Business Model Canvas Interview w/ Author


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The Business Model Canvas is an analytical tool outlined in the book Business Model Generation. It is a visual template preformatted with the nine blocks of a business model, which allows you to develop and sketch out new or existing business models. This book has sold over 220,000 copies the past two years and has established itself as one of the leading sources of modeling for both startups and established businesses. This is a transcription of the podcast I had with co-author, Alex Osterwalder.

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Business Model Canvas Interview w/ Author

  1. 1. Business901 Podcast Transcription Implementing Lean Marketing SystemsWhat’s new in Business Model Generation? Guest was Alex Osterwalder Related Podcast: What’s new in Business Model Generation? Customer Value Canvas and more What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  2. 2. Business901 Podcast TranscriptionImplementing Lean Marketing Systems Dr. Alexander Osterwalder is a sought-after author, speaker, workshop facilitator and adviser on the topic of business model design and innovation. He has established himself as a global thought leader in this area, based on a systematic and practical methodology to achieve business model innovation. Executives and entrepreneurs all over the world apply Dr. Osterwalder’s approach to strengthen their business model and achievea competitive advantage through business model innovation.Organizations that use his approach include 3M, Ericsson, IBM,Telenor, Capgemini, Deloitte, Logica, Public Works andGovernment Services Canada, and many more.Alex’s Websites:http://www.businessmodelalchemist.com  Competitive Advantage Through Business Model Innovation  Aligning Business Model Innovation and Information Technology  From Business Model to Business Plan  Private Banking Business Models – discover, understand, define  Business Models in the Media Industry  Business Models at the Bottom of the Pyramid  Social Entrepreneurship Business models  Design Thinking in Business What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  3. 3. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJoe Dager: Welcome everyone. This is Joe Dager, the host ofthe Business901 podcast. With me today is Dr. AlexanderOsterwalder. Alex has worked in applying business models and isa true leader in thought leadership. He has replaced the poorlyyet well discussed concept with a sharply defined framework andtools highlighted in his book "Business Model Generation." Alex, Iwould like to compliment you first starting out, I think I just readsomewhere that your book has been on the top 200 in Amazonfor two years now?Alex Osterwalder: Yes, a little bit over two years. We have220,000 copies in circulation in 23 languages. Its been a niceride.Joe: Yeah, it certainly has. I look at it a little different beingfrom a Lean perspective. I look it as the A3 of customer value.Alex: OK, great. What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  4. 4. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJoe: Ive used it in that sense a little bit to work with clients indetermining value. I saw some of the latest things youre doing isyoure taking the Business Model Generation into a wholedifferent area. Youre taking a deeper dive with it into personaluse and also customer value.Alex: Yeah, absolutely. Jim Clark who was already editing theBusiness Model Generation book and who was in the core team,he launched a new initiative called "Business Model You." Heapplied the Business Model Canvas to people and thats going in atotally new direction. So that was interesting to see becausepeople started doing it, we were catching up. Tim wrote a greatbook around that in the same style as Business ModelGeneration, of course, with a lot of visuals, very accessible andextremely well designed by Trish Nalan.Joe: In the Business Model Generation book, though, I think alot of people attach it very quickly to the Lean start-up because ofthe craze there, but it really grew out of, I would say, designthinkers and design thinking concepts in Europe.Alex: The approach is used everywhere. This was used first inlarge companies, particularly telecom companies around theworld in Columbia, Norway, some of the biggest players. Onlylater did it really come into the start-up field or the Lean start upfield. So it was the other way around. Every community thinksthat it happened there first, which is very nice because it meansthat were getting some traction in all different kinds ofcommunities, which was, to a certain extent, a surprise that thiswould have such a success in different places like socialentrepreneurship startups, large companies, even governments.So that was pretty interesting to see how it spread beyond whatwe originally intended with this framework.Joe: What was the original intention then? What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  5. 5. