Presented at opening day of BoS USA Online 2020 with the help of PDQ.com as they went through the process of Designing a Breakthrough Business Model

1. Designing Breakthrough
Business Models with a Live
Case

2. Your hosts today are…
Alex OsterwalderTendayi Viki
Mathias Maisberger

3. 1. Shawn Anderson -
Co-Founder
3. Brigg Angus -
Director
2. Shane Corellian -
Co-Founder

5. 1
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6. poll
1. Constantly Reinvent itself
2. Compete on Superior
Business Models
3. Transcend
Industry Boundaries
CompanyInvincibleThe Resilient
1. Warm-Up & PDQ Business Model
2. Types of Inno & Business Model Patterns
3. Business Model Shifts
AGENDA FOR TODAY
1
Business Models

7. FROM BUSINESS MODEL CANVAS
TO PORTFOLIO MANAGEMENT
2009
Map out your
business model
strategyzer.com
Gain Creators
Pain Relievers Pains
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Products
& Services
Customer
Job(s)
The Value Proposition Canvas
Value Proposition Customer Segment
strategyzer.comThe makers of Business Model Generation and Strategyzer
Copyright Business Model Foundry AG
Design your
value proposition
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
8 9
The Iterative
Process
Business Concept Design
Design is the activity of turning vague ideas,
market insights, and evidence into con-
crete value propositions and solid business
models. Good design involves the use of
strong business model patterns to maximize
returns and compete beyond product, price,
and technology.
The risk that a business can’t get access
to key resources (technology, IP, brand, etc.),
can’t develop capabilities to perform key
activities or can’t find key partners to build
and scale the value proposition.
Testing and reducing risk
To test a big business idea you break
it down into smaller chunks of testable
hypotheses. These hypotheses cover three
types of risk. Firstly, that customers aren’t
interested in your idea (desirability).
Secondly, that you can’t build and
deliver your idea (feasibility). Thirdly,
that you can’t earn enough money
from your idea (viability).
You test your most important hypotheses
with appropriate experiments. Each experi-
ment generates evidence and insights that
allow you to learn and decide. Based on the
evidence and your insights you either adapt
your idea if you learn you were on the wrong
path or continue testing other aspects of
your idea if the evidence supports your
direction.
Desirability risk
Customers aren’t interested
The risk that the market a
business is targeting is too
small, that too few customers
want the value proposition, or
that the company can’t reach,
acquire, and retain targeted
customers.
Feasibility risk
We can’t build and deliver
The risk that a business can’t
get access to key resources
(technology, IP, brand, etc.),
can’t develop capabilities to
perform key activities or can’t
find key partners to build and
scale the value proposition.
Viability risk
We can’t earn enough money
The risk that a business can’t
generate successful revenue
streams, that customers are
unwilling to pay (enough), or
that the costs are too high to
make a sustainable profit.
Reducing
Uncertainty
and Risk
TEST
BUSINESS
DESIGN
Ideate
Business
Prototype
Assess
Learn
D
ec
id
e
Hypothesize
Experiment
Idea
Key Hypotheses
Business Model
Experiments
Value Proposition
Key Insights
hypothesize
experiment
learn
ideate
business
prototype
assess
decid
e
Test and de-risk
business ideas
x
From Business
Model Generation to
Invincible Company
Job-to-be-Done Key question Key Tool and Process Books
Innovate and Design
Invent and Improve
Map your business, idea,
or innovation
how do you create sustain-
able profits and value for your
organization?
Business Model Canvas (BMC)
or Mission Model Canvas
(MMC)
Busin
(2009
Map your product and
service
how do you create value for
your customers?
Value Proposition Canvas (VPC) Value
Maximize opportunities
and compete on business
models
How do I maximize
opportunities and improve
my business with the best
business model design?
Business Model Patterns
(invent patterns and shift
patterns)
The In
Busin
(2009
Test and De-Risk
Test and de-risk your idea
How do you reduce the risk of
pursuing a business idea that
won’t work?
Customer Development (Steve
Blank) and Agile Engineering /
Lean Startup (Eric Ries),
Test Card, Learning Card
The S
(Steve
Lean
Value
Pick the right experiments
to test your idea
What are the most appropriate
experiments to test and de-risk
your ideas?
Experiment Library Testin
Measure the reduction of
risk and uncertainty
Am I making progress from idea
to realistic business model?
Strategyzer Innovation Metrics The In
Design Innovation
Culture and
Manage Portfolio
Stay ahead of competition
and become invincible
How do you prevent
disruption and constantly
reinvent yourself?
Portfolio Map, Portfolio Actions The In
Create an (innovation)
culture
How do you design, test, and
manage an innovation culture?
Culture Map (CM), Innovation
Culture Assessment
The In
Invest in the best ideas
Which ideas and teams
should I invest in?
Strategyzer Growth Funnel
(SGF), Innovation Project
Scorecard (IPS)
The In
Align (innovation) teams
How do you pull through execu-
tion and keep teams aligned?
Team Alignment Map (TAM)
The Te
(2020
The Invincible Company is the fourth in the series
of Strategyzer books. It complements the previous
books and addresses a number of jobs-to-be-done
for innovation teams, entrepreneurs, and senior
leaders who manage entire organizations.
The new content is based on what we’ve learned
from working with leading organizations around
the world and from studying the world’s few
Invincible Companies.
strategyzer.com/books
strategyzer.com/invincible
Written by
Alex Osterwalder
Yves Pigneur
Fred Etiemble
Alan Smith
Designed by
Chris White
Trish Papadakos
You’re holding a guide to the world’s best business models.
Use it to inspire your own portfolio of new ideas and reinventions.
Design a culture of innovation and transformation to become…
This book integrates with
Business Model Generation,
Value Proposition D
The
nv nc b e
Company
Manage your portfo o &
create an nnovat on cu ture
Resou ce
Ac v y
Pa ne You Va ue
P opos on
You
Cus ome
Cos
Channe
Re a onsh p
Revenue
ADAPTABILITY
FEASIBILITY
Can we bu d t ?
VIABILITY
Can we generate va ue ?
DESIRABILITY
Do the customers want t ?
Exercice — TED
1984

