Hack your business model ideation
Use patterns to generate new ideas fast!
How do you come up with new ideas for business models? Where do ideas come from? And how do you know that you’ve covered all your bases when coming up with ideas?
In ideation workshops, sometimes it feels like throwing darts on a dartboard while wearing a blindfold and looking in the wrong direction. It’s hit and miss at best, as you’re dependent on the experience and personal point of view of the people in the room.
What if you spent the time to come up with ideas but simply missed a great idea because it wasn’t in your personal frame of reference? Do you want to make your innovation process dependent on coincidences like that?
What if there was a way to circumvent this problem? What if you could use data to come up with new ideas?
Well, here is a trick: use Business Model patterns to come up with new ideas.
Business Model Patterns
If you look at various business models, it won’t be long before you start to see different patterns. The models for Uber and Lyft are quite similar. The business model of Google Search looks a lot like that of Bing. The butchery and the bakery in your street have similarities.
For those of you that know the Business Model Canvas, this concept should be familiar territory: The book Business Model Generation already lists out some of these patterns, most notably the Multi-Sided Platform and Freemium. And there are many more patterns to use. St. Gallen’s Business Model Navigator lists a total of 55 different patterns.
When I started to go over business models that I found in the wild, I came up with even more than these 55 patterns. So, clearly, it turns out that there are a lot of business model patterns that can be found.
Organizing these patterns into some kind of comprehensive framework is messy, but I have attempted to make a rough categorization: ‘Archetypes’ describe a complete business model. ‘Patterns’ describe how a few business model blocks work together — think of the freemium pattern, or the multisided platform pattern. ‘Blocks’ describe even smaller units, that can combine to create patterns — think of a specific revenue model.
Besides this, there is another category, which I call ‘strategies’ (which is a bad term, and I’d love to find a better one.) They can be applied over the top of a business model. Think ‘go to market strategy’, or ‘customer referral strategy’. They define how elements of a business model work together.
For each of these categories, I keep a list with examples that I use to speed up the ideation process.
How I use Business Model Patterns
1) ‘Steal’ patterns
I use Business Model Patterns for ideation in two different ways. First, I look at existing businesses, and try to ‘steal’ parts of their business model.
I ask myself: ‘what if I took that part from their business model and stuck it onto the one I’m working at?’
Look at other interesting companies, and ask yourself what you can learn from them. Figure out what patterns they used that are interesting to you. What if your business operated like Amazon? Or like an NGO? What can you learn from Facebook? Or from your direct competitor? Start keeping a list of interesting patterns that are relevant for your sector or business.
The benefit of this is that it forces you to go out and look at new business models, which can be inspiring in itself, and it gives you a new collection of examples to ‘steal’ from.
(Side quest: are you able to draw out the business model of your direct competitor from the top of your head? You’d be surprised how hard that can be. It’s a great place to start!)
2) Use the list
The second thing I do is look at my list, and for each entry in the list try to find a way in which it applies to the situation at hand. I just go through the entire list, and for every option see how I can make it fit. That usually gives me around 10–20 new ideas easy.
Archetypes describe a complete business model, on the value creation side as well as the value delivery side.
- Retail model — the typical model of a retail operation
- Consultancy model — the typical model of a consultancy firm
- Broker model — the typical model of a broker
Patterns describe multiple parts of a business model that work together.
- Multi-sided platform — multiple value propositions for multiple customer segments that interlock
- Bait & Hook — Give out a cheap ‘bait’ and cash in on the ‘hook’
Blocks are patterns for a smaller part of a business model. (This is currently the least well-defined list, as there are so many different options — additions are always welcome!)
- Revenue Models — e.g. Freemium, Saas, Bartering
- Marketing Models — online marketing, direct marketing, etc.
I use these patterns as Lego blocks and put them together to build new models. It is almost as if you can ‘layer’ different options on top of each other to create new combinations. Pick an archetype, then add a Revenue Model building block, and a Channel building block, and you have a new combination.
By allowing yourself to play around with patterns and building blocks you allow your creative mind to take over and your analytical mind can take the back seat for a while, until it is needed.
Some interesting entries on the list (where would you categorize them?)
- Anything as a Service (AAAS)
- ‘Cut out the Middle Man’
- 100% Luxury
- Bait & Hook
- Inverse Bait & Hook
- Razor & Blade
- Bottom of the Pyramid
Can you use a ‘broker’ archetype for your idea? Can you use a ‘freemium’ pattern? Can you use a ‘land grab’ strategy to get market share? Can you combine multiple patterns and building blocks? And what archetypes and patterns do you use in your organization right now?
Using this list will at least make sure you have considered many of the most successful patterns for your business.
One last thing that comes to mind when looking at these patterns is the idea that business models are connected as ‘stepping stones’. It is possible to pivot from one business model to another, that is similar but has a few extras.
When I have gathered my ~5 ideas that I got from working through the list, I usually find myself organizing them in a series of stepping stones.
Rather than starting with the ‘end game’ business model that is built from multiple patterns, it makes sense to see if you can come up with simpler models that lead toward it in a logical way.
Working backward, you eventually end up with a relatively simple model that you might implement right away, and a few decision points where you can experiment with the next level of complexity and forms the basis of business model experiments.
Let’s say you are really excited about implementing an online store model and want to combine it with a subscription pattern like Amazon does with prime. The step before that is making the store itself work at scale, with 3rd party sellers, and the step before that running the store with your own products. These could be logical stepping stones. Each of these models is a step up that allows you to move to the next stepping stone. Shortcuts might not work.