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsAlex: Well, we were just trying to figure out "how could youbetter describe business models? How could you have a bettercommunication around business models?" The starting point wasduring the Internet boom years, and that was a little bit of thecontext. We always believed it would go beyond the Internet, butthat it would go even into governments and NGOs. That wasinteresting to follow.Joe: I think it even redefined the way a book was made a littlebit. Its a completely different concept, and its so much morevisual. Its not quite a workbook, but its not quite a book either.Its got its own place.Alex: Yeah, there are 11,000 business books coming out everyyear on top of 200,000 business books that already exist. So youreally want to find a way to stand out when you write a newbook. Nobody is waiting for 11,001 or 200,0001. We tried tofigure out what we should we do. We asked a lot of people,"Whats wrong with business books? What dont they like?" Weunderstood a couple of things. We started to design a book thatwould address that.At the end of the day, I think, Yves Pigneur, my co-author, andmyself, we created a book that we would want to buy. It wasbasically the book we would have wanted to buy on businessmodels. We created it for ourselves, and thats part of the story.Joe: So taking the deeper dive, whats different about theCustomer-Value Canvas over the Business Model Generation?Alex: The heart of The Business Model Generation book was theBusiness Model Canvas. Its really about figuring out how youcreate, deliver, and capture value. I think the core message thereis that product innovation, technology innovation is great andimportant but its just not enough anymore. With the BusinessModel Canvas, we created a way to help people map and discussbusiness models and have better conversations. Ultimately, just What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  6. 6. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsget it out of the heads of people and put it on a table in order toplay with different alternatives. I still really strongly believe inthat. I think thats the core thing a lot of larger organizations arestill struggling with.What we also realized, and we knew this from the beginning butwe never put a lot of effort into it, is that for every building block,the nine building blocks we have for the Business Model Canvas,you could think of plug-ins. Or around the Business ModelCanvas, you could think about plug-ins to sketch out certainthings like a competitive environment, whatever you want to useas the concept.The one thing I think that people understand really easily iscustomer problems and company solutions are valuepropositions, but they dont have a really good way to describethat. Taking a part of the business model, customer, theirproblems, I call them jobs to be done, a concept that is fairly wellestablished, and the value proposition.We took that and we asked ourselves, "How could we turn thisinto a visual canvas just like the Business Model Canvas?" butjust to visualize part of your business model. It does not replacethe need to sketch out a powerful business model. Its acompliment that allows you to dig a bit deeper into one issuewhich is "What are the jobs the customer is trying to get done ineach of your customer segments and what are you offeringthem?"Its a topic thats not new. A lot of people are talking about it. Inthe Lean startup movement, its called Problem Solution Fit orMarket Product Fit. However, you want to call it. But theres novisual way of describing that, no canvas that would allow you tosketch this out easily.One of the biggest things Ive learned over the last couple ofyears is how powerful it is to visualize things that you discuss. So What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  7. 7. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsjust talking about something is probably not good enough to geta clear understanding. Its not good enough to just think aboutideas. You want to get them out of your head and make themtangible. So visualizing is one of the techniques that helps you alot with that.So the Business Model Canvas is the way to visualize yourbusiness model and make it tangible. The Customer-ValueCanvas is a new approach that allows you to visualize customerjobs and the corresponding value propositions. That was theintent behind it, to give people a method, to make things clearer,to have better communications about their value propositions andhow those value propositions address customer needs andcustomer jobs to be done.And since, this is one of the big things in the whole Lean start upmovement, this focus on products, I thought, "Hey, it would benice to offer a way to visualize this theme."Joe: Its taken each of the nine building blocks and adding,another layer to each of the blocks?Alex: So there are different things you could do. You could havea plug-in for a specific building block. If you take channels, youcould have a method that allows you to visualize your channelstrategy. That would mean you go into one building block with aplug-in method. You go deeper into your channels and yourstrategy. You dig down. Now, the customer value is a little bitdifferent, because it takes two building blocks and it visualizesthose two building blocks and how they connect to each other.So, basically, the message here is Business Model Canvas is onemethod. What you really want to be able to do is weave togetherall the important and relevant methods that help you createbetter businesses and integrate them. It could be one buildingblock. It could include several building blocks, or it could include What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  8. 