Archive for January, 2009

Jan 28, 2009

Financial Crisis – an Opportunity for Business Model Innovation?

Alexander Osterwalder

Innovating during an economic downturn might seem counter intuitive at first sight. However, it is precisely the right moment to do so, as long as you already prepared your company for survival during this extremely severe crisis.

This Monday European and US companies announced a brutal 76′000 job cuts in one single day (cf FT article Gloom deepens as 76,000 jobs go in a day). To focus on business model innovation when you just fired a part of your workforce to bring your company through the crisis might seem very strange. Yet, it is the right moment to do so for a number of reasons.

Business model innovation is difficult to achieve because it affects so many parts of an organization and because it needs the buy-in of so many different people. In addition, it requires the right organizational structures and a sense of urgency to make it happen. All these conditions are, unfortunately, easier to achieve during an economic downturn.

In an economic crisis complacency is gone and everybody feels a sense of urgency to act. People resist change much less when the survival of their company and ultimately their jobs are at stake. We all know how fiercely most people resist change in good times. So when the most urgent issues, such as cash management, are taken care of, a company’s management should turn to innovation. This is the best opportunity they will get to position their company for the future of business model innovation.

So what is to be done? A good place to start with is building the right organizational structures that allow for business model innovation. With this I don’t simply mean a “traditional” restructuring and shifting of people, but deep structural change. An organization that systematically wants to address business model innovation has the following characteristics:

  • its board explicitly gives the management the mandate to continuously examine business model innovation;

  • it extensively works with multidisciplinary teams across “departments” and across hierarchies;

  • it has mechanisms that allow innovative business model ideas to be evaluated by peers during a first phase, rather than “just by managers”;

  • it involves the customer in the process of business model innovation

  • it maintains a portfolio of innovative business models that may even cannibalize the existing business model.

  • it has the right physical space in place to allow multidisciplinary business model project teams to flourish. In other words, it has project/war rooms dedicated to a project during it’s entire duration and with lots of whiteboards and walls to post visuals.

Voilà, some “unbaked” thoughts on using the economic downturn as an opportunity to position an organization for the future of business model innovation.

If you have any thoughts to add, please don’t hesitate. The forum is yours…

Posted in business model, business model innovation, economic crisis, economic downturn, opportunity, organization, organizational structures | 8 Comments »

Jan 18, 2009

Business Model Designer From Sticky Note To Screen Interaction

Alexander Osterwalder

Last Friday I was part of the committee for a Masters Thesis defense on business model design at the HEC Business School in Lausanne, Switzerland. Boris Fritscher, whom I previously mentioned on this blog, defended his thesis “Business Model Designer From Sticky Note To Screen Interaction”. For his dissertation Boris developed a web-based business model design tool under the guidance of Professor Yves Pigneur, my co-author for an upcoming book on business model innovation.

Boris did an outstanding job combining business relevance with software development. You can check out his presentation and thesis below or on his website. You can also look into a non-interactive demo of his business model design tool. It allows capturing, storing and designing business models (read about it in the dissertation). Boris is not yet opening up the tool to the public, though many readers of my blog have already asked me for access. If we show him how much we want/need this tool he will hopefully change his mind and allow some testers access to an alpha/beta version. Isn’t it, Boris ;-) So post a comment to this blog if you think this is relevant!

Have a look at Boris’ thesis. It is really interesting and I believe it points us to the future of business model innovation: one where paper based brainstorming is combined and complemented with the advantages of computer aided business model design.

And here the slides Boris presented during his thesis defense:

Posted in CAD, boris fritscher, business design, business model design, business model innovation, computer aided business model design, computer aided design, redesigning business models, yves pigneur | 12 Comments »

Jan 13, 2009

Business Model Innovation Exercise Series: nr.1 – ideation

Alexander Osterwalder

The cow exercise is something I regularly do at my keynote speeches and workshops to trigger business model innovation thinking. It so far away from the audience’s daily business concerns that it easily stimulates creativity.

Have a look at the slides and make sure you send me your own sketches:

Have fun, send me your sketches and give me feedback…

Posted in business model innovation, cow, creativity, exercise, innovation | No Comments »

Jan 9, 2009

The Future of Management Books

Alexander Osterwalder

There are a lot of good management books out there and I’m looking up to many of the leading authors. I particularly admire thinkers like C.K. Prahalad (Bottom of the Pyramid), Gary Hamel (Future of Management) or Tom Kelley (Ten Faces of Innovation), to mention just some. Yet, even those outstanding personalities have not really changed the genre of management books. It’s high noon to do so.

The management book as it looks today is mainly due to past restrictions regarding printing and media. It is usually written by a limited group of persons or a single thought leader and it is published with a lot of black & white text and few images. This is the norm, though there are obviously great exception (John Kotter’s “Our Iceberg is Melting” or Tom Peters’ “Design Essentials“).

