📖 Business Model Generation

2010. Alexander Osterwalder, Yves Pigneur

While at college in Switzerland, Alex Osterwalder had become particularly interested in the concept of business models, publishing his thesis in 2004 on Business Model Onotology. After college he continued exploring this area, writing on his blog Business Model Alchemist. I mean just look at that hero image:

I wonder is these were written on a window at one stage.

In the blog’s first post in June ’04, The importance of the business model concept, he talks about how “fundamental changes in speed and complexity” have changed the economic landscape, and that now, “companies will have to find new ways of analysis in business management and business development”.

At the time, the term ‘business model’ was still relatively new, introduced with the internet boom. In an early post, Osterwalder references an academic publication from George S Yip, Using Strategy to Change Your Business Model (2004) in which Yip argues “The distinction between ‘business model’ and ‘strategy’ is more than one of semantics…they are two different concepts”

Within a year Osterwalder had teamed up with his old professor Yves Pigneur to start writing a book on business model innovation. The internet and advancements in technology meant companies were increasingly being disrupted not just by competitors with better products, but by competitors with better business models. New business models were “replacing established companies and conventional ways of doing business”.

The book was to be centered around a newly distilled map of nine building blocks which could represent how an organisation makes (or intends to make) money, which they called the business model canvas.

After first announcing that he was writing a book in 2005, five years later he eventually got to publish that book with Business Model Generation (2010).

The book has become a great success and Osterwalder & Pigneur are well regarded in their field, voted #7 on the list of top management thinkers in 2017. It became a popular tool for start-ups and a companion to the lean movement popularised by Eric Ries’s The Lean Startup published a year later (2011). Steve Blank added Business Model Generation to his list of required reading for his entrepreneurship course at Stanford, and included the book in his recommended toolkit for start-ups.

The core of the book is still the business model canvas which the pair had been talking about for 5 years at this point. They apply the canvas to different industries and run a host of examples through it to illustrate it’s effectiveness. There are chapters which they summarise some popular business models and again plot those business models out using the canvas. They encourage the reader to stick it on the wall, and add post-it notes to prototype their own business models.

While the book is an enjoyable read, I can’t say I was that better off having read it. I was aware of, and had used the business model canvas before reading, and didn’t feel like the book added much value beyond the canvas. The best thing about it was some of the interesting examples of innovative business models that I hadn’t heard of prior to reading (like Rolls-Royce’s pivot to jet-engines-as-a-service).

Since the book’s success, Osterwalder & Pigneur’s company Strategyzer has created a whole suite of online material and courses, and in 2014 they wrote a second book Value Proposition Design.

You can download the business model canvas for free from their website here.