8. - Bruno Giussani, Global curator & director of TED
“When people sit in a room to listen to a
speaker, they are offering her something
extremely precious […]: a few minutes of
their time and of their attention. Her task
is to use that time as well as possible
2003
Map out TED Conferences’s
Business Model
KEY PARTNERS KEY ACTIVITIES CUSTOMER RELATIONSHIP CUSTOMER SEGMENTSVALUE PROPOSITION
KEY RESOURCES CHANNELS
COST STRUCTURE REVENUE STREAMS
TED
conferences
Conferences
KEY PARTNERS KEY ACTIVITIES CUSTOMER RELATIONSHIP CUSTOMER SEGMENTSVALUE PROPOSITION
KEY RESOURCES CHANNELS
COST STRUCTURE REVENUE STREAMS
Staging
conferences
Personal
Invitations
TED
Speakers
Staff &
Curators
Conference
fees
Privilegeda
b
c
d
e
f
2
1
3
6
4
5
write down the full sequence of 6 letters matching the numbers
TED
conferences
Invite-only
influencers
Conferences
abcdef

9. KEY PARTNERS KEY ACTIVITIES CUSTOMER RELATIONSHIP CUSTOMER SEGMENTSVALUE PROPOSITION
KEY RESOURCES CHANNELS
COST STRUCTURE REVENUE STREAMS
3
6
4
1
5
2
a
b
c
d
e
f
2
1
3
6
4
5
Solution: dfaceb
Staging
conferences
Personal
Invitations
TED
Speakers
Staff &
Curators
Conference
fees
Privileged
TED
conferences
Invite-only
influencers
Conference
logistics
Visibility Sponsors
Sponsoring
Conferences
2
Types of Innovation &
Business Model Patterns

10. High uncertainty Low uncertainty
THE EXPLORE/EXPLOIT CONTINUUM
3 types of innovation
+transformative sustaining +efficiency
improve processes &
existing business model,
refine value propositions
replace and extend value
propositions, new channels,
new geographies
new business models, value
propositions, and entirely
new growth engines
THE EXPLORE/EXPLOIT CONTINUUM
+transformative sustaining +efficiency poll

11. business people don’t just need
to understand designers better;
they need to become designers
“
”– Roger Martin, Rotman School @ Toronto
‣A repeatable configuration of different
business model building blocks to strengthen
an organization’s overall business model
Business Model Pattern
with 27 flavors that new ventures and
established companies can apply to build
better, more competitive business models.
We describe each pattern so that you can
make use of it as a reference library.
Case Illustration
Each case serves to highlight a pattern
in action. We don’t outline the company’s
entire business model—just show how
it applied a particular pattern to build
a more competitive business model.
In reality, an entire business model might
combine several patterns.
more different flavors.
These are variations of a
particular pattern to help
you understand different
ways to apply the pattern
in question.
tration
– Greenfield
– Business Model
Pattern
– Case
Illustration
– Pattern
Building Blocks
– Optional Pattern
Building Blocks
– Original Business
Model Blocks
– Other Business
Model Blocks
Pattern
New Business Model
Business Models Canvas
INVENT
Invent Patterns
Backstage
Disruption
• Resource Castles
• Activity Differentiators
• Scalers
Profit Formula
Disruption
• Revenue Differentiators
• Cost Differentiators
• Margin Masters
Frontstage
Disruption
• Market Explorers
• Channel Kings
• Gravity Creators
226
Shift Pattern Library
INVENT
Invent Patterns
Library

12. FRONTSTAGE DISRUPTION
?What did all these three companies
add to their business model that
keeps them ahead of competition?
They added “switching costs”
that make it difficult for
customers to leave or switch
to competitors.
Gravity Creators Gravity
Creators
Lock in
Customers
Key Partners Key activities Value Proposition Customer SegmentCustomer
Relationship
Key Resources Channels
Cost Structure Revenue Streams

13. iPod
with
this amazing device you
can put thousand songs in
your pocket
...
and you’re locking
us in because it has just
become more difficult to
switch devices
1 2
3
4
56
iPod:
1’000 songs in
your pocket
Mass market
iPod
hardware
& software
Switching
cost
Recurring
transactional
sales
Retail
Gravity Creator
Key Partners Key activities Value Proposition Customer SegmentCustomer
Relationship
Key Resources Channels
Cost Structure Revenue Streams
iTunes
BACKSTAGE DISRUPTION

14. Question for You
What do these three business models
have in common ?
They created a competitive
advantage with key resources
that are difficult or impossible
for competitors to copy
Resource Castles
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
ource
tles
d
ats
competitive
age with key
es that are
or impossible
by competitors.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
User Base Castles — Create a business
model with network effects in which a large
number of users equals the relative value
for other users. Acquire a large user base
to establish a competitive advantage that
makes it hard for anybody else to catch up.
TRIGGER QUESTION
How could we establish
a competitive advantage
rooted in a large user
base and network effects
in our value proposition?
Platform Castles — Create a business
model with network effects in which a
number of users represents value to on
more other distinct set of users, and vi
versa. That makes it hard for anybody
with less users to compete or to catch
VP THAT
GETS BETTER
WITH MORE
USERS
USER
ACQUISITION
USER
BASE
USER
ACQUISITION
COST
USER
DIFFERENTIATED
VALUE
PROPOSITION
BASED ON IP
R&D
CUSTOMER
SEGMENT
BRAND
VALU
PROPOS
MARKETING
& BRANDING
VP THA
RELIES
“THE OT
SIDE OF
PLATFO
VP THA
RELIES
“THE OT
SIDE OF
PLATFO
USER
ACQUISITION
PLATFORM
OPERATIONS
USER
BASE
A
GENERAL USER
ACQUISITION COST
USER
BASE
B
PLATFORM
Key Partners Key activities Value Proposition Customer SegmentCustomer
Relationship
Key Resources Channels
Cost Structure Revenue Streams
Resource
Castles
164
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
User B
model
numbe
for oth
to esta
makes
Build
Moats
Illustration — Dyson

