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Mapping Business Models

Business Model Workshop Netherlands

Globalization and the emergence of digital business have changed the playing field for everyone. New business models can now rapidly disrupt an entire industry by changing the way value is delivered to customers (Look how Apple’s iTunes strategy disrupted the music industry, for example). The Business Model Canvas, developed by Alex Osterwalder, is a tool that you can use to examine and rethink your company’s business model. We are very pleased to announce a knowledge game for examining your business model and exploring alternatives, developed by Alex himself, and shared here for the first time. Thanks Alex!

Objective of Play: Visualize a business model idea or an organization’s current and/or future business model in order to create a shared understanding and highlight key drivers.

Number of Players: 1-6 (depending on the objective). Works well individually to quickly sketch out and think through a business model idea or an interesting business portrayed in the press. To map an organization’s existing and/or future business model you should work in groups. The more diverse the group of players (marketing, operations, finance, IT, etc.), the more accurate the picture of the business model will be.

Duration of Play: Anywhere between 15 minutes for individual play (napkin sketch of a business model idea), half a day (to map an organization’s existing business model), and two days (to develop a future business model or start-up business model, including business case).

Material required: Mapping business models works best when players work on a poster on the wall. To run a good session you will need:

How to Play: There are several games and variations you can play with the Business Model Canvas Poster. Here we describe the most basic game, which is the mapping of an organization’s existing business model (steps 1-3), it’s assessment (step 4), and the formulation of improved or potential new business models (step 5). The game can easily be adapted to the objectives of the players.

  1. A good way to start mapping your business model is by letting players begin to describe the different customer segments your organization serves. Players should put up different color sticky notes on the Canvas Poster for each type of segment. A group of customers represents a distinct segment if they have distinct needs and you offer them distinct value propositions (e.g. a newspapers serves readers and advertisers), or if they require different channels, customer relationships, or revenue streams.
  2. Subsequently, players should map out the value propositions your organization offers each customer segment. Players should use same color sticky notes for value propositions and customer segments that go together. If a value proposition targets two very different customer segments, the sticky note colors of both segments should be used.
  3. Then players should map out all the remaining building blocks of your organization’s business model with sticky notes. They should always try to use the colors of the related customer segment.
  4. When the players mapped out the whole business model they can start assessing its strength and weaknesses by putting up green (strength) and red (weakness) sticky notes alongside the strong and weak elements of the mapped business model. Alternatively, sticky notes marked with a “+” and “-” can be used rather than colors.
  5. Based on the visualization of your organization’s business model, which players mapped out in steps 1-4, they can now either try to improve the existing business model or generate totally new alternative business models. Ideally players use one or several additional Business Model Canvas Posters to map out improved business models or new alternatives.

Strategy: This is a very powerful game to start discussing an organization’s or a department’s business model. Because the players visualize the business model together they develop a very strong shared understanding of what their business model really is about. One would think the business model is clear to most people in an organization. Yet, it is not uncommon that mapping out an organization’s business model leads to very intense and deep discussions among the players to arrive at a consensus on what an organization’s business model really is.

The mapping of an organization’s existing business model, including its strengths and weaknesses, is an essential starting point to improve the current business model and/or develop new future business models. At the very least the game leads to a refined and shared understanding of an organization’s business model. At its best it helps players develop strategic directions for the future by outlining new and/or improved business models for the organization.

Variations: The Business Model Canvas Tool can be the basis of several other games, such as games to:

  • generate a business model for a start-up organization
  • develop a business model for a new product and/or service
  • map out the business models of competitors, particularly insurgents with new business models
  • map out and understand innovative business models in other industries as a source of inspiration
  • communicate business models across an organization or to investors (e.g. for start-ups)
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Boundary matrix

Creating a boundary matrix, originally uploaded by dgray_xplane.

Boundary object is a term from sociology used to describe something that helps two disciplines exchange ideas and information, even when their languages and methods may be very different. Today I was in a call with a couple of colleagues, Lou Rosenfeld and Marko Hurst, who were describing a problem that’s very familiar to many of us — the problem of communicating and sharing work between disciplines that are very different. In the case that we were discussing today, one discipline was data analytics, which is very quantitative in nature, very data-driven, in contrast to the other, user experience design, which is primarily quantitative, design-driven. The problem is that the two disciplines think of their work very differently and use different language and tools to approach their work. In a paper titled Languages of Innovation, researchers Alan Blackwell and David Good identify the language problem involved in transferring knowledge from the academic world to industry:

“One might imagine the university as a reservoir of knowledge, perhaps contained within books and the heads of individual academics, from which portions of knowledge can be poured out into the heads of recipients outside the university walls. But which of the available languages might this knowledge be expressed in, and how might it be translated into the languages current in business, industry, government and public service each of which have their own lingua franca? Scholarship does not exist in any form independent of language, so the transfer of scholarly knowledge either takes place in the disciplinary language in which it was formulated, or must be translated.”

This is the challenge many organizations have in conveying information between disciplines, and Blackwell and Good have some very constructive insights in their paper, which I encourage you to read. The ideas in that paper, and the subsequent conversation with two colleagues about some very real problems they were having translating information between “data people” and “design people” resulted in the idea of the boundary matrix. Here’s how it works:

1. First, identify what information needs to be exchanged between the disciplines:

(a) determine what kinds of questions discipline X must ask to get relevant and meaningful information from discipline Y, and

(b) determine what kind of form the answer to the question from discipline X might take, if answered by someone from discipline Y. This could be a document or artifact that is ready and available, or it might involve terms that are specific to discipline Y. For example, a designer who wanted to understand user behavior might need to ask for search terms and click-through rates.

(c) repeat the above from the perspective of discipline Y.

2. From examining these exchanges you should be able to create two lists, one for discipline X and one for discipline Y. Each list element contains a brief description of the discipline-specific term and why it should be important to the other discipline. For example user behavior > search terms, click-through rates.

In the sketch above, these descriptions are labeled A, B, C, D for discipline X and 1, 2, 3, 4 for discipline Y.

3. Now look at your matrix and see if you can find how each cell relates to an area of strategic interest for your company or team. These interior cells represent the points where the disciplines intersect with larger areas of shared interest. If you can’t find the strategic connection that might indicate that the activity might have outlived its usefulness or could be of dubious value to the organization.

The completed chart is your boundary matrix — a “cheat sheet” for managers as well as people from disciplines X and Y, that will allow them to communicate more effectively and quickly navigate to areas of strategic priority or shared interest. This is a new idea and has yet to be tested but I think it holds real promise.

I suspect that the initial value to cross-disciplinary teams will be the conversations it forces about what each discipline does and why it is important to the other discipline, or the organization as a whole. The conversations themselves are an education and culture-building process that will lead to better collaboration, and the better those conversations, the better the boundary matrix that will result.