In the “Matrix” part, there is a matrix or template which is used to describe, represent and analyze the basic elements of the new economic model. This explanatory matrix includes 9 main blocks which are broken down as follows: Customer segments, Value propositions, Channels, Customer relationships, Revenue streams, Key resources, Key activities, Key partners, Cost structure. This makes it possible to go around the 4 main dimensions of a company, namely the customers, the offer, the infrastructure and the financial viability.
Typology of different business model motives
The “Typology” section offers an overview of different types of economic models also recognized by the greatest thinkers in management. There is emphasis on five main types which are distinguished by their respective economic motives. The authors define the economic motives from the commonalities found in the different models.
According to them, it is a question of finding “characteristics, configurations and similar behaviours” specific to the logic of the economic model observed. Among the 5 economic models selected for reflection, we find the unbundled model, the long tail model, that of multisided platforms, the free economic model and open economic models. For each model, there is information as to the context, the challenge, the solutions, the principles of application and examples of companies corresponding to each type.
Design: Six Techniques for Creating Business Models
The “Design” part introduces us to six designer techniques which aims to help in the design of “Business Models”. These techniques are identified as follows: Knowing the customer, generating ideas, visual thinking, prototyping, storytelling, scenarios. Let us take a brief look at these different techniques based on the following considerations.
Technique #1: Knowing the customer
The know-your-customer technique is essentially about putting yourself in the customer’s shoes. “Put yourself in the customer’s shoes is a principle that governs the entire business model design process.” (p.128). We propose, among other things, to develop the profile of the clientele using the Empathy Map which includes the following questions: What do they see? What does she hear? What is she really thinking? What does she say and what does she do? What does she hope for?
Technique #2: Idea Generation
About the idea generation technique, it is proposed to bring together favorable conditions for the idea generation process. It’s about :
- Ensure the composition of a diverse team;
- To identify and study the elements that must be known by immersion in the subject;
- To generate many ideas in each of the nine blocks of the economic model;
- Select ideas based on criteria such as “estimated deployment time, revenue potential, potential customer resistance and impact on competitive advantage” (p.142);
- Evaluate ideas and ask yourself, “What does the business model look like for each winning idea?”
Technique #3: Visual Thinking
Visual thinking is presented as essential for working on economic models. Two visual thinking techniques are recommended as tools to facilitate the process of exploring, defining, discussing and changing a business model. This is the visualization with Post-its particularly recommended at the stage of exploring ideas. Then the use of the drawings in association with the matrix which makes it possible to improve the process of definition, discussion, construction and change of an economic model. Also, these two visual techniques used successively or jointly with the matrix have the advantage of helping to better understand the essential, of promoting co-creation and of improving dialogue and communication.
Technique #4: Prototyping
The prototypes for Osterwalder and Pigneur represent potential business models. They are tools at the service of discussion, questioning or validation of a concept. They help to explore different directions in which we can lead our business model (p.162). In other words, they help to better understand what could be. In this regard, the authors are convinced of the importance of designing and prototyping new ideas for business models to gain a competitive advantage and create new markets. They suggest adopting the “design attitude”, that is to say a questioning approach that requires no longer trying first to make decisions but to create options from which to choose. They remind us that the multiple questions at the different stages of development make it possible to bring out truly revolutionary economic models.
Technique #5: Storytelling
While the matrix helps to represent, build and analyze the business model, the storytelling (story) helps to communicate in a more tangible way the essence of the new business model. The use of stories makes potential futures tangible, helps to clarify the concept, to understand the new model and to see what it means. Also, telling a story that tells how the model creates value for the customer cannot fail to generate buy-in.
Technique #6: Customer Scenarios
The technique of customer scenarios stimulates creativity and helps to project into the future. Imagining several scenarios for the same concept makes it possible to give substance to the concept, to better adapt the economic model to different customer segments and to meet different criteria.
Read aslo: Business Consultant Job Description
Strategy: A reinterpretation of strategy in the new business model generation
In the Strategy section, you are encouraged to constructively challenge existing business models or examine new ones by considering the environment in which the organization operates. We propose to do this by analyzing four main strategic areas, namely: the business model environment, the evaluation of business models, the Blue Ocean strategy and the management of several business models within the same company. Here are some tips to help you find your way around.
The business model environment
It is essentially a question of examining the influence of forces external to the company. It is suggested to understand the “design space” by mapping “four major dimensions of your environment:
(1) market forces.
(2) sector strengths.
(3) key trends.
(4) macroeconomic forces.
Evaluation of economic models
The evaluation of the economic model is carried out by analyzing the forces present from within the company. It is suggested to combine the business model matrix with the SWOT analysis which considers the strengths, opportunities, weaknesses and threats of the business model. The aim is then to carry out a diagnosis by alternating the examination of the individual elements of each of the blocks of the model and the integrity of the whole.
