I wrote about Computer Aided Design Tools (CAD) for business people years back in my doctoral dissertation. With the Business Model Toolbox for iPad we now made the first concrete steps towards a whole new breed of computer aided business design tools. The Toolbox combines the speed of a napkin sketch with the smarts of a spreadsheet. It enables you to map, test, and iterate your business ideas — fast.

It always struck me that we have relatively few good software tools in business to think through more strategic issues. We do have sophisticated business analytics tools to make sense of large amounts of quantitative data. We do have spreadsheets to simulate complicated financial scenarios. Yet, what do we have today to design and test strategies and business models? Little.

That’s exactly why the team behind the bestselling book Business Model Generation developed the Business Model Toolbox for iPad (V.1.0.) together with Geneva-based development firm Hortis le studio.

Watch my rough and improvised demo. It’s filmed with my iPhone in the middle of Berlin where I’m giving a keynote at Process World 2011 – more sophisticated product videos to come soon

The Toolbox V.1.0. focused on three core activities required to prototype business models:

• Sketch your business model using the practical methodology from the best-selling book, Business Model Generation.
• Add ballpark figures for market size, revenue streams, and costs — faster than any spreadsheet.
• Test the profitability of your ideas with a quick report and breakdowns by offer, customer segments, and costs.

Below are the screenshots of the simple example I sketched out in the video…

Starting a simple business model prototype (without costs)




Adding revenue streams: sales through the app store (and paying a Apple a 30% cut of your sales)




Playing with revenue stream ideas: what about a Web subscription?




Report view of a more complex business model




Obviously, many people asked us why just for the iPad. As soon as we launched they immediately asked for Android and Web versions. From a business perspective it might have indeed been smarter to start with a Web app because of its broader reach. This is particularly true, since we started developing the Toolbox when it was far from clear if anybody would buy an iPad.

The reason we went for the iPad first is because I firmly believe that the touch interface and the relatively large screen of the iPad will allow us to demystify and democratize the prototyping of business models – just like the visual design of the Business Model Generation book helped demystify and democratize business model thinking and thus make it accessible to a larger audience than the usual business book readers.

By going for the iPad first and the Web second we wanted to show what’s really possible when it comes to prototyping business models. Using your fingers to pull in virtual sticky notes just feels so much more natural than using a computer mouse, doesn’t it? The iPad app allowed us to test and validate this theory.

Today there are about 19 million iPads in the market (read more) and there is no doubt that Apple is currently dominating the tablet market. More interestingly, a majority of the senior executives and entrepreneurs I work with have an iPad. Some of them even bought an iPad just to use the app. For all others we will have good news later this year. The Business Model Foundry will continue to develop breakthrough tools for the Business Model Generation.

Go get the Business Model Toolbox for iPad if you don’t have it yet and got curious after reading this post. It will help you build better business models at the price of a lunch. Is a better business model worth it?
read more…
buy it on the appstore…


PS: Here at Process World 2011 in Berlin where I currently am at I’ll give a keynote about bridging the gap between business strategy and processes through the Business Model Canvas. Already, Software AG, one of our partner companies and organizer of Process World, has integrated the Business Model Canvas into ARIS, their business process management tool (read more).

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>

The first print-run of Business Model Generation was sold out after a few weeks only. We couldn’t keep up with demand and were out of stock for a while. Now the book is available again. You can get it directly on Amazon.com in a deluxe or portable version.

Business Model Generation has been selling phenomenally well – and that without a publisher and 0 marketing budget. Last week it even ranked #2 in sales of management books on Amazon.com. For this second print-run we decided to produce two slightly different versions: a deluxe version for your office and a portable version for the road.

Deluxe Version

The particularity of the deluxe version is its beautiful cardboard cover and special binding, which allows you to lay it flat open on a table. Yet, it’s not only attractive, but also offers you the perfect working experience that you would expect from a hands-on and practical book. However, be careful: deluxe versions are objects of envy – it’s not unheard of that copies get stolen when you leave them unsupervised on your desk.

buy now

Portable Version

We introduced the portable version in order to offer you a lighter and more portable copy at a lower price. The content is the same, but its format (perfect bound and softcover) is designed for taking it on the road. Business Model warriors will likely own both versions. One to show off at their office and one to take with them anywhere they go.

buy now

Caveat

Unfortunately, Amazon.com currently restricts us from offering a top-notch service to some customer segments. Readers outside the US cannot benefit from expedited shipping. Also, Amazon.com does not ship the book to Canada, due to internal restrictions. Hopefully, we can find a way around those limitations in the future.

Mapping out a business model with a group of people is like playing a game. That’s what I came to realize when my friend and leading visual thinker, Dave Gray, introduced me to his new project called Knowledge Games.

I was instantly fascinated by the project, because it is extremely relevant for anybody who wants to understand how creative work is starting to be organized in today’s organizations. Yet, most interestingly, the Knowledge Games project is utterly practical, since it aims to outline a series of games designed to help you get more innovative, creative results in your work.

