Changing the game – Business Model Innovation

What is a business model anyway? The simplest way to describe it is as the fundamental principle by which an organisation (e.g. a company) operates and creates value. For example, an insurance company, a retail shop or a machine builder are all companies that follow different business models.

Business model innovation is actually nothing new. Examples such as the invention of the credit card by the Diners Club company in 1950 or the introduction of cheap international telephone calls by Skype are typical examples of business model innovation. What is new, however, is the speed with which previously established business models can become obsolete today. Many once large companies can tell the story.

But how can business models be innovated? An important first step here is a good visualisation that enables us to understand and question a company’s business model.

Today, a method of analysis is often used that was significantly developed by Alexander Osterwälder and Yves Pigneur and published in 2011 – the Business Model Canvas. The matching book
Business Model Generation“, which explains the principle in an extremely clear way.

The Business Model Canvas consists of 9 building blocks that represent the logic of business models in a kind of template. The 9 building blocks are:

  • Customer segments (Which customers does the organisation serve?).
  • Value propositions (Which proposition solves customer problems?)
  • Channels (How does the customer receive the value proposition?)
  • Customer relationships (How are customer relationships established and maintained?
  • Revenue sources (How are revenues generated?)
  • Key resources (What goods are required for the offering?)
  • Key activities (What activities are most important to secure the offer?)
  • Key partnerships (Who are key partners needed for the offer?)
  • Cost structure (What are the largest cost pools?)

The segments are filled in and discussed together in the group, e.g. in a workshop. The comprehensible visualisation of the Business Model Canvas makes it easy for colleagues without business studies to understand complex business processes and enrich them with new ideas. In the second step, the existing business model can then be further developed and changed.

The following video provides an overview of the Business Model Canvas, which can be downloaded free of charge here.

At the verrocchio Institute for Innovation Competence, Business Model Generation is also a topic at the Innovation Master.

With inspiring greetings,
Christian Buchholz