8. Business901 Podcast TranscriptionImplementing Lean Marketing Systemssomething else around visualizing the business modelenvironment, managing your business model portfolio.The main message here is that you find concepts that are useful,that are practical, intuitive, and that you weave them together soas a business person, executive and entrepreneur alike, you canwork in better ways.Joe: There are two different ways, when you look at somethinglike this in a one page document that you really cant get thedepth that you need. The other way you can look at is that whenyou do put something on one page you provide a lot of claritybecause youve got to get it on one page. Whats the limitation ofthe canvas?Alex: I think what youre saying is pretty important. This issueof granularity, we can go in a lot of depth and be very detailed.But I think that is not the problem. I think that people are prettygood at that, developing marketing strategies in very accuratedetail. What a lot of people lack is this ability to see the bigpicture and how all the pieces fit together. This is the same forstartup entrepreneurs or for large companies. Whats going to beimportant in the future is how all the pieces of a business modelstory fit together. And were not very good at mapping that out,just getting that big picture and how all these pieces fit together.That was really the core idea behind the Business Model Canvas.That was what were focusing on. A lot of people want to go intomore granularities. I think thats fine, but its when you address adifferent issue. When youre trying to figure out what is the rightbusiness model, when youre trying to figure out what is the rightstrategy, you want something that gives you the big picture.When youve found the right business model, when youve foundthe right strategy, then you want to become more granularbecause youre going towards implementation. So depending on What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  9. 9. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsthe goal you have, you will use different methods and differentgranularity in a method. Its essentially finding the right thing.Its what my colleagues and I when we had a consultingcompany, its what we called "Methodological Shopping." I likethat term because its about trying to find the right method forthe right problem youre addressing.Joe: One of the things that the canvas provides, is it gets usaway from that linear thought. Thats what a lot of problemsolving is, but its different than that. Its more of an iterativetype of problem solving where were looking more in circularunderstanding. Do you believe that value canvas promotes that?Alex: Absolutely. I think the biggest problem is thinking, interms of problems, is saying, "This is a problem, were trying tofind the solution." It sounds like an equation. When were talkingabout social systems and were talking about organizations andwere talking about business, there is no solution to a specificproblem. Thats why I have a little bit of an issue with this idea ofProblem Solution Fit. No. In social systems you have a specificcontext with specific variables. Youre going to try to designsomething that makes sense for that. So lets say you have acustomer with a specific job he wants to get done. There areprobably 10, 20, 100 ways of getting that job done.What you want to figure out is, whats the best way? If youre abusiness, whats the best and most profitable way to do that? Soits not about finding a solution, its about finding a good design.And thats something that designers are good at. They havetechniques to do that.If youre an engineer, you have the problem solution approach.Youll try to find in a linear way, the solution to your problem.Youll look at it as an equation, and youll use different methods.So I think the methods that we really want to look at are those What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  10. 10. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsby designers who look at 10, 20, 30 different alternatives and tryto find the best design for a specific context.Now if you take the Customer-Value Canvas, the context is youhave a customer and hes trying to get a job done. Some jobscant be done yet because no business has found a way toprofitably get that job done for the customer.But if you have a Customer-Value Canvas, you can start mappingout possible value propositions to get a job done. And then youlluse the Business Model Canvas to try to find profitable ways tomake that value proposition possible.It really comes back to designing a story that allows you tocreate, deliver, and capture value in different ways. Thats aboutiterative design if we take the Lean start-up customer developerwords but pivoting until you find the right business model.Its something that Steve Blank, author of "Four Steps to theEpiphany" calls the search for the right business model. Its thesame four value propositions, the search for a good valueproposition. Its not about finding a solution. Its about findingone that makes sense. Its about finding the right business modelthat allows you to actually offer that.I absolutely agree with you that its about iterations, aboutpivoting. I dont agree with the statement of calling it a problemand finding the solution. That gives you more of the linearengineering feel. I think we need to work more like designersrather than engineers.Joe: Lean has always been about problem solving and been onthe supply side of the equation When you go to the demand sideof the equation, I think if you start looking at Lean as far ascreating value and more of an appreciative inquiry type situationwhere you just mentioned it and said "Lean tries to find possiblesolutions over on that supply side." On the demand side, What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  11. 11. