Business model ideation
The Business model canvas can be a terrific ideation tool if you know how to use it as such. The tools on this page help you generate different options that you can either explore further or put on the shelf for later. The Business model canvas was created by Alexander Osterwalder, of Strategyzer.Free download
How to use the canvas
There are many, many ways to use a Business model canvas. Often we see people employ it to better understand how their company creates, delivers, and captures value today. And, just as often it’s used to make an idea (for the future) more concrete. However, in between those two things is ideation. In other words, if you know where you are today and you’re looking for ways to create business models for tomorrow, you must ideate.
While there are plenty of really great methodologies and frameworks, like open brainstorming and the Creative matrix, designed specifically for ideation, the Business model canvas can also be a really powerful tool to get the creative (ideation) juices flowing. The key to using the Business model canvas for ideation is that it’s best to start with your current business model. In other words, if you’re starting from zero, there are probably better methods for ideation.
1. Customer segments
List the top three segments. Look for the segments that provide the most revenue.
2. Value proposition
What are your products and services? What is the job you get done for your customer?
3. Revenue streams
List your top three revenue streams. If you do things for free, add them here too.
How do you communicate with your customer? How do you deliver the value proposition?
5. Customer relationships
How does this show up and how do you maintain the relationship?
6. Key activities
What do you do every day to run your business model?
7. Key resources
The people, knowledge, means, and money you need to run your business.
8. Key partners
List the partners that you can’t do business without (not suppliers).
9. Cost structure
List your top costs by looking at activities and resources.
Step by step guide
Need a jumpstart to start ideating based on your current business model? Why not use another company’s business model to start your creative engine. This is the purpose of the freshwatching ideation technique.
Freshwatching – a term invented in The Netherlands – is an ideation method by which you mix and match (or overlay) business models from other companies, often totally outside of your business or industry, with your own business model to see what you can come up with. For instance, say you’re current business model is one by which you sell accounting software to accountants through an extensive reseller channel to other business (i.e. B2B).
What might happen if you applied Uber’s business model to your own? How would it change things? How would you go about making money in a different way? How would your company change operationally?
It doesn’t matter if the company is an online business, an offline retailer, or even a massively popular one. With Freshwatching you’re simply looking at your company through the lens of another.
Here you can find business models of other companies .
Remove the Core
For this technique, you need to have filled your own business model. Start with that. Then, examine your own business model to find your company’s ‘special sauce’ – that one thing you are absolutely certain defines how your company creates, delivers, or captures value. For instance, if you’re running a software business, this might be the proprietary software you develop and sell. It could also be an irreplaceable partner or a specific customer segment. Now, as a thought experiment, remove the ‘special sauce’. Remove the post-it notes from your model that are, today, the core of what your business is about. Chances are, this leaves your business model with a large gaping hole. The innovation exercise is to fix the business model. But specifically not by sneaking your current special sauce back in! The point is to see what alternatives you can come up with.
TIP! This is an exercise that will usually cause some resistance by team members, as it removes the foundation under what you’ve been working on. Remind your team that it is a thought experiment, and that it’s the goal to go through this ‘what if?’ scenario, not to challenge the actual vision of the project.
The Business model canvas represents a dynamic system. There is interplay – cause and effect – between each and every building block; changing an element in one block will affect the others. This lends itself well to a technique called epicenter-based innovation. With epicenter based innovation, you effectively have nine different building blocks, or potential epicenters, to play with in order to generate more ideas. One way this works is to clear out eight building blocks of your business model, leaving only one intact. What would you build if that one was kept the same, but all the others can be filled just as you want? For instance, what would you build if you could bring your company’s key resources to bear on an entirely new business model? Amazon did just that when it figured out that it could use its cloud infrastructure to generate additional revenue. Other building blocks to focus on with this approach are customer segments (what else can you offer them?), your value proposition (what other customer segments can you address?), revenue streams (what other ways might you sell, lease, or rent your product/service), or even your channels (what else can you leverage with your current channels?).
Tip! Identify the unique strongpoints of your company and use these as epicenters. What are you exceptional at? What value have you created? What else can you do with that?
When you scan the landscape of existing business models, one thing you’ll notice is that there exist lots of business model patterns. Business model patterns are like formulas that can be applied to a business model to address a new customer need, or create a new revenue stream, etc. Some well-known examples of business model patterns are ones that use subscription revenue streams and/or have product platforms whereby one part of the product relies on the other to make money (think cheap handles, expensive blades, or cheap printers, expensive ink), often called bait-and-hook. There are tons of patterns that you can look at, we list the most well-known ones here.
Ask trigger questions
Asking “what if?” is a powerful way to help a team come up with great ideas. The key to doing this with the BMC is to come up with a list of questions that challenges what you do today…perhaps for each box of your business model. If, for instance, you’re BMW and you sell your product today through dealers, what would happen if you sold it directly to customers through an online channel? What would that look like? You get the picture.
As the trigger questions are asked by a facilitator in 10-15 second intervals (which is important that they are), each person will simply write whatever comes to mind on a sticky note using a permanent marker. By the end of this exercise, there should be a pile of at least as many sticky notes as there are questions in front of each participant.
Bring it all together
The above ideation (and innovation) techniques are meant to give you concrete starting points for coming up with new ideas. The best way to use these is to do so with a group of people brought together to create novel, new options for your company or product.