15. - James Dyson,
inventor & founder of Dyson
“The key to success is
failure… Success is made
of 99 percent failure.
164
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
for competitors to copy.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
Our key resources are
significantly inferior to
those of our competitors.
Our key resources can’t easily be copied or
emulated for the next couple of years and
they give us a significant competitive advan-
tage (e.g., intellectual property, brand, etc.).
Assessment Question
Do we own key resources that are difficult or impossible to copy and which
give us a significant competitive advantage?
+3+2+10−1−2−3
38
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
to copy by competitors.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
Our key resources are
significantly inferior to
those of our competitors.
Our key resources can’t easily be copied or
emulated for the next couple of years and
they give us a significant competitive advan-
tage (e.g. intellectual property, brand, etc.).
Assesment Question
Do we own key resources that are difficult or impossible to copy and which
give us a significant competitive advantage?
+3+2+20-1-2-3
164
RESOURCE
COST
D
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
for competitors to copy.
TRIGGER QUESTION
How could we make difficult-to-copy
Our key resources are
significantly inferior to
those of our competitors.
Assessment Question
Do we own key resources that are diff
give us a significant competitive adva
−1−2−3
PREMIUM
CONSUMER
APPLIANCES
High-end
mass market
Research &
development
R&D
Costs
100 million machines as of 2017
Premium
Price
Intellectual
proprietary
& patents
$700 Vs $40
Resource
Castles
IP Castle
Build
Moats
Key Partners Key activities Value Proposition Customer SegmentCustomer
Relationship
Key Resources Channels
Cost Structure Revenue Streams
170
INVENTPATTERNS
170 171
BACKSTAGEDISRUPTION
245
years
Wedgwood’s Jasper vases
have stayed in continuous
production since 1774.⁴⁰
In the 1980s, James Dyson developed revo-
lutionary, bagless, cyclonic vacuum technol-
ogy. He attempted to license it to vacuum
manufacturers, but the companies rejected
his ideas. The technology was indeed better
but this product would remove the recurring
revenues from bag and filter sales.
Dyson didn’t give up and manufac-
tured his own vacuum in 1993, fighting off
several patent infringement lawsuits along
the way. Subsequently, Dyson’s business
portfolio grew by continuing to manufac-
ture superior products from patented IP.
The company expanded into hand dryers,
fans, air purifiers, hair dryers, robot vacu-
ums, and even electric cars. Each product
is the result of a leap in technology (with
patented IP).
Dyson
Starting with a vacuum in 1993,
Dyson tackles a wide range of prod-
uct engineering challenges with an
ingenious approach. It invests heavily
in R&D to launch innovative, best-
in-class products that it sells at a
premium and protects with patents.
1 Invest Heavily in R&D
Dyson’s ambition is
to produce the best in
class or nothing in each
product range it enters.
The company reinvests
approximately 20% of its
earnings into research and
development.
4 Sell at a Premium
Dyson sells its home appliances at a premium
price point. With a $700 price tag for its upright
vacuum, Dyson is the most expensive vacuum
on the market, with the cheapest alternative
selling for $40.
2 Patent Aggressively
Dyson protects its product
innovations with many pat-
ents. For the development
of the Supersonic Hair Dryer,
Dyson spent $71 million and
filed 100 patent applications.
The company reportedly
spends over $6.5 million per
year on patent litigation.³⁷
3 Differentiate with the Best
Products and Services
Dyson uses its IP to create
the best product within
each category it competes.
Its vacuums, for instance,
include technologies that
have never been incorpo-
rated into its competitors’
products.
Research &
development
Intellectual
property
& patents
Premium
consumer
appliances
High-end
mass
market
Premium
price
Research &
development
cost
Engineers
Brand
Design &
manufacturing
2
3
4
1
Brand
Dyson developed a strong brand by transform-
ing the sleepy home appliance market into one
filled with cutting edge technology and sleek
industrial design. Dyson has often been dubbed
the “Apple of home appliances,” as the company
strives for perfection before releasing a product.
Her
Majesty's
Potter
Queensware
fine ceramic
pottery
Marketing
and branding
costs
Innovative
marketing of
Queensware
Royal
pottery
Queen of
England
royal
patrons
Aspirational
households
High-end
retail sales
IP Castle
1993 2019
Wedgwood used his royal recognition
to target aspirational consumers who
wanted to drink tea like the upper class,
but could not necessarily afford expen-
sive porcelain. He created a brand in an
area where there was none previously.
Wedgwood also convinced consumers to
buy pottery for display rather than use and
used the strength of his brand to protect
his business from competition for decades.
Wedgwood
In 1765, Josiah Wedgwood wins a royal pottery competition
and is declared Her Majesty’s Potter. He uses that
recognition to build a strong and defensible brand, markets
his pieces as Queensware, and generates a fortune of
$3.4 billion in today’s market value.
Brand Castle
1765 2019
6x
more
investment
in R&D than
competitors,
on average.³⁸
100
million
machines
were manufactured
by Dyson as of 2017,
produced at a rate of
80 thousand per day.³⁹
Dyson's R&D
Investment
Average Competitor
Investment
HISTORICAL CASE
TRIGGER QUESTION
How could we make difficult-to-
copy resources a key pillar of our
business model?
Resource
Castles
164
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
User B
model
numbe
for oth
to esta
makes
Build
Moats
38 39
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
to copy by competitors.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
Our key resources are
significantly inferior to
those of our competitors.
Our key resources can’t easily be copied or