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsappreciative inquiry tries to share value through dialog. I thinkthats what youre saying there, in summary, is that youre reallylooking at trying to share a value with the customer through thedialog. The canvas is a tool to use to get there.Alex: Right. Its a search process to find a profitable way to geta customer job done.Joe: The Customer-Value Canvas is pretty recent. You juststarted using that this year?Alex: Well, I just wrote a blog post about it last week. So itsmore than recent. Its something that started out with the idea...I was talking to Mark Johnson, the author of a great businessmodel book called "Seizing the White Space." Hes the co-founderof a consulting company called "Innosight" that he co-foundedwith Clayton Christensen. They use a concept a lot called "Jobs ToBe Done." They really brought this concept to another level. Theidea that came up during that conversation was, "Could we makea visual canvas for jobs to be done just like there is a visualcanvas for business models?" which is the Business ModelCanvas.I started thinking about that a little bit, and I tried out certainthings in my workshops and with students. I had a lot ofconversations about what would be a good design for such acanvas with my co-author of Business Model Generation, YvesPigneur. And then it resulted in a blog post just a week ago.So it is very new. I call it a "Prototype Version 0.8" because itmight not be finished. Were going to test it a bit more. Weregoing to talk to a lot of people. I want to test this also with SteveBlank who I enjoy working with a lot just to figure out "is this theright canvas for this specific situation?"We want to design value propositions for customer jobs to bedone. The Customer-Value Canvas is a mix of several different What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  12. 12. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsmethods. It started out with the idea of making a jobs canvasand ended up being something thats a bit of a mash-up betweendifferent approaches.Joe: I really enjoy the blog post and pictures of course that areon Flicker. If someone is trying to learn more about implementingBusiness Model Generation, where do they go past the book? Arethere workshops available in the states? I know youre puttingthem on, of course, all over the place. But youre just one guy.You can only be so many places. Where do I dig deeper?Alex: Yeah, so what we really want is that the method spreadsmore. We do our own workshops, and you can find them But, as you said, were one smallgroup. Im not focusing on doing more workshops and moreconsulting. I enjoy doing some workshops and some talks, butIm building a software company that builds tools to support thisprocess. We really want the method to spread more so we canhelp people with the software that were developing.Whats happening is that a lot of consulting boutiques areopening up that focus on business models and business modeldesign. Some of those people have been in my workshops, andthey go out and do it themselves.The best way to find workshops on this topic is if you go where we actually wrote the book in aco-creation fashion. We opened up the hub afterwards, and youhave all the people who are interested in business models, someof them consultants who can teach this stuff, where you can finda community of business small practitioners.Thats probably the best place to find others who do similarworkshops to myself. In the future we want to structure this a bitmore and train people, train the trainer concept so people will usethe method in the best way possible. What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  13. 13. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsThe canvas is a simple tool, but there are several ways of usingit, and you can use them in more sophisticated ways and in lesssophisticated ways. If you really want to get the maximum out ofit, I think there are a couple of things to follow. Not all of thepeople who use the canvas realize that.Joe: I think theres a lot of depth behind the canvas, and thatswhy I was asking that question. If you go back to how youdesigned the book itself and the people who participated in it, youbuilt a community within structuring a book.Alex: We had the idea of co-creating the book with people whowere already using the method. I put my PhD dissertation online,and that was about business models. It was the basis for thecanvas, practically the same model but described in a moreacademic way. So people were using it, and we thought, "Hey,lets get practitioners involved. Lets get them to give us feedbackon every piece of content that we would write." So we would putbook chunks out there on our platform. People are actually paidto join, and they would comment on every book chunk.They would say, "Hey this is good." They would say, "This is bad."They would say, "This is my experience in doing this in a largecompany. This is my experience in doing it in a not for profit." Wecould then figure out if our content was good enough. Fairenough, people would push back if they wouldnt agree.We really stress tested the whole book before putting it out onthe market. That was a lot of fun, but as an author it makes youpretty vulnerable. At the end of the day it gives you a betterproduct, so it was really worth it. I enjoyed the interaction withthe 470 people a lot. I think all of those 470 people are proud tohave their name in the book, to have been part of this.Joe: I think you did an outstanding job. If you go to the hub,what site was that again? What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  14. 14. