From time to time I invite guestbloggers to write about their expert knowledge. Today I have the pleasure to introduce you to Harry Verwayen from Europeana.eu, which aims to make European heritage openly available.

Harry has tirelessly advanced business model thinking in the (digital) cultural heritage sector. On this blog he is presenting the results of a new report. Harry, the floor is yours:

When large, forward thinking companies such Google are prepared to face huge lawsuits over the digitization of old books, that is a sure-tell sign that you find yourself in a sweet spot for business model innovation.

Not surprisingly, libraries and museums are pondering over ways to capture some of that value that comes with reaching a whole new audience. Over the past decade, museums, archives and other cultural heritage institutions have started digitizing important cultural heritage collections on an unprecedented scale. Literally millions of artifacts such as books, film, audio and even clay tablets have been digitized in order to bridge the divide between our analogue pasts and the digital futures.  Based on this material these institutions-  that were originally designed to safeguard our heritage-  have started experimenting with new digital services, aiming to bring this material closer to a group of people that would otherwise never visit these temples of wisdom.

However, there is an increasing recognition that these digital services are not yet perfectly suited to the needs of today’s users, who expect to be able to request, retrieve and adapt cultural heritage content- any content for that matter-  through popular interactive sites like YouTube, Flickr, Facebook and Wikipedia. This is a step that requires true business model innovation. A research team from thinktank Knowledgeland and the DEN Foundation in the Netherlands used the canvas to create a common language as the start of our investigations.

Old model

We found that the old, analogue model looked something like this: the value proposition was primarily based on ‘managing’ and safeguarding heritage for the (distant) future. In this model the clients are the government and professionals such as historians that are catered to through a building and professional curators. Cost and revenue streams are transparent and stable, practically all key activities could be carried out as part of the core business of the institutions, no partners needed.

New Model

With digitization the model changes, radically. The institutions still need to perform their management tasks, but completely new value propositions are suddenly within reach: The core mission of most of these institutions is to make  our heritage available as broadly as possible. With the variable costs of distribution falling close to zero this means that in theory all this material could be made accessible through a licensing system such as Creative Commons to the general public. Granted, there may not be a huge uptake on some of this ephemeral material, but if you still believe in the Long Tail you could imagine that at least some of this material will find a new audience.

Both the institutions themselves and policymakers consider the broad accessibility of cultural heritage materials to be an important contribution to our common social capital. But, when innovating the model, various barriers are encountered: while more than 26% of our heritage in Europe is currently digitized only a very small percentage (less than 1% by my estimates) is available where the value creation would be greatest, in the networked environment. After several rounds of iteration we came to the conclusion that there are four main problem areas that we needed to delve deeper into: Organization, ICT infrastructure, Copyright and Revenue Models.

We quickly found out that the traditional instrumentarium (bring together expert groups, read and write thick reports) alone would not do the trick. The subjects were simply too large and too complex. We then asked the people from JAM visual thinking to help us out. Tother with them we shaped our expert meetings into creative sessions supported by strong visuals that were constantly adapted to our latest thinking.

Revenue Models

We figured out that from a legal perspective there are four distinctive ways to make heritage available, represented by the four rings in the picture. In the inner rings the material is presented within the walls of the institutions. In the two outer rings the material is presented in the online environment. The further you get out, the more the material is shared in the networked environment with explicit re-use rights. We argue that the value for the users becomes greater when the material is cut loose from institutional boundaries and have tried to categorize ways to generate revenues in all four rings.

Although we are still far from reaching our goal of creating the ubiquitous, open, virtual library that is necessary to support the knowledge economy, we feel that we have at least been able to map out the issues and some paths towards solutions. This has resulted in a publication that I would like to bring to your attention, which can be downloaded here. Your comments are more than welcome, and I appreciate you spreading this in your network!

Special thanks to Alex and the team for continuously supporting this initiative and inspiring us to continue approaching these issues as designers.

Best,
Harry Verwayen <hverwayen@ziggo.nl>

It’s a really exciting topic and I am a firm believer in the combination of “doing good” and “doing well”. In my opinion the traditional frontiers between nonprofits focusing on social and environmental impact, and corporations solely focusing on profits will disappear – because of new and innovative business models. So many young professionals want to make a difference, but are not willing to forgo decent salaries. Personally, I think that’s not a contradiction. The challenge is to come up with the business models that combine both impact & profit.