emulated for the next couple of years and
they give us a significant competitive advan-
tage (e.g. intellectual property, brand, etc.).
User Base Castles — Create a business
model with network effects in which a large
number of users equals the relative value
for other users. Acquire a large user base
to establish a competitive advantage that
makes it hard for anybody else to catch up.
TRIGGER QUESTION
How could we establish
a competitive advantage
rooted in a large user
base and network effects
in our value proposition?
Platform Castles — Create a business
model with network effects in which a large
number of users represents value to one or
more other distinct set of users, and vice
versa. That makes it hard for anybody else
with less users to compete or to catch up.
TRIGGER QUESTION
How could we create
a multi-sided platform
that depends on the
existence of two or more
large user bases?
IP Castles — Use protected intellectual
property (IP) to outcompete others. Offer
distinct value propositions that are hard or
impossible to copy if you don’t own the IP.
TRIGGER QUESTION
How could we use pro-
tected intellectual property
as a competitive advan-
tage (in arenas where it
hasn’t mattered before)?
Brand Castle — Use a strong brand to
outcompete others. Focus on value proposi-
tions in which a strong brand is an essential
component.
TRIGGER QUESTION
How could we make
brand a relevant com-
petitive advantage (in
an area where it hasn’t
been so far)?
VP THAT
GETS BETTER
WITH MORE
USERS
USER
ACQUISITION
USER
BASE
USER
ACQUISITION
COST
USER
DIFFERENTIATED
VALUE
PROPOSITION
BASED ON IP
PROTECTED
INTELLECTUAL
PROPERTY
R&D COST
R&D
CUSTOMER
SEGMENT
PREMIUM
PRICE
BRANDED
VALUE
PROPOSITION
MARKETING
& BRANDING
LOVEMARK
BRAND
PREMIUM
PRICE
LOVEMARK
BRAND
MARKETING
& BRAND
COST
CUSTOMER
SEGMENT
VP THAT
RELIES ON
“THE OTHER
SIDE OF THE
PLATFORM”
VP THAT
RELIES ON
“THE OTHER
SIDE OF THE
PLATFORM”
USER
ACQUISITION
PLATFORM
OPERATIONS
USER
BASE
A
GENERAL USER
ACQUISITION COST
USER A
USER B
USER
BASE
B
PLATFORM
Assesment Question
Do we own key resources that are difficult or impossible to copy and which
give us a significant competitive advantage?
+3+2+20-1-2-3
Resource
Castles
164
RESOURCE
COST
D
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
Build
Moats
164 16
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
for competitors to copy.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
Our key resources are
significantly inferior to
those of our competitors.
Our key resources can’t easily be copied or
emulated for the next couple of years and
they give us a significant competitive advan-
tage (e.g., intellectual property, brand, etc.).
User Base Castles – Create a business
model with network effects in which a large
number of users equals the relative value
for other users. Acquire a large user base
to establish a competitive advantage that
makes it hard for anybody else to catch up.
TRIGGER QUESTION
How could we establish
a competitive advantage
rooted in a large user
base and network effects
in our value proposition?
Platform Castles – Create a business
model with network effects in which a large
number of users represents value to one or
more other distinct sets of users, and vice
versa. That makes it hard for anybody else
with fewer users to compete or to catch up.
TRIGGER QUESTION
How could we create
a multisided platform
that depends on the
existence of two or more
large user bases?
IP Castles – Use protected intellectual
property (IP) to outcompete others. Offer
distinct value propositions that are hard or
impossible to copy if you don’t own the IP.
TRIGGER QUESTION
How could we use pro-
tected intellectual property
as a competitive advan-
tage (in arenas where it
hasn’t mattered before)?
Brand Castle – Use a strong brand to
outcompete others. Focus on value proposi-
tions in which a strong brand is an essential
component.
TRIGGER QUESTION
How could we make
brand a relevant com-
petitive advantage (in
an area where it hasn’t
been so far)?
VP THAT
GETS BETTER
WITH MORE
USERS
USER
ACQUISITION
USER
BASE
USER
ACQUISITION
COST
USER
DIFFERENTIATED
VALUE
PROPOSITION
BASED ON IP
PROTECTED
INTELLECTUAL
PROPERTY
R&D COST
R&D
CUSTOMER
SEGMENT
PREMIUM
PRICE
BRANDED
VALUE
PROPOSITION
MARKETING
& BRANDING
LOVEMARK
BRAND
PREMIUM
PRICE
LOVEMARK
BRAND
MARKETING &
BRAND COST
CUSTOMER
SEGMENT
VP THAT
RELIES ON
“THE OTHER
SIDE OF THE
PLATFORM”
VP THAT
RELIES ON
“THE OTHER
SIDE OF THE
PLATFORM”
USER
ACQUISITION
PLATFORM
OPERATIONS
GENERAL USER
ACQUISITION COST
USER A
USER B
USER BASE B
USER BASE A
PLATFORM
Assessment Question
Do we own key resources that are difficult or impossible to copy and which
give us a significant competitive advantage?
+3+2+10−1−2−3
164 165
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
for competitors to copy.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
Our key resources are
significantly inferior to
those of our competitors.
Our key resources can’t easily be copied or
emulated for the next couple of years and
they give us a significant competitive advan-
tage (e.g., intellectual property, brand, etc.).
User Base Castles – Create a business
model with network effects in which a large
number of users equals the relative value
for other users. Acquire a large user base
to establish a competitive advantage that
makes it hard for anybody else to catch up.
TRIGGER QUESTION
How could we establish
a competitive advantage
rooted in a large user
base and network effects
in our value proposition?
Platform Castles – Create a business
model with network effects in which a large
number of users represents value to one or
more other distinct sets of users, and vice
versa. That makes it hard for anybody else
with fewer users to compete or to catch up.
TRIGGER QUESTION
How could we create
a multisided platform
that depends on the
existence of two or more
large user bases?
IP Castles – Use protected intellectual
property (IP) to outcompete others. Offer
distinct value propositions that are hard or
impossible to copy if you don’t own the IP.
TRIGGER QUESTION
