One of the books getting buzz in the startup community these days is Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. Currently it is #158 in Books on Amazon. I read through it a week or so ago, and it is a useful addition to the entrepreneur’s library.
The book has five major sections. In the first, the authors introduce their notion of a business model canvas broken down into nine constituent parts. Some of these parts are obvious things that anyone trying to think about a business model would examine such as customer segments, value proposition, channels, customer relationships and revenue streams. The canvas adds in the other pieces (key resources, key activities, key partnerships and cost structure) and adds an organizational overlay that lends itself to analysis. The second major section takes a look at five different business models and fits them into the canvas. The third section, called “Design,” describes various techniques such as visual thinking, ideation and prototyping, “that can help you design better and more innovative business models.” The Strategy section then takes the earlier concepts and combines them with other strategic approaches such as SWOT analysis and Blue Ocean strategies in order to determine where opportunities for improving models may lie. In the final major section, “Process,” the authors lay out a roadmap for running a business model design initiative.
Note that much of the book relies heavily on concepts and work originated by others. This is actually a great strength since it pulls together a lot of different theories and presents them in an easily digested form. The writing is accessible, and it may be that many of the concepts are more easily absorbed here than in the original source materials (all of which are conveniently referenced in case you want to explore further).
The notion of the canvas is new, and it does have an organizational elegance about it that is appealing. One of the points in the first section is that the first five constituent parts of a business model are all about value, whereas the final four are all about efficiency. This makes it easy to see why it made sense for Amazon to unbundle its businesses into an e-commerce line and an IT infrastructure management line.
Aside from a few styling miscues (tiny white print on a black background on some of the pages, really), the major complaint about the book from me — and many others — is that it lacks depth. Most of the case studies are short and the answers are dished up without consideration of the iterations that must have been required to get there. This book is trying to present a generalized way of looking at business models — and I would say that it succeeds very well at that task — but nothing beats seeing the concepts applied in real time rather than in retrospect. For people that are interested in seeing the canvas in action, I highly recommend reading about the Lean Launchpad project at Stanford on Steve Blank’s blog. Think about it as an advanced class after you read the book in the introductory class.