Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers [Paperback]

"Then He said, 'To what shall we liken the kingdom of God? Or with what parable shall we picture it?'" -- Mark 4:30 (NKJV)

You've probably heard the old saying that a picture is worth a 1,000 words. Well, this book has more illustrations, sketches, design flourishes, and graphic displays in it than pages so you can probably imagine how much content it covers. In addition to sharing ideas about business model generation, you'll learn about business strategy, change processes, story telling, design, and creativity . . . among other subjects covered in a few paragraphs or pages. If you haven't read many of the books about business innovation that have come out in the last ten years, you can just use this one to get a brief summary of the key ideas in each of those areas. So your cost per subject is almost nothing. What a bargain!

If you get bored easily, you will like this book. It covers most subjects in almost no space. By using small type, a lot of information is concentrated onto just a few pages.

A lot of my graduate business students tell me that they like books that teach them a lot of the technical terms that business people use. Business Model Generation is excellent for that purpose. It's jammed full of C-level business jargon and lots of flow diagrams of the sort that technology managers and engineers love to use.

So, what is a business model? "A business model describes the rationale of how an organization creates, delivers, and captures value." Got that? "This concept can be a shared language that allows you to easily describe and manipulate business models to create new strategic alternatives."

If that isn't clear to you, the authors offer nine building blocks that give you the whole picture:

1. Customer Segments
2. Value Propositions
3. Channels
4. Customer Relationships
5. Revenue Streams
6. Key Resources
7. Key Activities
8. Key Partnerships
9. Cost Structure

Each of these nine elements is conveniently broken down into still more subsegments of what to consider.

Fans of Michael Porter's work on competitive strategy will note the strong resemblances between this approach and his pioneering work of 30 years ago. But Professor Porter doesn't include as many graphics and his examples are much longer and more detailed. If you want to learn more about advantaged value chains, Professor Porter's work may be more helpful to you.

The book similarly borrows deeply from 20 other standard business and strategy references.

Who is the ideal reader for this book? I think it's someone who hasn't been introduced to business models before and has just been asked to work on developing one at work. The book seems to be aimed at people without much business education such as technologists and designers.

If you are such a person, be sure to take notes on where to find the examples you want to refer to. There's no index to the book and you'll be thumbing through all the pages to find what you are looking for.

The approach emphasizes a small group of people doing the business model generation for a business or a company. That's pretty typical of a venture being formed (venture capitalists always want to know what the business model is), new ventures, and smaller enterprises that need to make a big change in direction.

The recommended approach is 180 degrees away from what many business model innovating companies do which is to encourage stakeholders and employees to continually develop low-key, inexpensive experiments and then to expand the successes.

I always find books such as this one more helpful when they teach me about businesses I've never studied before. So if you don't know about the Swiss private bank, Pictet, France Telecom, KPN, Vodafone, Bharti Airtel, Siemens, book publishers, LEGO, Metro in Stockholm, Google, game console makers, Apple, Flickr, Red Hat, Skype, REGA, Gillette, P&G, Glaxo SmithKline, InnoCentive, Amazon, Microsoft, and Yahoo, you'll get some new knowledge. You may find that you'll have to do more homework on your own in many cases. Most of the references are 75 words or less.

The book was co-produced by hundreds of contributors. It shows. There's a lot here. Much of it is from the service provider perspective (consultants, design companies, and researchers), but you can probably get a sense of who you want to hire by reading this book if you find that you cannot implement what it tells you by yourself.

Over the last 35 years, I have interviewed hundreds of successful executives who created business model innovations that changed their industries in major ways. I must comment that this book is a lot more complicated than what those practitioners think about and do. So it's possible that this book is capturing an emerging practice that will obsolete how all business model innovation is done. But I don't think I've ever met anyone who did it this way. Most of these practices are normally applied to developing new products, redesigning old products, to repositioning offerings, and adjusting the value chain.

Loading'
Your Tags: creativity, business model, design, strategy, value chain, michael porter

I live in a rural town of 3,000 that is a 15 hour drive from any major urban center. My purpose for buying this book was to gain a deeper understanding of how the tool works in light of my inability to partake in the Startup Weekend events or attend courses/workshops in person. I also bought this book as a recommendation for the Udacity course by Steve Blank on The Lean Launchpad. Before purchasing I listened to the Standford's Entrepreneurship Corner podcast on the Business Model Canvas. All in all, I had high expectations for this book.

What I discovered was 1/5th of the book explained how to fill in the blanks and 2/5ths explained the merits of story telling, using illustrations, what is prototyping, the importance of designers. The last 2/5ths focused on how famous management tools like Porter's Five Forces or concepts like Freemium can be represented using the business model. As such, I found 3/5ths of it useful.

As a critique on the Business Model Canvas itself, I felt it should be flipped horizontally for western cultures (reading from left to right, start with customer segments instead of key partnerships).

I'm a big fan of Value Network Analysis. A key component with VNA is linking the deliverable (value proposition) via transaction (channel and customer relationship) to the role (customer segment). Furthering this, there logically flows a linking of these to key activities and then key resources which determine the cost structure. The book fails, in my opinion, to adequately offer techniques for linking. I see that some practitioners of the Business Model Canvas have come over this by using colours, attaching string, drawing arrows, etc... to demonstrate linkages. I find this incredible important as when I remove a value proposition, I can then see the instant impact to the entire model. This was brushed upon in the section describing prototyping, but did not go into the depth of how a business model can act as a prototype other than stating it could be done in Excel. Addressing this in further detail and cutting out the stuff about story telling or the "designer's mentality" (although important, should be covered in a different book) would have brought this book to a 5 star rating.

All in all I am please I purchased the book as I intend to give it to aspiring entrepreneurs who lack the level of awareness that is required to understand and present a business model. It is a supporting resource and not a stand-alone guide. I hope that my purchase of the Owner's Startup Manual will prove more valuable like my Textbook on Culinary Fundamentals has been for cooking.

This book is self-described as a way to "design tomorrow's enterprises" by "defy(ing) outmoded business models", but there's really nothing new here. It simple goes through the standard business modelling process, but does so with pictures for each part of the process.

If you're new to business models and are looking for the fundamentals, this is a good book; it does show you the elements you need to consider. But if you're considering this book as a new way to look at business models, don't buy it. Yes, the illustrations are nice and they do a great job of design, but don't let that fool you -- there's nothing new here.