Business Model Canvas Interview w/ Author

Business901 Podcast Transcription
Implementing Lean Marketing Systems

What’s new in Business Model Generation?
Guest was Alex Osterwalder

Related Podcast:
What’s new in Business Model Generation?
Customer Value Canvas and more

What’s new in Business Model Generation? Customer Value Canvas and more
Copyright Business901


Dr. Alexander Osterwalder is a sought-after
author, speaker, workshop facilitator and
adviser on the topic of business model design
and innovation. He has established himself as
a global thought leader in this area, based on
a systematic and practical methodology to
achieve business model innovation.
Executives and entrepreneurs all over the
world apply Dr. Osterwalder’s approach to
strengthen their business model and achieve
a competitive advantage through business model innovation.
Organizations that use his approach include 3M, Ericsson, IBM,
Telenor, Capgemini, Deloitte, Logica, Public Works and
Government Services Canada, and many more.

Alex’s Websites:
http://www.businessmodelalchemist.com
http://businessmodelhub.com/
http://www.businessmodelgeneration.com/

 Competitive Advantage Through
Business Model Innovation
 Aligning Business Model Innovation and
Information Technology
 From Business Model to Business Plan
 Private Banking Business Models – discover, understand, define
 Business Models in the Media Industry
 Business Models at the Bottom of the Pyramid
 Social Entrepreneurship Business models
 Design Thinking in Business



Joe Dager: Welcome everyone. This is Joe Dager, the host of
the Business901 podcast. With me today is Dr. Alexander
Osterwalder. Alex has worked in applying business models and is
a true leader in thought leadership. He has replaced the poorly
yet well discussed concept with a sharply defined framework and
tools highlighted in his book "Business Model Generation." Alex, I
would like to compliment you first starting out, I think I just read
somewhere that your book has been on the top 200 in Amazon
for two years now?
Alex Osterwalder: Yes, a little bit over two years. We have
220,000 copies in circulation in 23 languages. It's been a nice
ride.
Joe: Yeah, it certainly has. I look at it a little different being
from a Lean perspective. I look it as the A3 of customer value.
Alex: OK, great.


Joe: I've used it in that sense a little bit to work with clients in
determining value. I saw some of the latest things you're doing is
you're taking the Business Model Generation into a whole
different area. You're taking a deeper dive with it into personal
use and also customer value.
Alex: Yeah, absolutely. Jim Clark who was already editing the
Business Model Generation book and who was in the core team,
he launched a new initiative called "Business Model You." He
applied the Business Model Canvas to people and that's going in a
totally new direction. So that was interesting to see because
people started doing it, we were catching up. Tim wrote a great
book around that in the same style as Business Model
Generation, of course, with a lot of visuals, very accessible and
extremely well designed by Trish Nalan.
Joe: In the Business Model Generation book, though, I think a
lot of people attach it very quickly to the Lean start-up because of
the craze there, but it really grew out of, I would say, design
thinkers and design thinking concepts in Europe.
Alex: The approach is used everywhere. This was used first in
large companies, particularly telecom companies around the
world in Columbia, Norway, some of the biggest players. Only
later did it really come into the start-up field or the Lean start up
field. So it was the other way around. Every community thinks
that it happened there first, which is very nice because it means
that we're getting some traction in all different kinds of
communities, which was, to a certain extent, a surprise that this
would have such a success in different places like social
entrepreneurship startups, large companies, even governments.
So that was pretty interesting to see how it spread beyond what
we originally intended with this framework.

Joe: What was the original intention then?


Alex: Well, we were just trying to figure out "how could you
better describe business models? How could you have a better
communication around business models?" The starting point was
during the Internet boom years, and that was a little bit of the
context. We always believed it would go beyond the Internet, but
that it would go even into governments and NGOs. That was
interesting to follow.

