Large Organizations and the Business Model Canvas

by Paul Hobcraft

Large Organizations and the Business Model CanvasRecently I was having a ‘conversation’ with Alexander Osterwalder concerning the limited adoption of the Business Model Canvas within large organizations. I was asking him if he agreed and if he had any thoughts on this.

Now if you know Alex, he is either jetting off to somewhere in the world to keep spreading his Business Model gospel, or about to get immersed in his next idea associated with it, so these conversations are grabbing him through twitter or short email exchanges.

Short and sweet

Alex Osterwalder“Excellent! One thing I’ve seen: once the Canvas is in an org it spreads organically, virally without my intervention… interesting research topic!”

Those of you in the business world that have either been hiding under a rock recently or obviously as it seems, in a number of larger organizations, the Business model canvas comes from the pioneering work Alex did for his PhD. This was published not just in his thesis but in a bestselling book, as lead author, called ‘Business Model Generation” http://amzn.to/uY9U4b. Also take a look at his site : http://bit.ly/m4DNC1

The books claim of “You’re holding a handbook for visionaries, game changers and challengers striving to defy outmoded business models, and design tomorrow’s enterprise” on the cover, it sets itself up for the imaginative person striving to alter the status quo within their business.

Without doubt this book weaves design throughout, to give you a visual feast through its canvas approach. It leads by example in wanting to replace or alter the more established business book with its style. It is a beautifully designed book to enhance the pleasure of reading it and it is not a typical business book, it conveys the essentials that you need to know quickly, simply and in a highly visual format.

So what is holding the large organization back?

I’ve previously commented Business model innovation meets one of today’s business needs. Many of the tools we have relied upon for decades just simply do not ‘articulate’ the job on hand. Models enshrined in business folk law like Porters 5 forces, Boston matrix and a host of others gave insight, were very analytical, but gave declining comfort on foresight and this is what is needed today.

the times they are a-changinbob dylan

We have seen the significant shift from internalizing to externalizing through open innovation. In seeking differentiation, businesses have had to loosen up and give up some of their ‘control’. The world seems more dynamic and complex, it is a place where you have to find a unique position in the market, and one built on competitive advantage seen through the eyes of your customer not from within your four walls. The business model captures ‘breaking’ opportunities and clarifying existing value propositions, so why this lack of uptake?

Often a potential problem is to do with it’s positioning- for the BM is it:

  • Alex spends an incredible amount of his engagement time with entrepreneurs, small business owners and to a far more limited degree, I sense, within the larger organizations. Is this one reason? There is only a certain amount of time and I’m sure Alex has to be selective with what and where he wants to deliver this message across the world. He might though, need to draw in a fellow BM disciple, who could focus and spread the message to the larger organization as his ‘patch’.
  • Is his message skewed towards the entrepreneur more? Even the subtitle on the front of the book might be a little challenging to the incumbent. “You’re holding a handbook for visionaries, game changers and challengers striving to defy outmoded business models and design tomorrow’s enterprise”. Maybe those (the majority in large organizations) find this more of a “oh, I wish” but are simply not sitting in that sort of position to change the world? Maybe the book needs a mini-repositioning? Or a further one where a new book brings all the ‘collective’ knowledge that has been learnt since the first one, all together as a companion, or as a field guide?
  • Is it also because it might be hard to imagine that you can capture a complex picture within a one page canvas? Within large organizations you deal in pages (I mean pages) of business plans, marketing plans, briefing papers and countless justifications. Could a business model be captured so easily? Well actually yes, if anyone is wondering.
  • Is it partly because the Business model does not have enough of a blueprint of proven techniques or follows a more (comfortable) descriptive process, yet to be fully established? I’d argue that this has dramatically been changing in what I saw in a recent workshop given by Alex- it is going more along that route but perhaps not there yet, for wider adoption or ‘comfort’ for some. Perhaps it now requires a more radical ‘layered’ supporting structure that underpins the canvas? Or you simply shout “get on the train, it is about to leave without you”
  • Or more than likely, it is far more to do with that classic ‘lead and lag’. Larger organizations are slower in adoption; it is just a matter of course. Be this in new technology, new processes, social media or a host of new things they tread more cautiously, they are slower to adapt. Those that get ‘it’ internally spend often frustrating months, sometimes years, trying to convince others to make a change, to change a process, a planning structure, even a widget within an established product that often holds it back. Then the CEO reads it in a magazine, hears it from a friend and away we go. Why not buy him/ her the book and save yourself the time and trouble!