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsAlex: Exactly. Yeah, its a bit of a wild community at themoment. We might structure it a little bit more, but I think thatsthe main place where business model innovators come together.Thats the place to learn about business model innovation.Joe: Youre coming out with an iPad, or you have come out withan iPad version of the canvas?Alex: Yes, so we created an iPad App to help people designbusiness models and also to do some sanity checks. I thinkcomputer assisted design is very powerful. You can do a lot ofgreat stuff with paper and post-it notes, but there are somethings that are harder to do. One would just be working in acollaborative manner. When you have people in Singapore andLondon and they want to work together, paper and post-in notesis probably not the easiest way forward. You have to send peopletraveling around the world.There are also things that are just hard to do with paper andpost-it notes. Thats throwing in ballpark figures, doing a financialsanity test of your business model in five minutes rather thantrying to put together a spread sheet which is not complicated buttime consuming, even for the simplest business model.We created an iPad App that allows you really to get the best of anapkin sketch and of a spreadsheet in one, where you couldrapidly sketch out business models and put in some ballparkfigures and figure out "Could this be a profitable idea?" That wasthe goal of the iPad App, and thats out at the App store. Itscalled "Business Model Tool Box." You can find it on the Appstore.What were launching very soon is a web App that would startfrom the same starting point, allow you to create and quicklysketch out business models, and on the web App, we will evenpush the collaborative aspect more to get teams to be able tosketch out business models together. What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  15. 15. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsAgain, this is not about replacing the paper world. I think thereare great things that you can do with post-it notes and paper, butthere are some things you cant do. Were going to launch theweb App pretty soon on a website called "Strategizer."We hope to really support this process even more so more peoplearound the world try to find new ways to create, deliver, andcapture value. It would really be great to see this spread evenmore.Joe: I think its a great concept. We jump on our desktop andshare our desktop so quickly now with people were working with.To have a point like that to be able to pull that up and strategizeand move stuff around, its hard to duplicate pen and papersometimes but most of us live in a virtual world.Alex: I think that the goal is to combine the best of all worldswhere you get the best of the paper based world and pens andpost-it notes and where you get the best of computer assisteddesign. Our goal is really to use every medium in the best way. Idont think we want to replace paper, but we want to boostpaper. We want to give it even more power, and thats withcomputer aided design.Joe: Is there something youd like to mention that maybe Ididnt ask?Alex: No, I think that was a great interview. This was a lot offun. There was one thing that I was a bit afraid about when Ilaunched the idea of the Customer-Value Canvas. Its about valuepropositions, and its about customers. My fear is a little bit thatpeople forget the business model. The real value comes when youfocus on both, product services and customer jobs and powerfulbusiness models. Its never the powerful product alone anymorethat gives you a competitive advantage. What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  16. 16. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsThat gives you maybe a short term competitive advantage, butthe most powerful business models are those that combine greatproducts and a great business model. I think you really need tofocus on both and not fall into the product trap where you reallyjust go for it and try to design the best product possible.I think thats a limitation. I think you need it, but I think greatproducts and amazing new technologies are becoming acommodity. What you really want to do is you want to go beyondthat. You want to combine great products or great valuepropositions with a great business model. Thats ultimately thetrophy that were looking for.Joe: Well, Id like to thank you very much for the time and theopportunity to do this. It was a pleasure for me. Again, thank youvery much, Alex. This podcast will be available on theBusiness901 site on iTunes store and also the Business901 blogsite. So thanks again.Alex: Joe, It was my pleasure. It was fun. What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901
  17. 17. Business901 Podcast TranscriptionImplementing Lean Marketing Systems Joseph T. Dager Implementer of Lean Marketing Systems Ph: 260-438-0411 Fax: 260-818-2022 Email: Web/Blog: Twitter: @business901 What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joes ability to combine his expertise with "out of the box" thinking is unsurpassed. He has always delivered quickly, cost effectively and withingenuity. A brilliant mind that is always a pleasure to work with." James R.Joe Dager is President of Business901, a progressive company providingdirection in areas such as Lean Marketing, Product Marketing, ProductLaunches and Re-Launches. As a Lean Six Sigma Black Belt,Business901 provides and implements marketing, project and performanceplanning methodologies in small businesses. The simplicity of a singleflexible model will create clarity for your staff and as a result betterexecution. My goal is to allow you spend your time on the need versus theplan.An example of how we may work: Business901 could start with aconsulting style utilizing an individual from your organization or a virtualassistance that is well versed in our principles. We have capabilities toplug virtually any marketing function into your process immediately. Asproficiencies develop, Business901 moves into a coach’s role supporting theprocess as needed. The goal of implementing a system is that the processeswill become a habit and not an event. Business901 Podcast Opportunity Expert Status What’s new in Business Model Generation? Customer Value Canvas and more Copyright Business901