Joe: I think it even redefined the way a book was made a little
bit. It's a completely different concept, and it's so much more
visual. It's not quite a workbook, but it's not quite a book either.
It's got its own place.
Alex: Yeah, there are 11,000 business books coming out every
year on top of 200,000 business books that already exist. So you
really want to find a way to stand out when you write a new
book. Nobody is waiting for 11,001 or 200,0001. We tried to
figure out what we should we do. We asked a lot of people,
"What's wrong with business books? What don't they like?" We
understood a couple of things. We started to design a book that
would address that.
At the end of the day, I think, Yves Pigneur, my co-author, and
myself, we created a book that we would want to buy. It was
basically the book we would have wanted to buy on business
models. We created it for ourselves, and that's part of the story.
Joe: So taking the deeper dive, what's different about the
Customer-Value Canvas over the Business Model Generation?
Alex: The heart of The Business Model Generation book was the
Business Model Canvas. It's really about figuring out how you
create, deliver, and capture value. I think the core message there
is that product innovation, technology innovation is great and
important but it's just not enough anymore. With the Business
Model Canvas, we created a way to help people map and discuss
business models and have better conversations. Ultimately, just


get it out of the heads of people and put it on a table in order to
play with different alternatives. I still really strongly believe in
that. I think that's the core thing a lot of larger organizations are
still struggling with.
What we also realized, and we knew this from the beginning but
we never put a lot of effort into it, is that for every building block,
the nine building blocks we have for the Business Model Canvas,
you could think of plug-ins. Or around the Business Model
Canvas, you could think about plug-ins to sketch out certain
things like a competitive environment, whatever you want to use
as the concept.
The one thing I think that people understand really easily is
customer problems and company solutions are value
propositions, but they don't have a really good way to describe
that. Taking a part of the business model, customer, their
problems, I call them jobs to be done, a concept that is fairly well
established, and the value proposition.

We took that and we asked ourselves, "How could we turn this
into a visual canvas just like the Business Model Canvas?" but
just to visualize part of your business model. It does not replace
the need to sketch out a powerful business model. It's a
compliment that allows you to dig a bit deeper into one issue
which is "What are the jobs the customer is trying to get done in
each of your customer segments and what are you offering
them?"
It's a topic that's not new. A lot of people are talking about it. In
the Lean startup movement, it's called Problem Solution Fit or
Market Product Fit. However, you want to call it. But there's no
visual way of describing that, no canvas that would allow you to
sketch this out easily.
One of the biggest things I've learned over the last couple of
years is how powerful it is to visualize things that you discuss. So


just talking about something is probably not good enough to get
a clear understanding. It's not good enough to just think about
ideas. You want to get them out of your head and make them
tangible. So visualizing is one of the techniques that helps you a
lot with that.
So the Business Model Canvas is the way to visualize your
business model and make it tangible. The Customer-Value
Canvas is a new approach that allows you to visualize customer
jobs and the corresponding value propositions. That was the
intent behind it, to give people a method, to make things clearer,
to have better communications about their value propositions and
how those value propositions address customer needs and
customer jobs to be done.
And since, this is one of the big things in the whole Lean start up
movement, this focus on products, I thought, "Hey, it would be
nice to offer a way to visualize this theme."
Joe: It's taken each of the nine building blocks and adding,
another layer to each of the blocks?
Alex: So there are different things you could do. You could have
a plug-in for a specific building block. If you take channels, you
could have a method that allows you to visualize your channel
strategy. That would mean you go into one building block with a
plug-in method. You go deeper into your channels and your
strategy. You dig down. Now, the customer value is a little bit
different, because it takes two building blocks and it visualizes
those two building blocks and how they connect to each other.
So, basically, the message here is Business Model Canvas is one
method. What you really want to be able to do is weave together
all the important and relevant methods that help you create
better businesses and integrate them. It could be one building
block. It could include several building blocks, or it could include


something else around visualizing the business model
environment, managing your business model portfolio.

The main message here is that you find concepts that are useful,
that are practical, intuitive, and that you weave them together so
as a business person, executive and entrepreneur alike, you can
work in better ways.
Joe: There are two different ways, when you look at something
like this in a one page document that you really can't get the
depth that you need. The other way you can look at is that when
you do put something on one page you provide a lot of clarity
because you've got to get it on one page. What's the limitation of
the canvas?
Alex: I think what you're saying is pretty important. This issue
of granularity, we can go in a lot of depth and be very detailed.
But I think that is not the problem. I think that people are pretty
good at that, developing marketing strategies in very accurate
detail. What a lot of people lack is this ability to see the big
picture and how all the pieces fit together. This is the same for
startup entrepreneurs or for large companies. What's going to be
important in the future is how all the pieces of a business model
story fit together. And we're not very good at mapping that out,
just getting that big picture and how all these pieces fit together.
That was really the core idea behind the Business Model Canvas.
That was what we're focusing on. A lot of people want to go into
more granularities. I think that's fine, but it's when you address a
different issue. When you're trying to figure out what is the right
business model, when you're trying to figure out what is the right
strategy, you want something that gives you the big picture.