How could we use pro-
tected intellectual property
as a competitive advan-
tage (in arenas where it
hasn’t mattered before)?
Brand Castle – Use a strong brand to
outcompete others. Focus on value proposi-
tions in which a strong brand is an essential
component.
TRIGGER QUESTION
How could we make
brand a relevant com-
petitive advantage (in
an area where it hasn’t
been so far)?
VP THAT
GETS BETTER
WITH MORE
USERS
USER
ACQUISITION
USER
BASE
USER
ACQUISITION
COST
USER
DIFFERENTIATED
VALUE
PROPOSITION
BASED ON IP
PROTECTED
INTELLECTUAL
PROPERTY
R&D COST
R&D
CUSTOMER
SEGMENT
PREMIUM
PRICE
BRANDED
VALUE
PROPOSITION
MARKETING
& BRANDING
LOVEMARK
BRAND
PREMIUM
PRICE
LOVEMARK
BRAND
MARKETING &
BRAND COST
CUSTOMER
SEGMENT
VP THAT
RELIES ON
“THE OTHER
SIDE OF THE
PLATFORM”
VP THAT
RELIES ON
“THE OTHER
SIDE OF THE
PLATFORM”
USER
ACQUISITION
PLATFORM
OPERATIONS
GENERAL USER
ACQUISITION COST
USER A
USER B
USER BASE B
USER BASE A
PLATFORM
Assessment Question
Do we own key resources that are difficult or impossible to copy and which
give us a significant competitive advantage?
+3+2+10−1−2−3
164 165
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
for competitors to copy.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
Our key resources are
significantly inferior to
those of our competitors.
Our key resources can’t easily be copied or
emulated for the next couple of years and
they give us a significant competitive advan-
tage (e.g., intellectual property, brand, etc.).
User Base Castles – Create a business
model with network effects in which a large
number of users equals the relative value
for other users. Acquire a large user base
to establish a competitive advantage that
makes it hard for anybody else to catch up.
TRIGGER QUESTION
How could we establish
a competitive advantage
rooted in a large user
base and network effects
in our value proposition?
Platform Castles – Create a business
model with network effects in which a large
number of users represents value to one or
more other distinct sets of users, and vice
versa. That makes it hard for anybody else
with fewer users to compete or to catch up.
TRIGGER QUESTION
How could we create
a multisided platform
that depends on the
existence of two or more
large user bases?
IP Castles – Use protected intellectual
property (IP) to outcompete others. Offer
distinct value propositions that are hard or
impossible to copy if you don’t own the IP.
TRIGGER QUESTION
How could we use pro-
tected intellectual property
as a competitive advan-
tage (in arenas where it
hasn’t mattered before)?
Brand Castle – Use a strong brand to
outcompete others. Focus on value proposi-
tions in which a strong brand is an essential
component.
TRIGGER QUESTION
How could we make
brand a relevant com-
petitive advantage (in
an area where it hasn’t
been so far)?
VP THAT
GETS BETTER
WITH MORE
USERS
USER
ACQUISITION
USER
BASE
USER
ACQUISITION
COST
USER
DIFFERENTIATED
VALUE
PROPOSITION
BASED ON IP
PROTECTED
INTELLECTUAL
PROPERTY
R&D COST
R&D
CUSTOMER
SEGMENT
PREMIUM
PRICE
BRANDED
VALUE
PROPOSITION
MARKETING
& BRANDING
LOVEMARK
BRAND
PREMIUM
PRICE
LOVEMARK
BRAND
MARKETING &
BRAND COST
CUSTOMER
SEGMENT
VP THAT
RELIES ON
“THE OTHER
SIDE OF THE
PLATFORM”
VP THAT
RELIES ON
“THE OTHER
SIDE OF THE
PLATFORM”
USER
ACQUISITION
PLATFORM
OPERATIONS
GENERAL USER
ACQUISITION COST
USER A
USER B
USER BASE B
USER BASE A
PLATFORM
Assessment Question
Do we own key resources that are difficult or impossible to copy and which
give us a significant competitive advantage?
+3+2+10−1−2−3
164 165
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
for competitors to copy.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
Our key resources are
significantly inferior to
those of our competitors.
Our key resources can’t easily be copied or
emulated for the next couple of years and
they give us a significant competitive advan-
tage (e.g., intellectual property, brand, etc.).
User Base Castles – Create a business
model with network effects in which a large
number of users equals the relative value
for other users. Acquire a large user base
to establish a competitive advantage that
makes it hard for anybody else to catch up.
TRIGGER QUESTION
How could we establish
a competitive advantage
rooted in a large user
base and network effects
in our value proposition?
Platform Castles – Create a business
model with network effects in which a large
number of users represents value to one or
more other distinct sets of users, and vice
versa. That makes it hard for anybody else
with fewer users to compete or to catch up.
TRIGGER QUESTION
How could we create
a multisided platform
that depends on the
existence of two or more
large user bases?
IP Castles – Use protected intellectual
property (IP) to outcompete others. Offer
distinct value propositions that are hard or
impossible to copy if you don’t own the IP.
TRIGGER QUESTION
How could we use pro-
tected intellectual property
as a competitive advan-
tage (in arenas where it
hasn’t mattered before)?
Brand Castle – Use a strong brand to
outcompete others. Focus on value proposi-
tions in which a strong brand is an essential
component.
TRIGGER QUESTION
How could we make
brand a relevant com-
petitive advantage (in
an area where it hasn’t
been so far)?
VP THAT
GETS BETTER
WITH MORE
USERS
USER
ACQUISITION
USER
BASE
USER
ACQUISITION
COST
USER
DIFFERENTIATED
VALUE
PROPOSITION
BASED ON IP
PROTECTED
INTELLECTUAL
PROPERTY
R&D COST
R&D
CUSTOMER
SEGMENT
PREMIUM
PRICE
BRANDED
VALUE
PROPOSITION
MARKETING
& BRANDING
LOVEMARK
BRAND
PREMIUM
PRICE
LOVEMARK
BRAND
MARKETING &
BRAND COST
CUSTOMER
SEGMENT
VP THAT
RELIES ON
“THE OTHER
SIDE OF THE
PLATFORM”
VP THAT
RELIES ON
“THE OTHER
SIDE OF THE
PLATFORM”
USER
ACQUISITION
PLATFORM
OPERATIONS
GENERAL USER
ACQUISITION COST
USER A
USER B
USER BASE B
USER BASE A
PLATFORM
Assessment Question
Do we own key resources that are difficult or impossible to copy and which
give us a significant competitive advantage?
+3+2+10−1−2−3
USER BASE CASTLES PLATFORM CASTLES
IP CASTLES BRAND CASTLES
FLAVORS
DIFFERENT FLAVOURS

