The book is co-authored by 470 business model practitioners from 45 countries. It features a beautiful, four-color visual design that uses powerful strategic ideas and tools to make it easier for your organization to implement them. Explains the most common patterns of business models based on the concepts of leading business thinkers and helps you re-examine them in your context. You will learn how to systematically understand, design, and implement a business model that changes games, or analyze and update old ones. Along the way, you will understand, at a much deeper level, your customers, distribution channels, partners, sources of revenue, costs, and your core value.
Building a business model includes practical innovative practices used today by leading consultants and companies around the world, including 3M, Ericsson, Capgemini, Deloitte and others. Designed for leaders, it is intended for those who are willing to abandon outdated thinking and embrace new value creation models: for leaders, consultants, entrepreneurs, and leaders of all organizations. If you are ready to change the rules, then you belong to the «generation of business models»!
This book gives you an in-depth look at the nature of business models. It describes traditional and cutting-edge models and their dynamics, innovation techniques, how to position your model in a highly competitive landscape, and how to lead the redesign of your own company's business model.
You may have noticed that this is not your typical strategy or management book. We designed it so that you can convey the essentials of knowledge quickly, easily and in visual form. The examples are presented as pictures and the content is supplemented by exercises and workshop scenarios that you can apply immediately. Instead of writing a traditional book about business model innovation, we tried to create a guide for visionaries, game changers, and challengers who want to design or reinvent business models. We have also worked hard to create a beautiful book to increase the enjoyment of your "consumption". We hope you enjoy using it as much as we enjoyed creating it. An online community complements this book (and was an integral part of its creation, as you will learn later). Since business model innovation is a rapidly evolving field, you may want to go beyond the basics of business model generation and discover new tools online. Please consider joining our global community of practitioners and researchers who co-developed this book. In the hub, you can take part in discussions about business models, learn from other people's ideas, and try out new tools from the authors. Visit the Business Model Hub at www.BusinessModelGeneration.com/hub.
Business model innovation is not new. When the founders of Diners Club introduced the credit card in 1950, they practiced innovation in the business model. The same is true of Xerox when it introduced copier leasing and the pay-per-copy system in 1959. In fact, we have been able to trace the innovation of the business model back to the 15th century when Johannes Gutenberg was looking for applications for mechanical printing. Device that he invented. But the extent and the speed with which innovative business models are changing today's industrial landscapes are unprecedented. It is high time for entrepreneurs, executives, consultants and academics to understand the implications of this extraordinary development. Now is the time to understand the challenge of business model innovation and approach it methodically.
Ultimately, business model innovation is about creating value - for companies, customers and society. This is intended to replace obsolete models. With its iPod digital media player and iTunes.com online store, Apple has created an innovative new business model that has made the company the dominant force in online music. With an innovative business model based on so-called peer-to-peer technology, Skype has given us very low global telephone charges and free Skype-to-Skype calls. Today it is the world's largest operator of international voice traffic. Zipcar frees city dwellers from car ownership by offering on-demand deals by the hour or by the day Car rental as part of a paid membership system. It is a business model response to emerging user needs and pressing environmental concerns. Grameen Bank contributes to the fight against poverty through an innovative business model that has popularized microcredit among the poor.
But how can we systematically invent, design and implement? these powerful new business models? How can you question, challenge and transform the old and the old-fashioned? How to transform visionary ideas in revolutionary business models that challenge or rejuvenate the establishment when we are the established companies ourselves? Business Model Generation aims to give you the answers.
Since practice is better than preaching, we adopted a new model for writing this book. Four hundred and seventy members of the Business Model Innovation Hub contributed cases, examples, and critical comments to the manuscript - and we took their comments seriously. Read more about our experiences in the last chapter of the Business Model Generation.
The starting point for any good business model innovation discussion, meeting, or workshop should be a common understanding of what a business model really is. We need a business model concept that everyone understands: a concept that makes it easy to describe and discuss. We have to start from the same point and talk about the same thing. The challenge is that the concept must be simple, relevant and intuitively understandable without over-simplifying the complexity of how businesses operate. In the following pages we offer you a concept with which you can describe and think about the economic model of your organization, your competitors or another company. This concept has been applied and tested around the world and is already in use in organizations such as IBM, Ericsson, Deloitte, Public Works and Government Services Canada and many more.
This concept can become a common language with which you can easily describe and manipulate business models to create new strategic alternatives. Without such a common language, it is difficult to systematically question assumptions about your own business model and to innovate successfully. We believe that a business model can best be described by nine basic elements that show the logic of how a business wants to make money. The nine blocks cover the four main areas of a business: customers, offerings, infrastructure and financial sustainability. The business model is like a template for a strategy to be implemented through organizational structures, processes and systems.
Aligning information systems and business goals is fundamental to the success of a business. CEOs ask their CIOs: do we have the right IT? How do we know? How can we best align our business with our technology systems?
Information technology research and consultancy Gartner highlights this problem in a report titled "Getting the Right IT: Using Business Models." Gartner says the Business Model Canvas is a powerful tool that helps CIOs quickly understand how a business works without getting bogged down in operational details. Gartner recommends that CIOs use the Business Model Canvas to align IT and key business processes. This helps them align business and IT decisions without digging deep into tactical issues. We think it makes sense to combine the canvas with an enterprise architecture approach. There are many different concepts in enterprise architecture that describe the business from three perspectives: the business perspective, the application perspective, and the technology perspective. We recommend that you use the canvas to guide the business perspective, and then align the business with the application and technology perspective.
From an application perspective, you describe the portfolio of applications that use aspects of your business model (e.g. referral systems, supply chain management applications, etc.) and describe all of the information requirements of the business model (eg customer profiles, warehousing, etc.). From a technology perspective, describe the technological infrastructure that underpins your business model (e.g. server farms, data storage systems, etc.).
Authors Weill and Vitale suggest another interesting way to explore computational alignment. They combine categories of IT infrastructure services with business models. Weill and Vitale suggest aligning business models with application infrastructure, communications management, data management, IT management, security, IT architecture, channel management, IT research and development , as well as computer education and training.
On the opposite page, we've summarized these elements in a chart to help you ask basic questions about business and IT alignment.
Mike, a senior business analyst at a large financial group, concludes the first of a two-day workshop he leads with a group of 24 executives. He gathers the business model prototypes and ideas that the participants have sketched out on large canvas posters and rushes into his office. There, Mike and his team integrate the ideas into a collaborative computer-assisted business model design program to further develop the prototypes.