Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers by Osterwalder Alexander & Pigneur Yves

Author:Osterwalder, Alexander & Pigneur, Yves [Osterwalder, Alexander]
Language: eng
Format: mobi
Tags: Business
Publisher: Wiley
Published: 2013-01-31T23:00:00+00:00

Prototyping’s Value

Prototyping is a powerful tool for developing new, innovative business models. Like visual thinking, it makes abstract concepts tangible and facilitates the exploration of new ideas. Prototyping comes from the design and engineering disciplines, where it is widely used for product design, architecture, and interaction design. It is less common in business management because of the less tangible nature of organizational behavior and strategy. While prototyping has long played a role at the intersection of business and design, for example in manufactured product design, in recent years it has gained traction in areas such as process design, service design, and even organization and strategy design. Here we show how prototyping can make an important contribution to business model design.

Although they use the same term, product designers, architects, and engineers all have different understandings of what constitutes a “prototype.“ We see prototypes representing potential future business models: as tools that serve the purpose of discussion, inquiry, or proof of concept. A business model prototype can take the form of a simple sketch, a fully thought-through concept described with the Business Model Canvas, or a spreadsheet that simulates the financial workings of a new business.

It is important to understand that a business model prototype is not necessarily a rough picture of what the actual business model will actually look like. Rather, a prototype is a thinking tool that helps us explore different directions in which we could take our business model. What does it mean for the model if we add another client segment? What are the consequences of removing a costly resource? What if we gave away something for free and replaced that Revenue Stream with something more innovative? Making and manipulating a business model prototype forces us to address issues of structure, relationship, and logic in ways unavailable through mere thought and discussion. To truly understand the pros and cons of different possibilities, and to further our inquiry, we need to construct multiple prototypes of our business model at different levels of refinement. Interaction with prototypes produces ideas far more readily than discussion. Prototype business models may be thought-provoking—even a bit crazy—and thus help push our thinking. When this happens, they become signposts pointing us in as-yet unimagined directions rather than serving as mere representations of to-be-implemented business models. “Inquiry” should signify a relentless search for the best solution. Only after deep inquiry can we effectively pick a prototype to refine and execute—after our design has matured.

Businesspeople are likely to display one of two reactions to this process of business model inquiry. Some might say, “Well, that is a nice idea, if we only had the time to explore different options.“ Others might say that a market research study would be an equally good way to come up with new business models. Both reactions are based on dangerous preconceptions.

The first supposes that “business as usual” or incremental improvements are sufficient to survive in today’s competitive environment. We believe this path leads to mediocrity. Businesses that fail to take the

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