16. Exercise — Waze
How would you map out Waze’s
business model using the ‘Resource
Castles’ pattern ?
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
ource
tles
d
ats
competitive
age with key
es that are
or impossible
by competitors.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
User Base Castles — Create a business
model with network effects in which a large
number of users equals the relative value
for other users. Acquire a large user base
to establish a competitive advantage that
makes it hard for anybody else to catch up.
TRIGGER QUESTION
How could we establish
a competitive advantage
rooted in a large user
base and network effects
in our value proposition?
Platform Castles — Create a business
model with network effects in which a l
number of users represents value to on
more other distinct set of users, and vic
versa. That makes it hard for anybody
with less users to compete or to catch u
VP THAT
GETS BETTER
WITH MORE
USERS
USER
ACQUISITION
USER
BASE
USER
ACQUISITION
COST
USER
DIFFERENTIATED
VALUE
PROPOSITION
BASED ON IP
R&D
CUSTOMER
SEGMENT
BRAND
VALU
PROPOSI
MARKETING
& BRANDING
VP THA
RELIES O
“THE OTH
SIDE OF T
PLATFOR
VP THA
RELIES O
“THE OTH
SIDE OF T
PLATFOR
USER
ACQUISITION
PLATFORM
OPERATIONS
USER
BASE
A
GENERAL USER
ACQUISITION COST
USER
BASE
B
PLATFORM
Key Partners Key activities Value Proposition Customer SegmentCustomer
Relationship
Key Resources Channels
Cost Structure Revenue Streams
Resource Castles
Real time
traffic
navigation
a
Acquisition
Costs
d
Driver
communityc
User
acquisition
b
Traffic data &
algorithms
e
Drivers
(& editors)
f
write down the full sequence of 6 letters (a…) matching the numbers
164
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
User Base Castles – Create
model with network effects
number of users equals the
for other users. Acquire a la
to establish a competitive a
makes it hard for anybody e
USER
ACQUISITION
USER
BASE
USER
ACQUISITIO
COST
R&D
1
2
3
5
4
1
5
3
4
3
2 RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
to copy by competitors.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
Key Partners Key activities Value Proposition Customer SegmentCustomer
Relationship
Key Resources Channels
Cost Structure Revenue Streams
1
2
3
4
5
Resource Castlesa
d
c
b
e
f
164
RESOURCE
COST
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible TRIGGER QUESTION
How could we make difficult-to-co
Solution: afcebd
Free
Real time
traffic
navigation
Acquisition
Costs
User
acquisition
Drivers
(& editors)
Driver
community
Traffic data &
algorithms

