and Jille Sol will run a workshop on Business Modeling on the 20th of October as part of this program. Vincent Everts, Paul Louis Iske and Dirk-Jan Abbringh are running colleges as well. We believe this is a major step in Business Model Thinking where Focus Conferences and especially Kristel Veerman has put a step forward in putting this program and people together. Hope to see you this fall.
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