We live in a rapidly changing world. Here are a few examples to consider:
- The top 10 in-demand jobs in 2010 did not exist in 2004.
- If Facebook were a country it would be the third largest behind China and India.
- There are 31 billion searches on Google each month. In 2006, this number was 2.7 billion.
- Today the number of text messages sent and received every day exceeds the total population on the planet. The first commercial text message was sent in December 1992.
- Revenue from the iPhone and iPad now account for 72% of Apple’s total revenue. Neither item was available to buy six years ago.
As business leaders and business owners, how do we ensure that our businesses stay relevant? Do we need to constantly innovate our products and technology? While the answer might be ‘yes’ to this question, there is a more powerful ingredient to drive innovation.
The more powerful ingredient is to think about innovating your business model. Your business model describes the rationale of how you create, deliver and capture value. It’s a holistic look at the business.
I work with clients to first draw a picture of their current business model using the Business Model Canvas, which was created by Alex Osterwalder & Yves Pigneur. There are nine building blocks.
1. Customer Segment. What are your distinct customer segments with common needs, behaviors and attributes?
2. Value Proposition. How do you solve a customer problem or satisfy a customer need?
3. Channels. How do you communicate with your customer and deliver your value proposition?
4. Customer Relationships. What type of relationships do you establish with your customers, and how do you maintain and retain customers?
5. Revenue Streams. For what value is the customer paying?
6. Key Resources. Your resources help you create and offer value.
7. Key Activities. This block describes the most important things a company must do to make its business work.
8. Key Partnerships. This describes the network of supplier and partners that enable the business to work.
9. Cost Structure. Describes the costs incurred to operate the business.
Once the business model is designed, we look at the environment in which it operates and then brainstorm and prototype options to consider innovating the business model.
Share Your Thoughts: As you think about the building block components of the model in what areas are you strong? What areas need the most improvement?