Irrespective of the answer to any of the above, my question here is: “can they afford to keep on ignoring a brilliant tool? One that will help them ‘galvanize’ the understanding of their business model and provide an amazing tool to explore other potential ones?

Clearworks - Customers, Connections, Clarity

I would argue to the large organization “simplicity can sometimes be deceptive” and just find the time and really focus upon the potential that lies within the Business model canvas. It is a powerful tool in the right hands. Let me suggest a number of reasons here:

So the BM Canvas and its value to large organizations.

BMI provides an increasing value, my opening set of arguments.

  1. It can help discover new perspectives on challenges, also new perspectives on solutions.
  2. These perspectives can be new insights, new customers, new resources and new channels.
  3. Framing BMI in the canvas approach can underpin the Business Case through the nine building block analysis and provide a great one page justification.
  4. It can define needs- needs in the market, needs required from solutions and their impact. It can compliment ‘jobs-to-be-done especially.
  5. It can investigate value propositions (ranking, impact, capability, competition).
  6. It can help investigate higher impact propositions (value- based, enhanced economic, applications etc) to stimulate internal thinking and greater generation of potential BMI’s.
  7. It can form the basis of any model for showing where the money lies in potential profit, the possible costs and the resources needed.
  8. It can help in evaluating competition or watching for new entrants if ‘it’ or you understand the needs of the customer and where opportunities might lie.
  9. It can explore and explain consumer thinking (pre and post discovery and execution) in easy visual ways.
  10. It can be used as a neutral observer, uncovering opportunities or validating them in other industries that today may not be relevant but need to have a ‘watch’ placed upon them.

My other powerful argument lies in the yet to be fully explored multiple uses:

I call these my “large organizations eight powerful reasons to adopt the Business model canvas” and place all the options in front of you, to be explored, to be tested, to be given a decent trial.

These are:

  • To simply explore new business models as the book originally sets out in the how, what and where of doing this through the canvas approach.
  • To ‘map’ changes to existing business models as they evolve or need to pivot differently. There is a growing body of work on the pivot by Steve Blank and Eris Ries. This is not exclusive to the entrepreneur, where they have tended to focus but much of their thinking can be applied to the larger organization to learn, understand and gain from (http://bit.ly/bYhHwQ and http://bit.ly/1fpIpK ). Just spend some real time on these two sites, it is time well worth spending to learn and challenge your current thinking on many approaches to your market and knowing the different value generation points in any engagement with your customers.
  • To sketch out competitors positions to explore possible opportunity gaps should be one of those consistent ‘habits’ that so many large organizations often have a real blind spot to undertake and then get caught out and surprised when they see their share slipping away. The BM Canvas can spot and track competitors.
  • Use it as a dashboard for innovations that have an impact on existing business models. Whenever you have any major BM change you capture it on your BM Canvas so all above and below can see the change. Again Steve Blank has been pioneering this concept for using the BM Canvas to ‘signal’ significant changes that he as a VC investor really only needs to get involved in. This can apply also as a ‘trigger’ point for communicating significant changes happening, up and down the organization.
  • Use it to compare business model components across countries where different models are being applied to build businesses. This enables all involved to quickly focus on the differences on these operating models and market formations to get quickly at strategic discussions. This gives the visitor clarity and draws out critical ‘talking points.’ for allowing the visiting fireman to actually say more than “how can we help” but “let me show you ways to be safe.” It brings everyone onto the same value proposition and to rapidly explore the different options far more quickly than through those countless power point slides we have all endured, explaining each of the factors within the market. It gives business reviews a (fantastic) template. Try it!
  • When you are pitching for funds it provides the top picture that others can quickly see and appreciate the why and how- they ‘see’ the value and the $$ potential, Again this has been grasped by some of the more enlightened venture capital investors, just wanting to know where the money is coming from, and then when the changes occur, as they always do, why the ones running the business made the changes from the original BM proposition. This offers ‘intelligent enquiry’ not getting involved in the running of the business but supporting owners or business managers with appropriate experience to compliment theirs.
  • To have ready alternative scenario’s for volatile business conditions as ‘early ready’ that have mapped out potential changing conditions and where and how the business model might be adjusted or radically changed. The earlier ‘warning system’ pays in volatile times and we are all facing those at present.
  • Rapid concept brainstorming to move into prototyping evaluation and market testing. Testing many different variations in small bite sized bets is rapid prototyping, do this through the effective use of the business model canvas. Testing fast in the actual market place new business models and then learning from them to improve the approach is absolutely critical. Get the customer involved.