When you've found the right business model, when you've found
the right strategy, then you want to become more granular
because you're going towards implementation. So depending on


the goal you have, you will use different methods and different
granularity in a method. It's essentially finding the right thing.

It's what my colleagues and I when we had a consulting
company, it's what we called "Methodological Shopping." I like
that term because it's about trying to find the right method for
the right problem you're addressing.
Joe: One of the things that the canvas provides, is it gets us
away from that linear thought. That's what a lot of problem
solving is, but it's different than that. It's more of an iterative
type of problem solving where we're looking more in circular
understanding. Do you believe that value canvas promotes that?
Alex: Absolutely. I think the biggest problem is thinking, in
terms of problems, is saying, "This is a problem, we're trying to
find the solution." It sounds like an equation. When we're talking
about social systems and we're talking about organizations and
we're talking about business, there is no solution to a specific
problem. That's why I have a little bit of an issue with this idea of
Problem Solution Fit. No. In social systems you have a specific
context with specific variables. You're going to try to design
something that makes sense for that. So let's say you have a
customer with a specific job he wants to get done. There are
probably 10, 20, 100 ways of getting that job done.
What you want to figure out is, what's the best way? If you're a
business, what's the best and most profitable way to do that? So
it's not about finding a solution, it's about finding a good design.
And that's something that designers are good at. They have
techniques to do that.
If you're an engineer, you have the problem solution approach.
You'll try to find in a linear way, the solution to your problem.
You'll look at it as an equation, and you'll use different methods.
So I think the methods that we really want to look at are those


by designers who look at 10, 20, 30 different alternatives and try
to find the best design for a specific context.

Now if you take the Customer-Value Canvas, the context is you
have a customer and he's trying to get a job done. Some jobs
can't be done yet because no business has found a way to
profitably get that job done for the customer.
But if you have a Customer-Value Canvas, you can start mapping
out possible value propositions to get a job done. And then you'll
use the Business Model Canvas to try to find profitable ways to
make that value proposition possible.
It really comes back to designing a story that allows you to
create, deliver, and capture value in different ways. That's about
iterative design if we take the Lean start-up customer developer
words but pivoting until you find the right business model.
It's something that Steve Blank, author of "Four Steps to the
Epiphany" calls the search for the right business model. It's the
same four value propositions, the search for a good value
proposition. It's not about finding a solution. It's about finding
one that makes sense. It's about finding the right business model
that allows you to actually offer that.
I absolutely agree with you that it's about iterations, about
pivoting. I don't agree with the statement of calling it a problem
and finding the solution. That gives you more of the linear
engineering feel. I think we need to work more like designers
rather than engineers.
Joe: Lean has always been about problem solving and been on
the supply side of the equation When you go to the demand side
of the equation, I think if you start looking at Lean as far as
creating value and more of an appreciative inquiry type situation
where you just mentioned it and said "Lean tries to find possible
solutions over on that supply side." On the demand side,


appreciative inquiry tries to share value through dialog. I think
that's what you're saying there, in summary, is that you're really
looking at trying to share a value with the customer through the
dialog. The canvas is a tool to use to get there.
Alex: Right. It's a search process to find a profitable way to get
a customer job done.
Joe: The Customer-Value Canvas is pretty recent. You just
started using that this year?

