Business Model Canvas or Business Model thinking?

The Business Model Canvas presents us with a great tool for the design and innovation of business models. As with every specific approach or tool, the Canvas can also bias or blind us. This can be caused by the features of the tool itself as well as from the way in which the tool is (wrongly) used.

As with every solution for solving a problem, the features of the Business Model Canvas are determined by the framing and scoping of the problem. This means that compared to other business model frameworks and tools, the Business Model Canvas has certain strengths and weaknesses (see also my discussion on different frameworks here). For example, some of specific areas where the Business Model Canvas could fall short in are related to business networks, service logic and business dynamics.

Another potential hazard with using the Business Model Canvas is that its use gets reduced to just filling out the individual building blocks. This will not provide a holistic perspective on value creation as it omits the relationships between the building blocks, e.g. Dell could offer direct sales because they targeted corporate customers going for a repeat purchase. Moreover, every business model has an underlying rational or story.  This is easily missed when one limits oneself to the individual building blocks. The idea behind Southwest Airlines' business model can be described as making flying an alternative for taking a bus or car.

So while the Business Model Canvas can be very useful for supporting the design and innovation of business models, we should not fall into the trap that we therefore assume that we do not need to also think more broadly about the logic for creating and capturing customer value.

Service-oriented business models: Service as value logic

This post is part of a series that explores service-oriented business models based on different perspectives on service.

Successful firms use business model innovation to rethink the way they do business and transform industries. However, current research on business model innovation is lacking theoretical underpinnings and is in need of new insights. The objective of this paper is to advance our understanding of both the business model concept and business model innovation based on service logic as foundation for customer value and value creation.

We present and discuss a rationale for business models based on ‘service logic’ with service as a value-supporting process and compared it with a business model based on ‘goods logic’ with goods as value-supporting resources. The implications for each of the business model dimensions: customer, value proposition, organizational architecture and revenue model, are described and discussed in detail.

See here for more information.

A simple Business Model Canvas example – The library

Looking for a simple example to learn and teach the Business model Canvas that is not too MBA like? Why not take something familiar like a library? Easy to map out but still very insightful. See the example I included below (as far as I remember it from when I was a kid in the Netherlands).

There are lots of ways to extent this. When you want to explore the commercial side, compare it with a book shop example. Or when you want to discuss the impact of technology, discuss how an e-book library would look like.

Where do we find services in enterprise architectures?

In recent years, enterprise architecture (EA) has captured growing attention as a means to systematically consolidate and interrelate diverse IT artefacts in order to provide holistic decision support. Since the emergence of Service-Oriented Architecture (SOA), many attempts have been made to incorporate SOA artefacts in existing EA frameworks. Yet the approaches taken to achieve this goal differ substantially for the most commonly used EA frameworks to date.

This paper investigates and compares five widely used EA frameworks in the way they embrace the SOA paradigm. It identifies what SOA artefacts are considered to be in the respective EA frameworks and their relative position in the overall structure. The results show that services and related artefacts are far from being well-integrated constructs in current EA frameworks.

The comparison presented in this paper will support practitioners in identifying an EA framework that provides SOA support in a way that matches their requirements and will hopefully inspire the academic EA and SOA communities to work on a closer integration of these architectures.

See here for more information.

The morphology of service bundling settings

The purpose of this paper is to advance our understanding of what contextual factors influence the service bundling process in an organizational setting.

Although previous literature contains insights into the mechanisms underlying bundling and the artefacts for performing the bundling task itself, the body of knowledge seems to lack a comprehensive framework for analysing the actual scenario in which the bundling process is performed. This is required as the scenario will influence the bundling method and the IT support. We address this need by designing a morphological box for analysing bundling scenarios in different organizational settings. The factors featured in the box are systematised into a set of four categories of bundling layers which we identify from reviewing literature. The two core layers in the framework are the service bundling on a type level and on an instance level (i.e. configuration).

To demonstrate the applicability and utility of the proposed morphological box, we apply it to assess the underlying differences and commonalities of two different bundling scenarios from the B2B and G2C sectors which stress the differences between bundling on a type and instance level. In addition, we identify several prospects for future research that can benefit from the proposed morphological box.

See here for more information.

Business Model Canvas 2.0

The Business Model Canvas, as described in Business Model Generation by Osterwalder and Pigneur (2010), is quickly becoming the dominant business model framework (see here for an overview of different frameworks). While the Business Model Canvas is a useful and easy-to-use tool for generating business models, it has certain limitations that I think need to be addressed in the future.

Below is my ‘wish list’ with what I consider the three major areas for improvement.

1. Moving from a product logic to a service logic
2. Moving from firm focus with partnering to constellation focus with networking
3. Moving from a static approach to a dynamic approach

I will address each of these areas in future posts.

Business model archetypes

How familiar are you with different business model archetypes or patterns, such as the 'free' model? Do you always start with a blank sheet when designing a new canvas or would/should you reuse existing models? Or when you analyse an exiting model, would/should you look at what is unique or what it has in common with other models?

Whatever your approach, it is good to be familiar with the individual archetypes that have been identified so far and the classifications (in the form of lists or typologies) used to describe multiple archetypes. Most of this started with trying to describe and understand different e-business models, for example Timmers (1998), Rappa (2000) and Weill & Vitale (2001). Later the specific focus on e-business models became less, although many of the newer models are still associated with the Internet as driver or enabler. Osterwalder & Pigneur (2010) and Johnson (2010) are examples of newer lists that are not e-business focussed.

Next to presenting different lists or typologies and their underlying criteria, some authors also address the application of business model archetypes for business model design and management via, for example,business model composition (Weill & Vitale, 2001), business model decision-making (Morris et al.,2005) and business model maturity (Chesbrough, 2006).

For a more detailed description and discussion see the whitepaper ‘Understanding business models.'