Michael Shuman, author of Going Local, nicely summarizes why I think nonprofits must be replaced with different business models (and I’m speaking with the experience of somebody who worked in the HIV/AIDS and malaria field):

There’s a very good argument that many of the attributes of typical nonprofits – heavy reporting requirements, self-reappointing boards, poor access to capital, awful labor standards (in the name of the public interest) – make them lousy vehicles for social change…I think we need to rethink the structure of do-good enterprises.

In my presentation I mainly focused on showing how the Business Model Canvas can be used to describe and design “new” models like Grameenphone, MyC4, Grameen Bank, Kiva and more. Have a look and tell me what you think:

By the way, we are looking for funding to write a social entrepreneurship version of our book Business Model Generation: A Handbook for Visionaries, Game Changers and Challengers. We know that this would be of immense value and that it would have a huge audience. Organizations like the Skoll Foundation, Ashoka and others are likely to be interested, but we don’t have the contacts there…

Boris Fritscher, a brilliant student who has just started working on his PhD, has conceived a Web-based tool to sketch and edit business models. Now this Business Model Editor called BM|DESIGN|ER is open to the public in the form of a beta version (I talked about Boris’ work previously here and here). The more you test it and play around with it the better it will get. All you need to give in return is substantive feedback! I hope to see the tool on TechCrunch soon – I think it is a substantial basic tool for start-ups to play around with their business model.

Check it out the BM|DESIGN|ER here:
http://bmdesigner.com/

Personally, I believe we can make a lot of progress in the field of computer supported business design. While I am a great fan of working on whiteboards and/or with post-it™ notes, I also think computer-aided systems have an essential complementary role to play (and one day we will be able to conveniently brainstorm with virtual post-it notes).

Some of the main advantages of computer aided business model design over paper are:

• Highlighting of linkages between business model building blocks throughout a model – e.g. what resources, activities and partners do we need to serve a specific customer segment.
• Navigating between layers of a business model – e.g. this allows us to look at the different interlinked parts/layers of Amazon.com’s business model, which has expanded from online retailing towards providing Web infrastructure to other companies.
• Automatically generating financial spreadsheets based on visually conceived business model prototypes.
• Advanced manipulation of business models, such as storing, merging, comparing, versioning and sharing models.

Of course this all sounds a bit futuristic and it remains to be seen how business people pick up on this. But look at the history of information systems in business and you might be able to trace a trajectory: We started out with modeling accounting information and now have sophisticated software-based accounting systems. Then we started modeling order and warehouse management. That brought us sophisticated enterprise resource planning systems. We moved on and started modeling and redesigning processes. Now we have quite advanced Business Process Management Systems. So what is the next bastion? Business Models: New ways of creating value

Boris, bravo for providing a first advance in this direction! Let’s have fun playing around with and advancing the BMeditor!!! Boris put all the examples of our upcoming book, Business Model Generation, into the system. That will give you something to start with…

The “real” book will be out in September and can be pre-ordered at a special 25% discount on www.businessmodelgeneration.com. The reason it takes a little bit longer than planned is because we are co-creating the book. Integrating 400+ people in the process is time-consuming, but makes for a better book!

A number of those co-creators from our business model book writing Hub also took place in the Business Model Knowledge Fair last Friday. It was extraordinary to see them face to face. They came from many different places: US, Spain, Canada, Slovenia, Germany, and more (12 countries in total – on the Hub participants are from 40+ countries).

As to the event: The day was perfectly run by Patrick van der Pijl from Business Models Inc, who moderated the presentations and workshop sessions. The event took place at the “Hotel De Goudfazant” – an innovator’s venue.

I kicked off the day with a presentation on… Business Models. Check out the slides:

After my Intro Patrick interviewed the entire core book team, including my co-author Yves Pigneur, designer Alan Smith and editor Tim Clark (Patrick is himself involved managing production and distribution). To give the audience a feel for the book project FISH-EYE media produced a short video trailer of the book writing. Enjoy it:

Then, after his short video intermezzo, four business model innovation practitioners presented their work. Bas van Oosterhout of Capgemini presented his work at DSM, Marielle Sijgers presented Seats2meet.com and Harry Verwayen of Kennisland presented his work at the National Archive. Really impressive what these people are achieving!