Just consider all of them. Learn the basics then experiment and you will not look back. I will be doing some more research and validation in the coming months on these, hopefully with large organizations willing to open up to this exploration and thinking.

Find a common language is simply needed

I do think the Business Model Canvas is about to go through a (further) tipping point, that crossing the chasm into mainstream adoption. Finding a common language is one of the critical tenets that Alex has been arguing with his Business Model approach. To find this common language and recognizing the value of this tool in many different situations can be valuable.

Gaining this common voice to the business model, so all those around can understand it easily and quickly, is a major advance on what we presently use in having to explain our business models. For me there is something intuitive about the BMC approach. But to then empower everyone, to go out and seek increased value from new ones seen, that can then be communicated on one page, well that’s the real power of the Business Model Canvas, for any organization, large or small.

image credit: wallpapers-free.co.uk


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Paul HobcraftPaul Hobcraft runs Agility Innovation, an advisory business that stimulates sound innovation practice, researches topics that relate to innovation for the future, as well as aligning innovation to organizations core capabilities.

No comments

  1. I like the Idea that you are proactive when helping people. Not asking what can I do, but suggesting instead. Here is what you should do to…
    I really think this could make the world a better place!

    Cheers Alex

  2. Hi Paul: I respect that you are ever vigilant for new, better ways to approach innovation. Your praise of Alex’s method is quite convincing. I will examine closely over the Holiday break A tool that allows people to approach challenges in a more holistic (but not overwhelming) way seems as if it would have many devotees. I always enjoy your posts. Well done, again.

  3. From my experience, a common language of communication and action is the essential ingredient for successful organisations and this ingredient will be all the more important for the more open business model canvas approach. Integrative Thinking, Integrative Problem Solving,Integrative Governance and their complementary tools offer a common language of communication.

  4. I wonder if your analysis of “limited adoption of the Business Model Canvas within large organizations” is fully correct — you might consider the fact that large organisations are much less transparent about which tools and methods they use. Additionally, large organisations often work with consultant firms that are even less transparent about their tools and methods. I would expect that there is a huge number of consultants applying the BMC within all kinds of organisations, also large ones; it’s just that these applications never see the light outside these firms.

  5. Great article! Another possible reason for a slow uptake in larger organizations may be that the focus is more on traditional business analysis rather than a more generative approach to business design. Often business models are written from a ‘why I should invest’ vs a ‘value creation’ perspective. Nonetheless, I found it interesting that it can be successfully used to explain Business model changes to VCs – as a visual-based approach it can in fact be used for many aspects of business modeling and certainly makes collaboration in the biz modeling process easier.

  6. We have successfully applied the BMC in a number of environments and specifically large enterprise, but always integrated with a combination of other solutions including a new SWOT360 model and our openaxyz toolset which allows one to frame and investigate decision-trees, cascade and ‘layer’ different perspectives depending on where you sit in the organization.
    This in turn is supported by ‘strategic conversations’ and further integration with balanced scorecards, blue ocean modelling etc. to create a dynamic view and working foundation for business strategy execution.
    Of importance to our clients is the ability to link to activity based KPIs, ownership, social business networking, lifecycle management and a wiki/glossary driven knowledge base and relate that back to a BMC frame.
    We have found the BMC to be invaluable to kickstart views and perspectives, validate assumptions and then integrate a broad range of activities ‘on one page’, but never just on its own. We then further ‘vectorize’ this to create business alignment – internally and externally.
    This has worked for large corporates such as Barclays, a national business development bank, an international utlities comany, the world’s largest synthetic fuel company, an international postal service and a range of SMEs and NGOs.
    We are happy to share these insights.
    Alex makes a good case for his value proposition for the BMC along the lines of ‘framing’, ‘gaining perspective’, ‘evaluating and comparing’, ‘scenario planning’, etc. which is indeed what the BMC helps to achieve, but never in a vacuum.
    We have also noted that executives and management ‘default’ back to what they know including the SWOT, balanced scorecards, PESTEL, etc. and we create a knowledge base first with what they are comfortable with before we lift the bar and shift the goalposts to assist them in redirected or ‘rebalancing’ their work portfolios, to steer their businesses in new directions and to start soemthing new based on what they experience as a solid defensible postion for strategic decisionmaking.

