My position is that Alex Osterwalder’s (and Yves Pigneur) Business Model Canvas is the original and best of the many imitations. Not least of my argument in favour is that it is well supported by sound academic research. Without this Swiss model canvas, I don’t think the Lean Startup movement would be what it is today.
A pretty straightforward opening statement I think. A business, for or not for profit, can only exist if there is some form of exchange. If that takes place then mutual benefit is assumed to be derived. Businesses can only exist if they do good, when this ceases to happen, the business will fail.
This kind of consideration of value is being given by Osterwalder in the development of what he calls ‘the design of the value proposition’. See next slide. Information at alexosterwalder.com
This diagram is an attempt to draw attention to the fact that when you engage with a problem owner/potential customer in a problem solving process the resulting solution (or failure) acts as an anchor in a relationship that is intimate and emotional.
We begin with another representation of the PE/PO/solution relationship. The solution emerges from a conversation (C1) about the problem and possible solution. In the developing process the EP can refer to others for help resolving the problem and designing the solution, she may refer to someone who can supply components and someone who can provide the necessary money to buy the materials. This set of conversations is designated C2 and the result of this is a system/organization or network of relationship that has grown to deliver the solution in physical form. What anchors the relationships are knowledge/material/money. These relationship are precipitated by the solution. New start businesses are single segment businesses. If the solution is found to be viable for one customer then, according the Lean Startup principles, it could be for others. The customer development process a la Steve Blank is not complete here but is implicit. Out of this third set of conversations new potential customers are recruited, the viability of the solution tested, which may lead to the solution being modified via the feedback channel. The form of relationship developed with customers will influence how feedback is obtained. Gradually the opportunity emerges to establish channels of information dissemination (advertising) and channels through which a physical product is put into the customer’s hands. This model can be mapped onto the Business Model canvas as seen in the last action of this slide. What I want to talk about next is the left side of the canvas as a first step toward establishing the nature of a value proposition.
What appears here is a business modelling tool of another kind. It is based on a simple input-output model and is known as IDEF (0). Typically itr can be used in a lean manufacturing project to model all activities that contribute to the production of the outputs, desired and undesired such as waste. The car seen here as the output from the manufacturing process or activity. At this stage, it’s value to the maker is nothing more than the cost of production. Knowing the activity means we can identify all the resources required, the inputs and the information required to control the activity or process. On this model, inputs are not a resource. The point is that the left of the canvas defines the organisation that will deliver the product in physical form. Key partners can come from raw material suppliers, information providers, key people in the process. Building a model using IDEF can become complicated but for a simple startup it provides a good point of reference and helps build the cost structure.
I want to a particular type of hat to get at the value proposition. If we follow the logic of the conversational model then the solution is the foundation of the value proposition and the left side of the canvas indicates how it is made/manufactured. The conversational model leads us to key partners. I want to present the left side in a more conventional way, by a form of input-output model known as IDEF(0).
Osterwalder's Canvas, Accept no Subsitutes
Osterwalder’sBusiness Model Canvas Accept no substitutes All imitations are just that.
• Gives a sense of the organization required to deliver a product or service that will be valued by a customer (a mutual beneficiary)• Value to the customer is derived from the transformation in their experience or manner of living, which is the effect of the product/service
Value is derived from ‘doing good’ Creating satisfaction, delight, happiness. Removing dissatisfaction, unhappiness, sources of frustration. Removing obstacles to others achieving good. Making improvements. Solving problems by designing and implementing solutions.X Problems may not be obvious.
Enterprising person Problem owner(EP) (PO) Solution anchors EP/PO in an intimate (emotional) relationship
Information gathering feedback channel Knowledge/information supplier Solution making C2 C1 C3 organisation PP market££ making EP EP sol sol OO mkt mkt makingMaterialsupplier Material distribution and information broadcastEP=Enterprising person PO=Problem owner channel
IDEF (0) System mapping (input – output model) Information/knowledge required to control the activity output Inputs components Raw materials Activity is Activity is manufacturing manufacturing Stripped of its RESOURCES Value Proposition?People with knowledge machines./toolsSkills/Experience devices Facilities/Offices/labs
Fully exploiting the value of a solutionValue to the customer is derived fromthe transformation in their experience Information gathering feedback channelor manner of living, which is theeffect of the product/service C3 PP market EP EP sol sol O mkt mkt O making Material distribution and information broadcast channel