Business Model Generation by Alexander Osterwalder & Yves Pigneur

by Paul Simister on August 9, 2011

The book Business Model Generation: A Handbook For Visionaries, Game Changers and Challengers by Alexander Osterwalder and Yves Pigneur is a remarkable triumph of visual design. I don’t think I’ve ever seen a book like it before.

Business Model Generation Osterwalder & Pigneur Book Cover of Business Model Regeneration

I have some criticisms about how easy it is to read and the fact that the content is more style over substance. For one thing, to create space for all the funky images, the words are in a small font. I was OK but I know that some people will struggle.

The Business Model Canvas

I like the idea of the one page Business Model Canvas which is described as “a shared language for describing, visualising, assessing and changing business models.”

It looks very useful to summarise your existing business model and for moving towards better ways to create, deliver and capture value.

Business Model Canvas Business Model Canvas

Sorry if that’s a bit small to read but you can download the full version.

The Business Model Generation Canvas has nine elements:

  1. Customer segments
    .
  2. Value propositions
    .
  3. Channels
    .
  4. Customer relationships
    .
  5. Revenue streams
    .
  6. Key resources
    .
  7. Key activities
    .
  8. Key partnerships
    .
  9. Cost structure

As you can see, it is a tight summary of a business with a balance between external and internal factors.

Why Business Models Are Important

Business models are important because they are the means to deliver your differentiation strategy. Without a coherent plan, any differentiation is likely to be shallow.

The exercise of filling in the Business Model Canvas will help you to focus on the few things of business model design that matter although you need to have done your differentiation strategy first.

Business Model Generation Review

Beyond the the Business Model canvas, I was disappointed in Business Model Generation.

Because the book looks so different and special I was expecting the content to match.

But it didn’t. I thought it was pretty superficial. It is a good introduction to thinking about business design although it assumes that’s the answer you want rather than giving you a diagnostic to establish whether business design lies at the heart of your business issues.

It’s no surprise that I’d have liked to have seen more consideration of the value proposition and how it is different from competitors now and what they are likely to develop in the future.

Others Love Business Model Generation

Many people love this Business Model Generation book and there are plenty of rave reviews on Amazon.

To quote one (because I don’t think I can put it better)

“Who is the ideal reader for this book? I think it’s someone who hasn’t been introduced to business models before and has just been asked to work on developing one at work. The book seems to be aimed at people without much business education such as technologists and designers.”

I suspect they will love the visual design.

People used to working with words might feel like I do about Business Model Generation, “Interesting but…”

Differentiating your business and creating a supporting business model is essential. If this book connects with you and you take on the concepts and implement them, then it will be money very well spent.

Have You Read Business Model Generation?

If you’ve read the book, then I’m very interested to hear what you think so please leave a comment.

I don’t mind whether you agree with me or whether you think I’m wrong because you believe Business Model Generation is the best business book ever written.

Paul Simister is the business strategy coach who helps business owners to differentiate their businesses and develop winning strategies. Get your free copy of the ebook The Six Steps Profit Formula.

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{ 2 comments }

Matt January 25, 2012 at 4:23 pm

Thanks for this post. I am a first-time entrepreneur. Business Model Generation was recommended to me as an ideal tool to help me learn what it is I need to be thinking about and anticipating, and to follow a model until i develop my own opinions about these matters. Having read the first bit of BMG and tried to apply the Canvas, I’m unsure why it’s so highly praised and I’d like to get past the jargon and declarative sentences and into the how-to big. I don’t see why the bits of the canvas are where they are or whether they could be somewhere else, for example. And I don’t see how this helps me to price my service.

That said, I like many aspects of what I’ve seen so far and I suspect that what I could really use are some complementary texts, guides, ideas, etc. to go along with BMG. Any recommendations would be welcome here!

Matt

Paul Simister January 26, 2012 at 7:03 am

Hi Matt, thanks for your comments about the Business Model Generation book.

I’m trying to think about other books that may be suitable which are still easy to read. I’d certainly take a look at Blue Ocean Strategy http://www.differentiateyourbusiness.co.uk/blue-ocean-strategy-by-w-chan-kim-and-renee-mauborgne if your business idea is an innovation rather than a better version of an existing business idea.

Pricing is always a particular problem which is why I like the customer value approach
http://www.differentiateyourbusiness.co.uk/customer-value-maps-clarify-your-position
http://www.differentiateyourbusiness.co.uk/blue-ocean-strategy-by-w-chan-kim-and-renee-mauborgne

while there are plenty of things you can do to signal your value and justify your price, testing in the market place is the best way to find the sweet-spot that gives good product profitability and high overall sales.

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