17. SCORING
Questions for leaders
TRIGGER QUESTION
How could we make difficult-to-
copy resources a key pillar of our
business model?
ASSESSMENT QUESTION FOR LEADERS
Do we own key resources that are difficult
or impossible to copy and which give us a
significant competitive advantage?
Resource
Castles
164
RESOURCE
COST
D
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
for competitors to copy.
TRIGGER QUESTION
How could we make difficult-to-copy
Our key resources are
significantly inferior to
those of our competitors.
Assessment Question
Do we own key resources that are diff
give us a significant competitive adva
−1−2−3
Build
Moats
38
RESOURCE
COST
VP THAT
DEPENDS ON
PROTECTED
RESOURCE
HARD
TO COPY
RESOURCE
Resource
Castles
Build
Moats
Build a competitive
advantage with key
resources that are
difficult or impossible
to copy by competitors.
TRIGGER QUESTION
How could we make difficult-to-copy resources a key pillar of our business model?
Our key resources are
significantly inferior to
those of our competitors.
Our key resources can’t easily be copied or
emulated for the next couple of years and
they give us a significant competitive advan-
tage (e.g. intellectual property, brand, etc.).
Assesment Question
Do we own key resources that are difficult or impossible to copy and which
give us a significant competitive advantage?
+3+2+20-1-2-3
Frontstage
Market Explorers: How large and
attractive is the untapped market
potential we are going after?
+10−1−2 +3+2−3
Channel Kings: Do we have large-
scale and, ideally, direct access to our
end-customer?
+10−1−2 +3+2−3
Gravity Creators: How easy or difficult
is it for our customers to leave or switch
to another company?
+10−1−2 +3+2−3
Backstage
Resource Castles: Do we own key
resources that are difficult or impossible
to copy and which give us a significant
competitive advantage?
+10−1−2 +3+2−3
Activity Differentiators: Do we create
significant value for customers because
we perform and configure activities in
disruptively innovative ways?
+10−1−2 +3+2−3
Scalers: How rapidly and how easily can
we grow our business model without sub-
stantial additional resources and activities
(e.g., building infrastructure, finding talent)?
+10−1−2 +3+2−3
Profit Formula
Revenue Differentiators: Do we use strong
revenue streams and pricing mechanisms to
monetize value creation for customers?
+10−1−2 +3+2−3
Cost Differentiators: Is our cost structure
conventional or disruptive?
+10−1−2 +3+2−3
Margin Monsters: Do we have strong
margins from low costs and high prices?
+10−1−2 +3+2−3
Assessment Questions for Leaders
213
Frontstage
Market Explorers: How large and
attractive is the untapped market
potential we are going after?
+10−1−2 +3+2−3
Channel Kings: Do we have large-
scale and, ideally, direct access to our
end-customer?
+10−1−2 +3+2−3
Gravity Creators: How easy or difficult
is it for our customers to leave or switch
to another company?
+10−1−2 +3+2−3
Backstage
Resource Castles: Do we own key
resources that are difficult or impossible
to copy and which give us a significant
competitive advantage?
+10−1−2 +3+2−3
Activity Differentiators: Do we create
significant value for customers because
we perform and configure activities in
disruptively innovative ways?
+10−1−2 +3+2−3
Scalers: How rapidly and how easily can
we grow our business model without sub-
stantial additional resources and activities
(e.g., building infrastructure, finding talent)?
+10−1−2 +3+2−3
Profit Formula
Revenue Differentiators: Do we use strong
revenue streams and pricing mechanisms to
monetize value creation for customers?
+10−1−2 +3+2−3
Cost Differentiators: Is our cost structure
conventional or disruptive?
+10−1−2 +3+2−3
Margin Monsters: Do we have strong
margins from low costs and high prices?
+10−1−2 +3+2−3
Assessment Questions for Leaders
213
Frontstage
Market Explorers: How large and
attractive is the untapped market
potential we are going after?
+10−1−2 +3+2−3
Channel Kings: Do we have large-
scale and, ideally, direct access to our
end-customer?
+10−1−2 +3+2−3
Gravity Creators: How easy or difficult
is it for our customers to leave or switch
to another company?
+10−1−2 +3+2−3
Backstage
Resource Castles: Do we own key
resources that are difficult or impossible
to copy and which give us a significant
competitive advantage?
+10−1−2 +3+2−3
Activity Differentiators: Do we create
significant value for customers because
we perform and configure activities in
disruptively innovative ways?
+10−1−2 +3+2−3
Scalers: How rapidly and how easily can
we grow our business model without sub-
stantial additional resources and activities
(e.g., building infrastructure, finding talent)?
+10−1−2 +3+2−3
Profit Formula
Revenue Differentiators: Do we use strong
revenue streams and pricing mechanisms to
monetize value creation for customers?
+10−1−2 +3+2−3
Cost Differentiators: Is our cost structure
conventional or disruptive?
+10−1−2 +3+2−3
Margin Monsters: Do we have strong
margins from low costs and high prices?
+10−1−2 +3+2−3
Assessment Questions for Leaders
213
Backstage
Disruption
Profit Formula
Disruption
Frontstage
Disruption
227
ft Pattern Library
Value
Proposition Shifts
p. XXX From Product to
Recurring Service
p. XXX From Low-Tech to High-Tech
p. XXX From Sales to Platform
Frontstage
Driven Shifts
p. XXX From Niche Market
to Mass Market
p. XXX From B2B to B2(B2)C
p. XXX From Low Touch
to High Touch
Profit Formula
Driven Shifts
p. XXX From High Cost to Low Cost
p. XXX From Transactional
to Recurring Revenue
p. XXX From Conventional
to Contrarian
Backstage
Driven Shifts
p. XXX From Dedicated Resources
to Multi-Usage Resources
p. XXX From Asset Heavy
to Asset Light
p. XXX From Closed to Open
(Innovation)
ASSESSMENT
Questions for Leaders

