The document summarizes two books:
1) Business Model Canvas provides a framework to develop business models through 9 building blocks organized on a canvas. It introduces various patterns and design/strategy tools to develop innovative models.
2) Blue Ocean Strategy describes creating new market spaces ("blue oceans") by making competition irrelevant through value innovation that contrasts sharply from existing offers. It provides examples of companies like Cirque du Soleil that created blue oceans.
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1. Business Model Canvas
Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers
By Alexander Osterwalder and Yves Pigneur
Spinuzzi’s book review of Business Model Generation
Slide Content Copyright @ Spinuzzi Blog
http://spinuzzi.blogspot.com/2014/11/reading-business-model-generation.html
Slides Compiled by Amanda Zhu, August 2016
2. Business Model Canvas (BMC)
a lean, rapid alternative to writing a business plan
popularized by Steve Blank
"readable" and "accessible“
The arc:
Canvas
Patterns
Design
Strategy
Process
Outlook
Each contributes to the development of a business
3. 1- Canvas – the starting point
provides "a shared language for describing, visualizing, assessing, and changing business models"
(Osterwalder and Pigneur, p.12).
assume that you already have an innovation in mind, and now you will build a business around it.
A business model
consists of "nine building blocks that show the logic of how a company intends to make money"
covering "the four main areas of a business: customers, offer, infrastructure, and financial viability"
(Osterwalder and Pigneur, p.15).
These building blocks all interact, and putting them on a canvas — a heuristic that is meant to be
collaboratively assembled — allows the entrepreneur to see their relationships and address weaknesses.
4. 1- Canvas – 9 building blocks
Customer segments: "the different groups of people or organizations an enterprise aims to reach and serve"
(Osterwalder and Pigneur, p.20)
Value propositions: "the bundle of products and services that create value for a specific customer segment" (p.22)
Channels: "how a company communicates with and reaches its Customer Segments to deliver a Value Proposition"
(p.26)
Customer relationships: "the types of relationships a company establishes with specific Customer Segments" (p.28)
Revenue streams: "the cash a company generates from each Customer Segment" (p.30)
Key resources: "the most important assets required to make a business model work" (p.34)
Key activities: "the most important things a company must do to make its business model work" (p.36)
Key partnerships: "the network of suppliers and partners that make the business model work" (p.38)
Cost structure: "all costs incurred to operate a business model" (p.40)
By laying these out in a canvas, the authors allow us to see the relationships spatially. The left side of the canvas
focuses on efficiency, while the right side focuses on value (p.49).
5. 2- Patterns
discuss three core business types
product innovation
customer relationship management
infrastructure management
in terms of three aspects (p.59)
culture
competition
economics
use the BMC to parsimoniously describe different business cases and patterns, including
free offerings
fremium services
open business models
This section is lengthy, perhaps overly so; you can find a summary on pp.118-119.
6. 3 - Design
discuss design techniques and tools "that can help you design better and more innovative
business models" (p.125). These tools include –
customer insights (including another heuristic, the empathy map)
ideation (including SWOT analysis)
visual thinking (including affinity diagrams, although they don't use the term)
prototyping
storytelling
scenarios
These are familiar tools to whoever involved in UX/UI, participatory design, and related
approaches. Essentially, the authors use these tools to increase customer empathy and adopt the
customer's perspective.
7. 4 - Strategy
introduces another set of heuristics. The Business Model Environment describes "context, design
drivers, and constraints" (p.200) by showing four categories characterizing the business
environment (p.201) -
key trends
market forces
macroeconomic forces
industry forces
they assess the business model by the overlay of SWOT over the BMC, providing a set of
questions (pp.217-223) to guide the SWOT.
turn to blue ocean strategy (BOS), declaring that the BMC is a "perfect extension" of it (p.226)
and using one example from Blue Ocean Strategy, that of Cirque du Soleil, to illustrate how BOS
and the BMC can complement each other.
8. 5 - Process
summarize the entire process of developing a business model.
the process does not follow the order of the sections. They describe the process as -
1- Mobilize (Setting the stage)
2- Understand (Immersion)
3- Design (Inquiry)
4- Implement (Execution)
5- Manage (Evolution)
helpfully provide tools and page numbers under each stage.
Naturally, 1-3 make heavy use of the Design section, while the BMC is evolved throughout.
9. Two more things …
First, the authors also discuss "beyond-profit business models" (p.264),
elsewhere called social innovation. i.e., the principles laid out here can also be applied to nonprofits
Second, briefly discuss how the BMC and other heuristics are translated into a formal business plan
(pp.268-269).
This small section reminded me of my favorite proposal writing book, which similarly helps people work
through various heuristics in order to assemble a complex argument.
However, the authors don't take the next step and demonstrate the concrete steps of writing the business
proposal.
In all, I found this book intriguing and very useful. As a professor of rhetoric and writing, I'm
interested in how people assemble complex arguments, and this book essentially helps budding
entrepreneurs to understand that argument-building process.
If you're interested in becoming an entrepreneur, or just understanding how entrepreneurs write
and communicate, definitely take a look.
10. Blue Ocean Strategy
Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant
By W. Chan Kim and Renee Mauborgne
Spinuzzi’s book review of Marketing Strategy
Slide Content Copyright @ Spinuzzi Blog
http://spinuzzi.blogspot.com/2014/05/reading-blue-ocean-strategy.html
Slides Compiled by Amanda Zhu, August 2016
11. Red Oceans and Blue Oceans
Blue Ocean Strategy is an international bestseller on strategically developing new market space. The authors invite us to consider a
"marketing universe composed of two sorts of oceans: red oceans and blue oceans" (p.4).
Red oceans are existing, known market spaces in which (p.4) –
rules are known
products are commodities
competition is fierce & makes it a battlespace
margins become thinner
the rule is incremental improvement (p.7)
Blue oceans are untapped market spaces in which –
rules are in the process of being made
competition is thin
margins are consequently fat (p.5)
Blue oceans are more profitable (p.7)]
They require value innovation, in which -
"instead of focusing on beating the competition
you focus on making the competition irrelevant by creating a leap in value for buyers and your company
thereby opening up new and uncontested market space" (p.12)
12. Examples of Blue Ocean Strategy
The authors include multiple examples of blue ocean strategy,
most memorably Cirque de Soleil, which made traditional circuses irrelevant by eliminating, reducing, and
raising certain aspects of the traditional circus while creating new value in the experience.
Another example is [yellow tail], the Australian wine that was marketed in sharp contrast to other wines in
the US market.
In these and other examples, the authors use analytical tools to demonstrate how the cases
contrasted sharply with existing products, allowing them to create blue oceans.
The notion of creating a new market is not especially revolutionary.
But the book provides several linked heuristics that allow readers to analyze the current market, see
possibilities, develop strategy, and execute it. That, I think, is what made it such a valuable book.
still valuable if you're planning to market a product, or even if you're thinking about analogous
ways to distinguish your work from others.
The book is readable, easy to grasp, and well illustrated with examples.