SWOT analysis | Unleashing Business Potential with Examples and how to address the weaknesses and threats identified
The Blue Ocean Strategy
In the Blue Ocean Strategy section, the authors offer a powerful tool to assess existing models and help create new ones. The performance of this tool comes from the combination of the Blue Ocean concept, the Four Actions Grid and the Business Model Matrix. Recall that the core of the Blue Ocean concept is to “create an entirely new market space through fundamental differentiation.” The Grid of the four actions is mainly used to analyze by questioning what must be excluded, mitigated, reinforced and created in a service, a product, an idea.
Combined with the Blue Ocean Strategy and the Four Actions Grid, the Business Model Matrix provides the big picture to examine the impact of a change on the whole in a structured way. The advantage of using its various tools simultaneously and/or successively is to offer the ability to question the economic model “in terms of value creation, customers and costs” and to take into consideration the impacts of its changes throughout the model.
The management of several economic models within the same company
The design and deployment of new economic models represent a major challenge for management. The management of several economic models and the presence of innovative economic models within the same company are part of the current portrait of companies.
They are among the issues and challenges facing organizations today. Should several models be integrated, separated or mixed within the same company? The authors offer some interesting lines of thought on this subject.
Process of designing an economic model
The Process part is devoted to the entire generic process that allows the design of innovative business models. In this part, you are encouraged to use the concepts, techniques and tools offered throughout the book.
It is important to note that the authors recall the importance of adopting a “Design attitude” designer approach. Why? Because “The design attitude is much less linear than the traditional decision-making approach which focuses on analysis, decision and optimization.
Yet it is this iterative and disorderly approach that calls for the thoughtful quest for new competitive growth”…”Uncertain at the start, the process unfolds in a chaotic and opportunistic way before focusing on a single point.” (p.246).
The 5 phases of the process of designing a new business model:
- MOBILIZE (present to convince, inform, train, federate)
- UNDERSTAND (search and question)
- DESIGN (try)
- DEPLOY (execute)
- MANAGE (and evolve)
1 — MOBILIZE (present to convince, inform, train, federate)
Put in place the conditions for the success of the project.
Make the people concerned aware of the need for a new business model, explain the reason for the project and define a common language.
Use the business model matrix as a communication tool.
2 — UNDERSTAND (search and question)
Collect and analyze the elements required to initiate the reflection.
Immerse yourself with your team in your subject: customer technology, environment, and, etc.
Collect information, interview experts, study potential customers and identify needs and problems.
Use the business model matrix as a tool to understand.
3 — DESIGN (try)
Generate and test viable options, then select the best ones.
Transform information and ideas from the previous phase into business model prototypes that can be explored and tested. After a thorough questioning, select the most satisfactory model.
Use the business model matrix as a tool to design your business project.
To build and/or improve the business model of a food service business… what you absolutely need to know
4 — DEPLOY (execute)
Deploy the business model prototype in the field.
Deploy the selected business model.
Use the business model matrix as a tool to deploy your business project in the field.
5 — MANAGE (and evolve)
Adapt and modify the model in response to market feedback.
Put in place the management structures required to monitor, evaluate and regularly adapt or transform your business model.
Use the business model matrix as a day-to-day management tool.
Point of view
Finally, Osterwalder and Pigneur invite you to explore new economic models and apply them to five future issues that they identify as follows:
- Using the matrix to drive innovation in the public and voluntary sectors;
- The design of computer-aided economic models;
- The relationship between economic models and business plans;
- The difficulty of deploying business models in new businesses and existing organizations;
- The consistency of business models and business information systems.
Epilogue – The story of the creation of the book
Where does this book come from? This book is the result of a doctoral thesis on innovative economic models. It also stems from a method that is applied via a blog and a specific request during a training workshop (Why is the method for developing innovative economic models not accompanied by a book?). The process of writing the book is a step-by-step creation process and successive integration with consultation and participation of members of an online platform “The Hub” where the writings are published. So this reference work used during seminars is the result of collaborative work online. Co-created with the participation of 470 professionals committed to creating innovative business models from 45 countries, it represents an innovative product that facilitates the understanding of innovative future projects.
In fact, this book breaks with the traditional format of strategy and marketing books. Very visual, it has certain educational and practical qualities. The subjects are treated in a synthetic way. Most concepts are presented on a page or two. A book with accessible content, whose understanding is facilitated thanks to the creative and visual thinking that dominates.
“Business Model – Next Generation: A Guide for Visionaries, Revolutionaries and Challengers” has the features necessary to satisfy anyone who is entrepreneurial and interested in improving or implementing new models of revolutionary economic development. This book offers many tools for diagnosing, taking stock, questioning and improving the business model. It gradually directs the reader towards a new generation economic model which makes it possible to stand out by creating new values.