In the afternoon we continued with something that I find core to systematically approaching business model innovation: Visual Thinking. The visual strategists of JAM, who are substantially contributing to the book, ran a dare2draw session. They got all 60 participants to draw their business model. Look at the photo proof (or check out all the photos here):

After the drawing session Tim Clark and Alan Smith took over. Tim presented his exciting and relevant research on the relationship between cultural context and business models, particularly related to Japan. Alan gave us a great insight into design methods and design thinking. Absolutely crucial when it comes to business model innovation.

The end of the day was devoted to the business model Hub where we co-created the book. First, Martijn Pater of Fronteer Strategy – a co-creation specialist – outlined the guiding principles of co-creation. Then the participants jointly brainstormed on a couple of questions to continue this business model innovation community: What are the lessons learned? What business model questions remain unanswered. What do we really need to focus on as a community of practitioners. Let’s hope this effort will go much beyond the book!

If you are interested in buying one of the remaining “broken” & unfinished limited editions of Business Model Generation, of which only 200 examples will ever be printed, you can do that here. The book is printed in black & white, contains about 70% of the final content, of which 50% is fully designed. This limited edition was part of the package of the Business Model Knowledge Fair. What makes it a collector’s item is that the print house got the printing wrong. The page order was misaligned, which completely messed up the design and made the book almost unreadable.

Buy the “broken” limited edition of Business Model Generation now for $250.- and you will get the final full color print in addition for free this September.

Caveat: This is a collector’s item of which only 200 examples will be printed. The book is not finished, not fully designed and has a print error.

I invited Alan Smith from The Movement, designer of our upcoming “Business Model Generation” book, to write about his take on design thinking. I’ve learned enormously about design from Alan while working on the book – it reinforced my love story with design thinking… (more about this topic in “Business Model Generation” But now, Alan, the stage is yours:

No Parking Policy:

The best class I had in design school was a class called “Design Thinking” with a fabulous professor named Mary Ann Maruska. The best comment I ever got in that class was on a project redesigning a “tow-away zone” sign.

As soon as we got the brief – that instant -I had this bloody brilliant idea of bending the sign-pole at its base and putting a hook through the circle in the “no parking” sign literally towing the sign away.

Brilliant no? What you don’t get it? That’s ok, most people didn’t. I was in love with this idea though!!!! It was so sweet!!! I’ve done X Y and Z right from a theoretical perspective and damn that’s hot!!! I shared it with fellow students. 8/10 times: “ummm”. I thought: “pfff. Another dimwit. I’m brilliant. That’s ok that they don’t get it. Everyone with a brain will.”

The course required that you create 10 alternatives, so I half-heartedly went through the process. I made them because I had to. Teacher says so. Jokes on her though, these crap solutions would enforce my Eureka sign and everyone would get it then!

As a young foolish student, my post project-reflection read: “I think my first idea is generally the best for any project. “

Mary Ann’s Response : “Really? This must be your first idea on ideas.” Went right over my head. But I think I get it now.

Creating alternatives is not just about verifying an idea you like, its about finding one that’s better, more appropriate, more interesting, or that leads to something better. Most of all, its about letting go.

This ability to let go dies hard, and with each new field / exercise you enter it comes back without you noticing.

Moving into business model design, I see myself making the same mistakes I made entering graphic design, and afterwards as a systems designer, furniture, motion graphics, web-architecture, management, entrepreneurship, etc…

Like a boxer, you can trust the process like you’d trust a coach. Run the drills knowing that they’ll give you value your weaknesses would not allow you to create. Better yet, you’ll also train those weaknesses out over time.

When you’re new to something, follow medium specific exercises and processes like you follow street-signs. You’ll end up arriving at incredible results you never could have found otherwise.

Or, you could just park one idea and hope it doesn’t get towed away by the first person who see’s through it.

As a reader of my blog you get a special discount off the entry price. The first 10 people get a crazy 35% discount (discount registration code: “bizmodelblog35″). When those are sold out you get still get a nice 10% (discount registration code: “bizmodelblog10″).

I will also be speaking at a couple of other public events this Spring:

• April 16. Oslo (Norway): Keynote at BEKK Business Model Seminar (sign-up)
• May 7. Tampa (US): Keynote at Innovate Tampa Bay Summit (sign-up)
• May 15. Waterford (Ireland): Keynote at Innovate to Compete

See you around!