  7. I agree with the idea of big companies being benefited by the Business Canvas of Ostelwalder and Pigneur. Here I leave a comment I did to a discussion in linked in, for some “detractors” of the BMC who argued it is not enough to consider all necessary elements of a winner business: <>

    • Here the comment: ‘I would like to share a thought from David Wilson and Stephen Cummings about how the “mapping” of anything can help to get to a deeper level of understanding of anything and eventually a more robust solution to a challenge. When referring to Knight’s criticism to Michael Porter’s frameworks, about them being to simple to reflect the reality for managers and the “ironic” incremental use of these by the managers, they allege it is because it helps -the mapping of a thought- to ‘bring discipline to the modern management regimes into emulating subjectivity in a given discipline, which helps to communicate the intentions in a clear (at least clearer) way. The example they use, is the map of the tub of London, everybody know is not exact, even its designer, but it gives non experts the opportunity to find themselves in the city and to plan interactions with other moving along it.
      My point is that the greatness of the BMC is that it allows to put different thoughts together towards a common plan to be agreed. Of course it should be only the beginning of any intention, to eventually dig deeper, as Rod did. And now the BM subject is widely spoken around this’

  8. I would like to share a thought from David Wilson and Stephen Cummings about how the “mapping” of anything can help to get to a deeper level of understanding of anything and eventually a more robust solution to a challenge. When referring to Knight’s criticism to Michael Porter’s frameworks, about them being to simple to reflect the reality for managers and the “ironic” incremental use of these by the managers, they allege it is because it helps -the mapping of a thought- to ‘bring discipline to the modern management regimes into emulating subjectivity in a given discipline, which helps to communicate the intentions in a clear (at least clearer) way. The example they use, is the map of the tub of London, everybody know is not exact, even its designer, but it gives non experts the opportunity to find themselves in the city and to plan interactions with other moving along it.
    My point is that the greatness of the BMC is that it allows to put different thoughts together towards a common plan to be agreed. Of course it should be only the beginning of any intention, to eventually dig deeper, as Rod did. And now the BM subject is widely spoken around this.

  9. Great article. I agree with you that BMC is also very relevant for large(r) enterprises. My experience with the company I work for, a large IT company, is that the “tool” part of BMC is adopted relatively easy. Reason that it is not so visible is that adoption in our company happens in a bottom-up way. When introducing the canvas to fellow consultants they play with it and use it to their own needs. These needs can be very different. We now use BMC in the development of business cases, for business/IT alignment, during exploration of the possibilities of a new technology or during analysis of customer issues.
    For me, the real value of BMC lies in the “cultural” part of BMC. The design thinking, customer centricity etc. Adoption of this aspect of BMC takes a lot more time but I see that with the introduction of the BMC tools, people automatically start to rethink the way they used to work.

  10. This is an excellent article on a subject that I have struggled with myself, working in a large otganisation I have been very impressed with the Business Model Canvas, it really does provide deep insight into large organization issues with their Business Models, parts of which have often formed through incremental evolution rather than through explicit design thinking.

    Additionally the forces of resistance/ homeostasis in large organisations are significant and a lot of over-engineering of subsets of the business model often pass for strategy when in fact the problem is bigger than the scope of the analysis or intervention itself, a point made by Alex and borne out in his thesis/ book.

    There is however scope for the overall construct to develop a deeper vocabulary or taxonomy which I believe would allow its direct application to large organisations, in effect to develop a line of attack as one addresses the transformation of VBO’s (very big organisations). As an Enterprise Architect I have been looking at how the Business Model Canvas can be addressed whilst retaining the simplicity using and modifying existing Enterprise Architecture standards this is proving quite useful.

    Thank you again for calling out the challenge I found it truly insightful and reassuring!!

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