18. 3
Business Model Shifts
Making the shift from
competitive advantage
to transient strategy
- Rita McGrath, Columbia
“
”
Shift Pattern
New Business Model
Original
Business Model
IMPROVE
Shift Patterns
226
Shift Pattern Library
Value
Proposition Shifts
p. XXX From Product to
Recurring Service
p. XXX From Low-Tech to High-Tech
p. XXX From Sales to Platform
Frontstage
Driven Shifts
p. XXX From Niche Market
to Mass Market
p. XXX From B2B to B2(B2)C
p. XXX From Low Touch
to High Touch
Backstage
Driven Shift
• From Dedicated to Multi-Usage
• From Asset Heavy to Asset Light
• From Closed to Open (innovation)
Profit Formula Driven Shift
• From High Cost to Low Cost
• From Transactional to recurring revenue
• From Conventional to Contrarian
Frontstage
Driven Shift
• From Niche to Mass Market
• From B2B to B2(B2)C
• From Low to High Touch
Value Proposition Shift
• From Product to Service
• From Low-Tech to High-Tech
• From Sales to Platform
IMPROVE
Shift Patterns
Library

19. SPECIALIZED
CHANNELS
NICHE
MARKETING
NICHE VALUE
PROPOSITION
NICHE
MARKET
HIGH-PRICE
REVENUE
NICHE
BRAND
Original niche market business model
Mass market pattern
242 243
is the shift from niche market player to mass market player. This often requires a simpli-
fication of the value proposition to cater to a larger market. The lower price that such a
simplified value proposition commands is compensated by a larger volume of revenues from
the mass market. This shift requires marketing activities, channels, and a brand that are
tailored to the mass market.
STRATEGIC REFLECTION
How might we simplify our
value proposition to break out
of a niche market and cater to
a mass market? How might we
change marketing and brand
to reach a mass market? How
can we compensate for lower
prices and increased marketing
costs with more revenues from
a larger mass market?
EXAMPLE
TED
From Niche Market
to Mass Market
MASS
MARKETING
COST
MASS
CHANNEL
LOW-PRICE
HIGH-VOLUME
REVENUE
MASS
MARKET
MASS MARKET
VALUE
PROPOSITION
MASS
MARKETING
MASS
MARKET
BRAND
A radical shift of who is
targeted and how products
and services are delivered
Frontstage Driven Shifts
From Niche Market to Mass Market
p.XXX TED
From B2B to B2(B2)C
p.XXX Intel Inside
From Low Touch to High Touch
p.XXX Apple Genius Bar
SPECIALIZED
CHANNELS
NICHE
MARKETING
NICHE VALUE
PROPOSITION
NICHE
MARKET
HIGH-PRICE
REVENUE
NICHE
BRAND
Original niche market business model
Mass market pattern
242 243
is the shift from niche market player to mass market player. This often requires a simpli-
fication of the value proposition to cater to a larger market. The lower price that such a
simplified value proposition commands is compensated by a larger volume of revenues from
the mass market. This shift requires marketing activities, channels, and a brand that are
tailored to the mass market.
STRATEGIC REFLECTION
How might we simplify our
value proposition to break out
of a niche market and cater to
a mass market? How might we
change marketing and brand
to reach a mass market? How
can we compensate for lower
prices and increased marketing
costs with more revenues from
a larger mass market?
EXAMPLE
TED
From Niche Market
to Mass Market
MASS
MARKETING
COST
MASS
CHANNEL
LOW-PRICE
HIGH-VOLUME
REVENUE
MASS
MARKET
MASS MARKET
VALUE
PROPOSITION
MASS
MARKETING
MASS
MARKET
BRAND
A radical shift of who is
targeted and how products
and services are delivered
Frontstage Driven Shifts
From Niche Market to Mass Market
p.XXX TED
From B2B to B2(B2)C
p.XXX Intel Inside
From Low Touch to High Touch
p.XXX Apple Genius Bar
SPECIALIZED
CHANNELS
NICHE
MARKETING
NICHE VALUE
PROPOSITION
NICHE
MARKET
HIGH-PRICE
REVENUE
NICHE
BRAND
Original niche market business model
Mass market pattern
243
is the shift from niche market player to mass market player. This often requires a simpli-
fication of the value proposition to cater to a larger market. The lower price that such a
simplified value proposition commands is compensated by a larger volume of revenues from
the mass market. This shift requires marketing activities, channels, and a brand that are
tailored to the mass market.
STRATEGIC REFLECTION
How might we simplify our
value proposition to break out
of a niche market and cater to
a mass market? How might we
change marketing and brand
to reach a mass market? How
can we compensate for lower
prices and increased marketing
costs with more revenues from
a larger mass market?
EXAMPLE
TED
From Niche Market
to Mass Market
MASS
MARKETING
COST
MASS
CHANNEL
LOW-PRICE
HIGH-VOLUME
REVENUE
MASS
MARKET
MASS MARKET
VALUE
PROPOSITION
MASS
MARKETING
MASS
MARKET
BRAND
s
SPECIALIZED
CHANNELS
NICHE
MARKETING
NICHE VALUE
PROPOSITION
NICHE
MARKET
HIGH-PRICE
REVENUE
NICHE
BRAND
Original niche market business model
Mass market pattern
243
is the shift from niche market player to mass market player. This often requires a simpli-
fication of the value proposition to cater to a larger market. The lower price that such a
simplified value proposition commands is compensated by a larger volume of revenues from
the mass market. This shift requires marketing activities, channels, and a brand that are
tailored to the mass market.
STRATEGIC REFLECTION
How might we simplify our
value proposition to break out
of a niche market and cater to
a mass market? How might we
change marketing and brand
to reach a mass market? How
can we compensate for lower
prices and increased marketing
costs with more revenues from
a larger mass market?
EXAMPLE
TED
From Niche Market
to Mass Market
MASS
MARKETING
COST
MASS
CHANNEL
LOW-PRICE
HIGH-VOLUME
REVENUE
MASS
MARKET
MASS MARKET
VALUE
PROPOSITION
MASS
MARKETING
MASS
MARKET
BRAND
s
hifts
230
SALES
CHANNEL
PRODUCT-
RELATED COST
PRODUCT-
RELATED
ACTIVITIES
PRODUCT
CUSTOMER
SEGMENT
SALES
PRODUCT-
RELATED
RESOURCES
Original product business model
Recurring service pattern
231
is the shift from manufacturing (and/or buying) and selling products toward providing a
recurring service. Selling products on a transactional basis requires a continuous effort for
every sale and it is often unpredictable. Recurring services require upfront customer acqui-
sition costs that lead to recurring revenues. Revenues become more predictable and grow
exponentially, because you build on top of a continuously growing base of customers.
STRATEGIC REFLECTION
How might we grow recurring and
predictable revenues by providing
a recurring service, rather than
selling a product?
Upfront acquisition costs per
customer might be higher,
but revenues become more
predictable and the lifetime
value of customers often
increases. Product and/or
technology innovation can
often provide the foundation
for new services.
EXAMPLE
HILTI
A radical shift of the value
created for customers
From Product
to Recurring Service
COST OF
SERVICE
SERVICE
DELIVERY
CHANNELS
GET CUSTOMER
TO USE SERVICE
UPFRONT
CUSTOMER
ACQUISITION
COST
RECURRING
REVENUE
CUSTOMER
SEGMENT
SERVICE
SERVICE
PROVISIONING
SERVICE
RESOURCES
Value Proposition Shifts
From Product to Recurring Service
p. 232 Hilti
From Low Tech to High Tech
p. 236 Netflix
From Sales to Platform
p. 238 The App Store
From Product
to Recurring Service
Customer
acquisition costs
Tool
manufacturing
& distribution
High
quality
tools
232
IMPROVEPATTERNS
232
In 2000, one of Hilti’s customers asked for
a holistic tool management solution. That
made Hilti realize that customers didn’t
want to own tools, but always wanted their
workers to work productively. Hilti began an
initial pilot program for tool fleet manage-
ment in Switzerland and eventually rolled
out the service worldwide in 2003.
With tool fleet management, Hilti became
more relevant to construction companies
by reducing nonproductive time for workers
and adding a gain of taking on more cus-
tomer jobs (e.g., tool repair).
Hilti also discovered that customers were
willing to lease more tools than they had ever
purchased. Some even asked Hilti to include
non-Hilti tools in the service to completely pre-
vent nonproductive time due to broken tools.
When the 2008 financial crisis hit the con-
struction sector, many stopped purchasing
new equipment. Yet Hilti’s business model
shift from a product to a recurring service
allowed it to overcome the crisis and it has
continued to grow since.
Hilti
Hilti shifts from selling high quality
tools to selling tool fleet manage-
ment services to construction compa-
nies, after a key customer requests a
holistic tool management system to
increase productivity.
From Product to Recurring Service
2000 2003
1 From Product to Recurring
Service and Revenues
Managers of building companies have a lot
more to worry about than just buying tools.
Hilti recognizes that in 2000 and starts offering
to track, repair, replace, and upgrade the
whole tool fleet for their clients. This increases
their productivity by ensuring they always
have the right tools, properly maintained and
reliable at all times. Hilti allows customers to
lease the tools through a monthly subscription
rather than paying for them upfront – enabling
predictability of costs for building company
managers and recurring revenues for Hilti.
SALES
CHANNEL
PRODUCT-
RELATED COST
PRODUCT-
RELATED
ACTIVITIES
∗
PRODUCT
CUSTOMER
SEGMENT
SALES
PRODUCT-
RELATED
RESOURCES
Original product business model
Recurring service pattern
CUSTOMER
SEGMENT
Original product business model
CUSTOMER
SEGMENT
Recurring service pattern
230 231
is the shift from manufacturing (and/or buying) and selling products toward providing a
recurring service. Selling products on a transactional basis requires a continuous effort for
every sale and it is often unpredictable. Recurring services require upfront customer acqui-
sition costs that lead to recurring revenues. Revenues become more predictable and grow
exponentially, because you build on top of a continuously growing base of customers.
STRATEGIC REFLECTION
How might we grow recurring and
predictable revenues by providing
a recurring service, rather than
selling a product?
Upfront acquisition costs per
customer might be higher,
but revenues become more
predictable and the lifetime
value of customers often
increases. Product and/or
technology innovation can
often provide the foundation
for new services.
EXAMPLE
HILTI
A radical shift of the value
created for customers
From Product
to Recurring Service
COST OF
SERVICE
SERVICE
DELIVERY
CHANNELS
GET CUSTOMER
TO USE SERVICE
UPFRONT
CUSTOMER
ACQUISITION
COST
RECURRING
REVENUE
CUSTOMER
SEGMENT
∗
SERVICE
SERVICE
PROVISIONING
SERVICE
RESOURCES
Value Proposition Shifts
From Product to Recurring Service
p.XXX Hilti
From Low to High Tech
p.XXX Netflix
From Sales to Platform
p.XXX The App Store
STRATEGIC REFLECTION
How might we grow recurring and predictable
revenues by providing a recurring service,
rather than selling a product?
[sources: Mark W. Johnson, photo: Hilti.com]
Illustration — HILTI
Hilti shifted from selling high quality tools
to providing online tool fleet management
“The big benefit of recurring service
revenues helped us to stabilize our
business during the financial crisis,
a time when most contractors
wouldn’t purchase new equipment
- Christoph Loos, CEO of Hilti