What is a business model?

03 Aug 2010|cfinlay

What is a business model?

Take a second.

Write your answer down.

Now ask your colleagues what they think and to agree.

That is how Alex Osterwalder kicked off his presentation last night at the Berkeley Hub, a coworking space in Berkley, CA. Alex brings a great deal of expertise (pdf) to the discussion of business model innovation, which is the topic of his best selling book Business Model Generation. This is a critical piece of thinking for everyone, especially those of us charged with creating new product and service innovations and figuring out a great way to get them to market. Business model innovation is really about understanding possibilities and choosing a model that suits your offering. This may sound obvious but the exercises and case studies in the book will likely show you that you are probably not in the business you think you are. Scary and exciting.

Business Model Generation offers a “business model canvas” that helps people to map out their business model and then describe potential alternatives. It helps people to be specific about their business, define clear options and build criteria for choosing. After participating in the exercise at the Hub, Alex’s opening statement “The communication about business models between specialists is just so bad that we had to make a tool.” came through loud and clear. It was wild to watch smart people struggle so mightily with what seemed like a simple challenge. Creating a clear definition of a “business model” that everyone could agree on seemed almost an almost insurmountable task, but the business model canvas provides a great start for this crucially underexposed challenge.

Tomorrow I will be presenting the business model canvas internally and have my colleagues practice using it. We will start with a company that everyone is familiar with, perhaps our own, and dig in. I think my colleagues may be as surprised and delighted by the challenge as the people at Alex’s talk were.

Follow Alex: @business_design & the Hub in Berkley: @HubBayArea

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