Alex: Well, I just wrote a blog post about it last week. So it's
more than recent. It's something that started out with the idea...
I was talking to Mark Johnson, the author of a great business
model book called "Seizing the White Space." He's the co-founder
of a consulting company called "Innosight" that he co-founded
with Clayton Christensen. They use a concept a lot called "Jobs To
Be Done." They really brought this concept to another level. The
idea that came up during that conversation was, "Could we make
a visual canvas for jobs to be done just like there is a visual
canvas for business models?" which is the Business Model
Canvas.
I started thinking about that a little bit, and I tried out certain
things in my workshops and with students. I had a lot of
conversations about what would be a good design for such a
canvas with my co-author of Business Model Generation, Yves
Pigneur. And then it resulted in a blog post just a week ago.
So it is very new. I call it a "Prototype Version 0.8" because it
might not be finished. We're going to test it a bit more. We're
going to talk to a lot of people. I want to test this also with Steve
Blank who I enjoy working with a lot just to figure out "is this the
right canvas for this specific situation?"
We want to design value propositions for customer jobs to be
done. The Customer-Value Canvas is a mix of several different


methods. It started out with the idea of making a jobs canvas
and ended up being something that's a bit of a mash-up between
different approaches.
Joe: I really enjoy the blog post and pictures of course that are
on Flicker. If someone is trying to learn more about implementing
Business Model Generation, where do they go past the book? Are
there workshops available in the states? I know you're putting
them on, of course, all over the place. But you're just one guy.
You can only be so many places. Where do I dig deeper?

Alex: Yeah, so what we really want is that the method spreads
more. We do our own workshops, and you can find them on
Businessmodelgeneration.com. But, as you said, we're one small
group. I'm not focusing on doing more workshops and more
consulting. I enjoy doing some workshops and some talks, but
I'm building a software company that builds tools to support this
process. We really want the method to spread more so we can
help people with the software that we're developing.

What's happening is that a lot of consulting boutiques are
opening up that focus on business models and business model
design. Some of those people have been in my workshops, and
they go out and do it themselves.
The best way to find workshops on this topic is if you go to
businessmodelhub.com where we actually wrote the book in a
co-creation fashion. We opened up the hub afterwards, and you
have all the people who are interested in business models, some
of them consultants who can teach this stuff, where you can find
a community of business small practitioners.
That's probably the best place to find others who do similar
workshops to myself. In the future we want to structure this a bit
more and train people, train the trainer concept so people will use
the method in the best way possible.


The canvas is a simple tool, but there are several ways of using
it, and you can use them in more sophisticated ways and in less
sophisticated ways. If you really want to get the maximum out of
it, I think there are a couple of things to follow. Not all of the
people who use the canvas realize that.
Joe: I think there's a lot of depth behind the canvas, and that's
why I was asking that question. If you go back to how you
designed the book itself and the people who participated in it, you
built a community within structuring a book.

Alex: We had the idea of co-creating the book with people who
were already using the method. I put my PhD dissertation online,
and that was about business models. It was the basis for the
canvas, practically the same model but described in a more
academic way. So people were using it, and we thought, "Hey,
let's get practitioners involved. Let's get them to give us feedback
on every piece of content that we would write." So we would put
book chunks out there on our platform. People are actually paid
to join, and they would comment on every book chunk.
They would say, "Hey this is good." They would say, "This is bad."
They would say, "This is my experience in doing this in a large
company. This is my experience in doing it in a not for profit." We
could then figure out if our content was good enough. Fair
enough, people would push back if they wouldn't agree.
We really stress tested the whole book before putting it out on
the market. That was a lot of fun, but as an author it makes you
pretty vulnerable. At the end of the day it gives you a better
product, so it was really worth it. I enjoyed the interaction with
the 470 people a lot. I think all of those 470 people are proud to
have their name in the book, to have been part of this.

Joe: I think you did an outstanding job. If you go to the hub,
what site was that again? Thebusinessmodelhub.com?


