Business Model Generation – Part4 – Strategy
“There is not a single business model … There are really a lot of opportunities and a lot of options and we just have to discover all of them.” Tim O´Reilly, CEO
This section is about re-interpreting strategy through the lens of the Business Model Canvas. This will help us constructively question established business models and strategically examine the environment in which our own business model functions.
We will explore the first two out of four strategic areas:
- The Business Model Environment
- Evaluating Business Models
- A Business Model Perspective on Blue Ocean Strategies
- How to Manage Multiple Business Models within an enterprise
1 Business Model Environment: Context, Design Drivers, and Constraints
Business models are designed and executed in specific environments and continuous environmental scanning is more important than ever because of the growing complexity of the economic landscape, greater uncertainty and severe market disruptions. Understanding changes in the environment helps you adapt your model more effectively to shifting external forces.
To get a better grasp on our business model “design pace”, the authors suggest roughly mapping four main areas of our environment:
- Market forces (needs and demands, switching costs, revenue attractiveness…)
- Industry forces (Suppliers, stakeholders, competitors …)
- Key trends (technology, societal, cultural trends…)
- Macroeconomic forces (global market conditions, capital markets, economic infrastructure…)
In the book are a few examples to describe these external forces in great detail. After showing all the influences they strongly advocate mapping our own business model environment and reflecting on what trends mean for the future of our enterprise.
2 Evaluating business models
Regularly assessing a business model is an important management activity that allows an organization to evaluate the health of its market position and adapt accordingly. This checkup may become the basis for incremental business model improvements, or it might trigger a serious intervention in the form of a business model innovation initiative.
In the book are two type of assessment outlined. A big picture assessment of amazon.com´s online retailing model and second a set of checklists for assessing our business model´s SWOT analysis. The SWOT analysis is familiar to many businesspeople and is used to analyze an organization´s strengths and weaknesses and identify potential opportunities and threats.
Blue Ocean Strategy, a concept born by Kim and Mauborgne, is a powerful framework for questioning incumbent business models and creating new, more competitive models. This is described in the book in great detail as well as managing multiple business models.
The nextchapter will be “Process” followed by the “Final words“. So stay tuned.
The Business Model Generation