Some of the most frequent points mentioned were:

• current success – it prevents companies from asking themselves how their business model could be replaced
• risk avoidance – people are often unwilling to take risks on a personal level, but also as an organization. It is easier to stick with the status quo.
• organizational structures – because they are not designed for new business models to emerge. They sustain the status quo.
• lack of customer understanding – of course organizations understand their customers, but not good enough to design new business models that address their emerging needs.
• required size of innovations – in big companies a potential new business model must immediately demonstrate an opporunity of millions of additional revenue.

These were just some few points to kick-off the discussion. Please share your EXPERIENCE!

You may also want to share your experience from a start-up perspective. What is preventing start-ups from more business model innovation (though many innovative BMs come from that universe…).

While working on this section I realized that ideas were not necessarily the problem. They exist in abundance within a company or an industry. I’ve experienced this with multiple organizations. The issue is selecting the right ideas, turning them into something implementable and then actually DOING them.

Regarding the first issue, selection, the biggest problem is that today’s organizational and management structures don’t allow good business model ideas to become visible. Interesting business model ideas can come from anywhere in a company. Operations, client services, finance… Yet, they have to be selected by management in order to maybe become real options. More often than not they stay invisible. I’m pretty sure that there were many smart folks in record companies that had good busines model innvation ideas. However, the management of these companies preferred to stick to the status quo… and ultimately become disrupted by illegal downloads and challenged by iTunes.

A solution to this is to put a multi-disciplinary business model innovation task force together. One that has the sponsorship of top management and the board. The task force should be composed of people from various levels of hierarchy, from different age groups, with diverse levels of experience, from different business units and with mixed expertise. The diversity will help ideas to emerge, to be discussed, improved and then selected for implementation.

The implementation issue is more challenging. It requires the willingness of top management and the board to experiment and allow for bottom-up ideas to emerge. Unfortunately, it also requires taking some risks to play with new ideas in the field. But if you look at the major record companies today, the risk of inaction is even bigger. I would argue for maintaining a portfolio of business models of which some may even cannibalize the existing main business model.

A great example of a business model portfolio can be found within Nestlé’s coffee business. While the Swiss multinational became big in coffee with Nescafé it’s current growth engine is now Nespresso. Nespresso sells espresso machines and pods to the high-end of the market. What is impressive is that Nestlé is internally challenging its new multi-billion espresso-pod money-making machine. They expanded their business model portfolio in coffee with Dolce Gusto, a Nescafé sub-brand targeting the lower end of the market. Dolce Gusto’s business model is quite similar to that of Nespresso with some tweaks. Nespresso sells to the higher end of the market, while Dolce Gusto sells to the lower end. Nespresso doesn’t sell pods through third party retail, while Dolce Gusto does. Though they are both targeting different customer segments, Dolcé Gusto is still cannibalizing Nespresso to a certain extent. Respect for Nestlé that they allow for this internal competition!

One of the main changes I made to the workshop structure was a new focus for the break-out sessions. I gave the immersion into client issues much more space. The workshop had two “client immersion sessions” before actually thinking of drafting an innovative business model around the clients. The ultimate task was to re-invent the consulting business model. Instead of getting them to start with business model innovation immediately I made them think about how consulting clients really feel and start innovating from there. This worked out really well, notably because JAM made the outcomes more tangible through images.

In the first break-out session I asked the groups to make a simple client profile (based on a method from XPLANE, which they call “empathy map”). The goal of this exercise is to think of the client more holistically.

The next break-out session consisted of sketching out the most important client issues. Wouter (1st image below) and Jan (2nd image) from JAM did a wonderful job of making these client issues more tangible through visualizations.

The groups then had a chance to walk around and look at the other groups’ work. In addition I asked them to put stickers on the client issues which they found most interesting. This “silent feedback” gave the groups a direction for the following break-out sessions.

After the client immersion sessions I asked the groups to outline the building blocks of their business models with the business model canvas.

At the end of the busy day each group presented their work and we voted for the best new consulting business model.

By the way, the workshop was kindly hosted by seats2meet.com, a company led by Ronald van den Hoff. He is disrupting the meeting space and event venue business with an innovative business model. Workshop participants had a chance to learn about his “lessons learned” when I interviewed him on business model innovation issues during the workshop.

All the other photos of the event can be found on my Flickr page. Big thanks to my business partner Patrick van der Pijl who took the pictures, but more importantly, set-up and managed the event.