Mapping a Business Model in 5 Steps
Systems thinking, spinning your flywheel, and using visual language to tell compelling stories
Dave Gray in his book Gamestorming outlines what he calls “The Game of Business”. Basically, business is built around goals. Goals which set a tension between some initial point A, and some targeted future state B — the goal.
Business is a set of processes designed to move us from initial Point A to targeted Point B. In between these points is something called the “Challenge Space”.
Inside this Challenge Space is a mess of busy-ness in the form of money, people, infrastructure, and strategies all attempting to find alignment to move jointly towards targeted point B. Management is usually seen as the corralling of resources towards the execution of those processes.
From the diagram below we can see that alignment creates significant efficiencies in business models.
Alignment is the difference maker that the top companies wield to outperform their competitors. Companies like Commerce Bank — that ruthlessly cut everything that isn’t directly executing on their vision (the best customer service in consumer banking). Hiring, marketing, management, infrastructure — everything is done with the direct intention of realizing that vision.
Alignment requires clarity, and to be clear on something we need to trim away all the fat so we understand exactly what our business does, who it does it for, and why it’s doing it. This simple model of a business is known as a Business Model.
The best business modeling technique I’m aware of is called the Business Model Canvas. It arose first from a 2004 paper by Alex Osterwalder, and then graphically from his 2010 “handbook for visionaries” Business Model Generation. Alex broke down the business into 9 components, seen below.
The incredible benefit of a tool like this is its creation of a shared language between practitioners — enabling them to speak concretely about a business as it moves through the design process — from ideation to implementation.
The drawback, however, is it’s static. It fails to convey the movement and complexity of real-world business models. In my practice, I’ve found it extremely useful as a teaching aid. But when you deconstruct a business model into neat boxes — you lose some of its soul.
With the rest of this article, I’m going to propose a methodology for visually outlining business models in a way that communicates clarity and alignment, and captures the dynamic movement or “soul” of real-world businesses.
I love using visual language to help make complex things simple. This practice is also extremely helpful in sharing complex things to other people and helping them to understand the important bits.
Visual language can seem intimidating — but as Dave Gray pointed out in Gamestorming — there’s really only 12 shapes or “glyphs” that make up every 2D object you can imagine. Shown below is our Visual Alphabet.
In Donella Meadow’s wonderful book Thinking in Systems, she outlines a methodology for visually mapping systems that I’m going to borrow for this article, shown below.
The boxes are stocks, the taps flows, and the arrows external factors that influence the flow of the resource we’re mapping, which in this case is the coffee drinkers energy level.
Systems are sets of interconnected things whose influence on each other forms a whole. Systems are defined by the movement or “flows” of resources between reservoirs or “stocks”. Sound familiar?
Businesses are systems. They’re complex systems. Ones that have many moving pieces, and lots of noise blocking out crucial signal. Systems mapping is that act of converting that noisy reality into a simple diagram that outlines the important flows and stocks and communicates alignment.
Jim Collin’s outlines the concept of a “Flywheel” in his seminal work From Good to Great. I’ve lightly edited the below quote for clarity, which explains what a Flywheel is. The original can be found at this link.
“Picture a huge, heavy flywheel — a massive metal disk mounted horizontally on an axle, about 30 feet in diameter, 2 feet thick, and weighing about 5,000 pounds. Now imagine that your task is to get the flywheel rotating on the axle as fast and long as possible. Pushing with great effort, you get the flywheel to inch forward, moving almost imperceptibly at first. You keep pushing, and with continued great effort, you move it around a full rotation. You keep pushing in a consistent direction.
Then, at some point — breakthrough! The momentum of the thing kicks in in your favor, hurling the flywheel forward, turn after turn … whoosh! … its own heavy weight working for you. You’re pushing no harder than during the first rotation, but the flywheel goes faster and faster.”
As Collins vividly explained, the flywheel gains its momentum through extreme effort directed in one consistent direction. This is alignment. Anything about your business model that’s misaligned will act as a push in the opposite direction, slowing down your flywheel and limiting the impact of every push made after it.