The authors of the project, Dave Gray, Sunni Brown, and James Macanufo are on the best path towards creating the next reference guide for the creative business professional and business innovator. The metaphor of games refers to the most natural of human mechanisms of exploring the world: games & play. And what could be more important than exploration when it comes to defining strategy and business models in a competitive environment characterized by volatility, unknowns and constant change:

Games come naturally to human beings. Playing a game is a way of exploring the world, a form of structured play, a natural learning activity that’s deeply tied to growth. Games can be fun and entertaining, but games can have practical benefits too.

When Dave asked me to formulate the usage of the Business Model Canvas as a Knowledge Game I was immediately hooked. Here is the blogpost I wrote for the Knowledge Games project (check out the original post):

Objective of Play: Visualize a business model idea or an organization’s current and/or future business model in order to create a shared understanding and highlight key drivers.

Number of Players: 1-6 (depending on the objective). Works well individually to quickly sketch out and think through a business model idea or an interesting business portrayed in the press. To map an organization’s existing and/or future business model you should work in groups. The more diverse the group of players (marketing, operations, finance, IT, etc.), the more accurate the picture of the business model will be.

Duration of Play: Anywhere between 15 minutes for individual play (napkin sketch of a business model idea), half a day (to map an organization’s existing business model), and two days (to develop a future business model or start-up business model, including business case).

Material required: Mapping business models works best when players work on a poster on the wall. To run a good session you will need the following:

• A very large print of a Business Canvas Poster. Ideally B0 format (1000mm × 1414mm or 39.4in × 55.7in)
• Tons of sticky notes (i.e. post-it® notes) of different colors
• Flip chart markers
• Camera to capture results
• The facilitator of the game might want to read an outline of the Business Model Canvas (free 72 page preview of Business Model Generation

How to Play: There are several games and variations you can play with the Business Model Canvas Poster. Here we describe the most basic game, which is the mapping of an organization’s existing business model (steps 1-3), it’s assessment (step 4), and the formulation of improved or potential new business models (step 5). The game can easily be adapted to the objectives of the players.

1. A good way to start mapping your business model is by letting players begin to describe the different customer segments your organization serves. Players should put up different color sticky notes on the Canvas Poster for each type of segment. A group of customers represents a distinct segment if they have distinct needs and you offer them distinct value propositions (e.g. a newspapers serves readers and advertisers), or if they require different channels, customer relationships, or revenue streams.
2. Subsequently, players should map out the value propositions your organization offers each customer segment. Players should use same color sticky notes for value propositions and customer segments that go together. If a value proposition targets two very different customer segments, the sticky note colors of both segments should be used.
3. Then players should map out all the remaining building blocks of your organization’s business model with sticky notes. They should always try to use the colors of the related customer segment.
4. When the players mapped out the whole business model they can start assessing its strength and weaknesses by putting up green (strength) and red (weakness) sticky notes alongside the strong and weak elements of the mapped business model. Alternatively, sticky notes marked with a “+” and “-” can be used rather than colors.
5. Based on the visualization of your organization’s business model, which players mapped out in steps 1-4, they can now either try to improve the existing business model or generate totally new alternative business models. Ideally players use one or several additional Business Model Canvas Posters to map out improved business models or new alternatives.

Strategy: This is a very powerful game to start discussing an organization’s or a department’s business model. Because the players visualize the business model together they develop a very strong shared understanding of what their business model really is about. One would think the business model is clear to most people in an organization. Yet, it is not uncommon that mapping out an organization’s business model leads to very intense and deep discussions among the players to arrive at a consensus on what an organization’s business model really is.

The mapping of an organization’s existing business model, including its strengths and weaknesses, is an essential starting point to improve the current business model and/or develop new future business models. At the very least the game leads to a refined and shared understanding of an organization’s business model. At its best it helps players develop strategic directions for the future by outlining new and/or improved business models for the organization.

Variations: The Business Model Canvas Tool can be the basis of several other games, such as games to:

• generate a business model for a start-up organization
• develop a business model for a new product and/or service
• map out the business models of competitors, particularly insurgents with new business models
• map out and understand innovative business models in other industries as a source of inspiration
• communicate business models across an organization or to investors (e.g. for start-ups)

I admit, I have been posting about the music industry too much recently. However, by studying it we can learn a lot about business model innovation in general (or a lack of it).

After my keynote at the Eurosonic Noorderslag music industry event I gave a short interview. Check it out and don’t miss out on the interview with Niklas Ivarsson of Spotify (promise: my next blogpost will certainly not be about the music industry – I will explain how to use the Business Model Canvas to play a game).





Spotify is one of the hot start-ups in the music industry. I portrayed the company’s business model in my keynote by sketching it out with the Canvas. Niklas Ivarsson, their global head of licensing, outlines the services of his company in the interview below. Interestingly, he also explains how many users prefer using Spotify rather than relying on piracy for music.

Last month I did a short 7 minute talk in the “Eye Opener” session at eDay in Rotterdam. Have a look at the video.