Monday, March 30, 2009

Business Model Innovation and Design

Yesterday, as part of my Managing Innovation and Change course with Prof. Chesbrough, I attended a lecture on Business Model Innovation and Design by Alex Osterwalder.

Alex started by providing a definition of business model, "how an organization makes (or intends to make) money", which he maps around a simple yet powerful visual tool, the business model canvas:

The business model canvas by Alex Osterwalder

In the center we have the value proposition of whatever business model we are looking at. To the right we have the customer, segments and relationships, and how the revenue is generated. To the left we have the company resources, activities and partners and its cost structure.

This unified framework captures a lot of information in a snapshot. Alex successfully used it to describe existing business models and to compare them to those of competing companies. Such a simple tool helped the audience generate insights "on the fly". Visual representation, a design tool, does a great job helping describing and applying a business concept.

Alex went on explaining how design thinking can be applied to design new business models providing examples of design tools for observation, ideation, prototyping and visual thinking. You can find more in his blog, Business Model Design and Innovation.

Alex's work is an example of how meaningful the dialogue between business and design can be. There are many interesting things going on around this subject and I am currently working on a project along these lines so I will be blogging about it soon.

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