Thursday, September 30, 2010

Business Model Canvas vs. Four-Box Framework

It is surprising that Johnson in developing and presenting the four-box business model framework does not make the connection with earlier business model frameworks, in particular the business model canvas with its four pillars and nine building blocks, which was already widely published in Osterwalder’s earlier work.

Here I will focus on comparing the elements of the two models without making too much of a judgement. Next to these differences in elements, the business model canvas makes the use of a graphical template which is not the case for the four-box framework. For a more extensive review of Johnson's book 'Seizing the White Space' I refer to Anders Sundelin's review on his Business Model Database blog, which also includes an interesting comment of Johnson.

A preliminary comparison of the elements of the two models shows that they overlap substantially. I have identified five main differences so far:

  1. The most prominent difference seems to be that that the four-box framework does not have a separate customer box as the canvas has a customer pillar, but includes this to some extent in the value proposition box, where customer segments are identified based on the job-to-be-done and the offering also include the access, which relates to the channels.
  2. The value proposition box also includes a financial aspect in terms of the payment scheme, which is in the revenue stream building block of the canvas.
  3. The profit formula box is more extensive than the financial pillar of the canvas including two key metrics: target unit margin and resource velocity. Whether or not this should be positioned in the business model or in the financial analysis of a more elaborated and detailed business plan following the business model, will depend upon the purpose and situation when using the models.
  4. The same can be said about the business rules, behavioural norms and success metrics, which Johnson discusses as part of the processes box and also as connection to the day-to-day operations.
  5. While the business model canvas has key partnerships as one of its nine building blocks, the four-box framework puts it under key resources and does not distinguish it as an explicit business model element.

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