Visualizing your business model is about identifying what it is you’re pushing, or as Collin’s puts it — what’s your flywheel? And then mapping what those pushes you need to make are, and which pushes you need to avoid making.
Let’s bring this all together. We’re at some Point A and we want to get to our goal at Point B through the Challenge Space. To reach Point B — we need to align our resources, avoid any actions that misalign our resources, and then start pushing our Flywheel. The model for doing that is our business model. Which is a model of the flow of resources between stocks. Resources like money, people, and infrastructure.
Oliver Emberton attempted this process with McDonald's, and Google (specifically their AdSense platform), seen below.
Both of these business models are very clean and lose much of the nuance that makes up extremely complex companies. However imagine you’d never heard of McDonalds or Google before, and someone was trying to explain to you what they do. These would capture the soul of those models while masking much of the noise.
Here’s a rough sketch of an Innovation Consulting company — Boardroom Labs. I’ve attempted to find a balance between granularity, and clarity. I want you to see the nuance of the business, without losing the dynamism.
Here’s another example of one that’s been refined and graphically rendered. This is for a women-led coworking space named 51%.
How to Visualize Your Business Model in 5 Easy Steps
The building blocks of your business model are your Customer, Offering, and Goal. I call this the COG model of business modeling. Customers are the people buying your offering. Your offering is the solution to their problem. Your goal is your Point B — the place you’re building this machine to reach. These are your stocks, to use the Thinking In Systems vocabulary.
The loops of your business model are your Channels, Relationships, and Growth. Channels are the paths your customers follow to go from having never heard of you, to purchasing your offering. Relationships are the paths your customers follow after purchasing your offering. Growth is what happens after your offering to align your offering with reaching your goal. These are your flows.
Lists are nodes of your business model that require elaboration. For instance, in my Innovation Consulting model. I have several possible problems I’m solving, which requires a list to explain. The key with lists is moderation. Only use them when the added granularity is worth sacrificing the visual clarity of the model.
- Lay the foundation with your building blocks. Customer on the left, Offering in the middle, and Goal on the right.
- Chart out your loops in between. Channels connect your Customer and your Offering. Relationships loop your customer between your offering. Growth connects your Offering and your Goal.
- Elaborate on key nodes using lists. Generally — these are the points where someone looking at your model might stop and ask — what’s going on here? In some cases a list might actually be another loop in disguise. To identify these — look for interdependencies between the points of the list.
- Look over your map. The above 3 steps are a simple framework to build out the skeleton of your business model map. By poring over it and looking for weaknesses, confusing points, or opportunities you can refine your model until it effectively conveys the soul underlying your business, and nothing else.
- You may find like with 51% that you have more feedback loops that reinforce your offering. If that’s the case, feel free to add additional loops beyond the three core loops. The purpose is to filter your business down to its core parts and then show how those parts connect over time.
I call this ontology Business Model Mapping or BMM. It’s a process for simplifying complex systems that exists between systems thinking, business modeling, conventional strategy, and visual language.
Use it when you’re trying to understand new technologies implications, innovate within an existing organization, or plan a new venture.
I’ve cited a number of different works that influenced my thinking. They’re only a fraction of who I owe a great debt to. Other authors include Steve Blank, Geoffrey Moore, Frederic Laloux, Eric Von Hippel, Clayton Christensen, and Fred Kofman.
I also owe a debt to Antony Upward and his Flourishing Business Canvas. His visit to one of my classes several years ago is what first got me thinking about externalities in business modeling and how to reframe them as strategic advantages.
I plan on releasing a white paper on this topic eventually. If you’d like to be contacted when that happens — visit my blog and subscribe to my newsletter.
I’m also hard at work on releasing two new innovation tools. One for helping navigate venture growth during the scaling phase, and one for understanding the context your primary stakeholder operates within — beyond the scope of an Empathy Map. Subscribe to my newsletter for updates on those as well.