Here is my take on how a management book should be crafted and how the result should look like. I try to apply this in my own management book that I am writing together with Professor Yves Pigneur on business model innovation.

The 4 design essentials that the NEW management book should follow:

Visual Thinking & Design: The majority of management books as we now them today only rely on few visuals. This is mainly due to past restrictions in the printing industry. Authors of management books should use images much more because the visual sense trumps all authors as John Media outlines in his excellent book on brain rules (see rule #10). Images allow the simplification of concepts and they make it possible to convey emotion (e.g. change, urgency, competition). Personally, I believe it is not enough to have some graphs and 2×2 matrixes. We need a compelling visual design to make useful management books. For that purpose our book writing team includes a designer and the participation of XPLANE, the leading company in visualizing business strategy and management.

Co-creation: Management books should be co-created together with the end-user. Though authors usually have a pretty clear idea of what they want to convey in their book, I believe they should still integrate the reader as part of the book creation process. Yves and I are doing this through an online platform (called the Hub) where we share chunks of the book as we write them and then allow people to give feedback on each piece. We are doing this to integrate the valuable experience of our readers, to test ideas and start building a community of practitioners around the topic. In a month over 160 people have paid 24.- $US to be part of this process!

Prototyping: The method we use to co-create is prototyping. We see the book chunks that we share on the Hub as prototypes that we test with the members of the platform. This includes testing the content as well as the form, since in our book both play an essential role. Conveying a message through a more visual presentation must be tested by the end-user, the reader. Does it really work? Do people “get it”? The amount and quality of feedback that we got from our 160+ Hub members on our first book chunk was wonderful. It’s amazing how people get involved.

Applicability: Ultimately, a management book should help a person better manage his work, team or organization. Hence, the easier a management book makes it for the reader to apply the concepts conveyed in the book, the better it is… I think this is still a relatively weak point in the majority of management books – even in those with some of the most powerful concepts. Let me be clear, applicability is about limiting the effort the reader needs to make to translate the concepts conveyed in the book into applying them to his own work setting. In our own book on business model innovation we are aiming at making all we write applicable. As a consequence our book will look more like a manual for business model innovation. It shall include workshop scenarios, use cases and exercises to practices business model thinking.

Well great, now I’ve raised the expectations for our book once again… Join our book chunk project if you want to judge our ability to achieve the above design essentials. For 24.- $US you get some great privileges and the opportunity to participate in the future of management books ;-)

Posted in book project, book recommendation, business model book, business model innovation, business model innovation manual, business model manual, hamel, management book, prahalad | 1 Comment »

Jan 2, 2009

Wikipedia Needs a Business Model not Donations – plead-for-business model

Alexander Osterwalder

Wikipedia founder, Jimmy Wales, recently made a plead-for-donations for his extremely successful website (hat tip to Victor Lombardi).

Dear Jimmy Wales, this looks really desperate and I think it’s the wrong route you are going down! A great website, such as yours, should not have to rely on the mercy of donors. I would suggest you try to find a better business model, because donations are just not sustainable… Look at the lessons of long standing not-for-profit organizations: They are relying less and less on donations.

With your foundation you are hoping to raise $6 million through your annual campaign. With such a valuable and successful website, I think you would better focus on your core competencies rather than fund raising. You have the assets to build a successful business model and still fulfill your vision. 8 years of track record, 275 million monthly visits to your website, 11 million articles in 265 languages and your 150′000 volunteers merit more than the mercy of donors.

Please learn lessons from companies like Google. Based on advertising they have contributed just as much to trying to make knowledge universally accessible than Wikipedia. Ok, you don’t want to use advertising, because your volunteers think that could compromise the content. Well, I think you have a much larger range of possible business models to explore than just one built on advertising based revenue streams. I think you should launch a plead-for-business-models rather than a plead-for-donations.

I don’t want to give you any recommendations – you and your board are smart enough. However, if I were to find money to fulfill Wikipedia’s vision I would look into other business models that are complementary to your overall not-for-profit goal. Examples:

  • Licensing Wikipedia’s technology to for-profit-companies
  • Hosting other Wiki’s (similar to what WordPress does for blogs)
  • Membership fees like Amnesty International has

Here Jimmy Wales’ plead-for-donations:

Personally, I don’t really believe in donations. Some of the organizations that I find most astonishing and have achieved a huge social and economic impact are not at all donation-based (some take donations, but it’s not at their core). Here I’m thinking of Grameen Bank, Grameen Phone, Kiva or WISE.

Any other suggestions for Wikipedia business models?

Posted in business model, business model innovation, donations, jimmy wales, wikipedia, wikipedia business model, wikipedia donation, wikipedia founder | 17 Comments »