Alex: Exactly. Yeah, it's a bit of a wild community at the
moment. We might structure it a little bit more, but I think that's
the main place where business model innovators come together.
That's the place to learn about business model innovation.
Joe: You're coming out with an iPad, or you have come out with
an iPad version of the canvas?
Alex: Yes, so we created an iPad App to help people design
business models and also to do some sanity checks. I think
computer assisted design is very powerful. You can do a lot of
great stuff with paper and post-it notes, but there are some
things that are harder to do. One would just be working in a
collaborative manner. When you have people in Singapore and
London and they want to work together, paper and post-in notes
is probably not the easiest way forward. You have to send people
traveling around the world.
There are also things that are just hard to do with paper and
post-it notes. That's throwing in ballpark figures, doing a financial
sanity test of your business model in five minutes rather than
trying to put together a spread sheet which is not complicated but
time consuming, even for the simplest business model.
We created an iPad App that allows you really to get the best of a
napkin sketch and of a spreadsheet in one, where you could
rapidly sketch out business models and put in some ballpark
figures and figure out "Could this be a profitable idea?" That was
the goal of the iPad App, and that's out at the App store. It's
called "Business Model Tool Box." You can find it on the App
store.
What we're launching very soon is a web App that would start
from the same starting point, allow you to create and quickly
sketch out business models, and on the web App, we will even
push the collaborative aspect more to get teams to be able to
sketch out business models together.


Again, this is not about replacing the paper world. I think there
are great things that you can do with post-it notes and paper, but
there are some things you can't do. We're going to launch the
web App pretty soon on a website called "Strategizer."
We hope to really support this process even more so more people
around the world try to find new ways to create, deliver, and
capture value. It would really be great to see this spread even
more.
Joe: I think it's a great concept. We jump on our desktop and
share our desktop so quickly now with people we're working with.
To have a point like that to be able to pull that up and strategize
and move stuff around, it's hard to duplicate pen and paper
sometimes but most of us live in a virtual world.
Alex: I think that the goal is to combine the best of all worlds
where you get the best of the paper based world and pens and
post-it notes and where you get the best of computer assisted
design. Our goal is really to use every medium in the best way. I
don't think we want to replace paper, but we want to boost
paper. We want to give it even more power, and that's with
computer aided design.
Joe: Is there something you'd like to mention that maybe I
didn't ask?
Alex: No, I think that was a great interview. This was a lot of
fun. There was one thing that I was a bit afraid about when I
launched the idea of the Customer-Value Canvas. It's about value
propositions, and it's about customers. My fear is a little bit that
people forget the business model. The real value comes when you
focus on both, product services and customer jobs and powerful
business models. It's never the powerful product alone anymore
that gives you a competitive advantage.


That gives you maybe a short term competitive advantage, but
the most powerful business models are those that combine great
products and a great business model. I think you really need to
focus on both and not fall into the product trap where you really
just go for it and try to design the best product possible.
I think that's a limitation. I think you need it, but I think great
products and amazing new technologies are becoming a
commodity. What you really want to do is you want to go beyond
that. You want to combine great products or great value
propositions with a great business model. That's ultimately the
trophy that we're looking for.
Joe: Well, I'd like to thank you very much for the time and the
opportunity to do this. It was a pleasure for me. Again, thank you
very much, Alex. This podcast will be available on the
Business901 site on iTunes store and also the Business901 blog
site. So thanks again.
Alex: Joe, It was my pleasure. It was fun.



Joseph T. Dager
Implementer of Lean Marketing Systems
Ph: 260-438-0411 Fax: 260-818-2022
Email: jtdager@business901.com
Web/Blog: http://www.business901.com
Twitter: @business901
What others say: In the past 20 years, Joe and I
have collaborated on many difficult issues. Joe's
ability to combine his expertise with "out of the
box" thinking is unsurpassed. He has always
delivered quickly, cost effectively and with
ingenuity. A brilliant mind that is always a pleasure to work with." James R.

Joe Dager is President of Business901, a progressive company providing
direction in areas such as Lean Marketing, Product Marketing, Product
Launches and Re-Launches. As a Lean Six Sigma Black Belt,
Business901 provides and implements marketing, project and performance
planning methodologies in small businesses. The simplicity of a single
flexible model will create clarity for your staff and as a result better
execution. My goal is to allow you spend your time on the need versus the
plan.

An example of how we may work: Business901 could start with a
consulting style utilizing an individual from your organization or a virtual
assistance that is well versed in our principles. We have capabilities to
plug virtually any marketing function into your process immediately. As
proficiencies develop, Business901 moves into a coach’s role supporting the
process as needed. The goal of implementing a system is that the processes
will become a habit and not an event.

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