It’s fascinating to see how the language of business can evolve over time. As new tools or principles are introduced to the world, we can see a shift in the ways companies transform their thinking. In this post, Alex Osterwalder and I look at a variety of business languages that have been influential over the past 20 years and analyze them alongside our own tools like the Business Model Canvas.
Alex and I wanted to put the Business Model Canvas into context with other influential management and strategic tools. In the analysis below, you’ll see how in some instances, the Business Model Canvas hasn’t met the success of other players in the field. In other comparisons, we are seeing incredible adoption of the tools and concepts we've created here at Strategyzer.
Of course, the analysis below is a collection of hypotheses on the transformation of business languages. In our mission to create a shared language for business innovation and strategy, we wanted to display the potential and thinking for what we are trying to accomplish.
Business Model Canvas & Lean Startup
Lean Startup has conquered and dominated the startup world, particularly in the US but now also globally. The Business Model Canvas, interestingly, has spread in both corporate and startup worlds but hasn’t been as dominating. It’s not as much of a religion as Lean Startup is for startups. Lean Startup, on the other hand, is only now gaining ground in the corporate world.
I will point out that Lean Startup has seen incredible adoption in large organizations like GE as a set of principles. The Business Model Canvas is a tool that tackles a strategic topic with tactical implementation.
Of course, it’s not one or the other here--they both go hand-in-hand. Our latest book, Value Proposition Design integrates the Lean Startup concept into its teachings. We wanted to take the work of Steve Blank and Eric Ries and build on existing principles rather than reinventing them. What we do try to do is create practical tools that can sit on top of the principles we believe in--things like the Learning Card or Test Card. We believe this can strengthen the existing concepts and evolve the way they are adopted.
Business Model Canvas & Balanced Scorecard
When you look at the graph above you see how incredibly dominating Balanced Scorecard was in the early 2000s. Harvard Business Review really championed the Balanced Scorecard approach, and it was widely adopted by companies. The concept did start get a little bit out of fashion because it was mostly linked to personal compensation within an organization.
Balanced Scorecard did evolve into a “strategy maps” incarnation, which was a more visual approach similar to the Business Model Canvas. There also aren’t many visual tools that have dominated business language. The Business Model Canvas however has greater upside potential here because it’s a lot more intuitive and requires less explanation.
Business Model Canvas & Strategic Plan
I do think people are annoyed with the traditional strategic plan--in particular, the traditional strategic planning process. The approach has become more of an annual cycle of securing your budgets for the next year rather than coordinating company strategy.
The Business Model Canvas really puts a company’s future moves front and center. It can play the same functions as a strategic plan, but as a visual tool it allows a company to see beyond just the numbers. It’s a new tool that will replace how generic “strategic planning” has become as an exercise.
This is what we’re excited about with the Business Model Canvas. You can show your team what you say you’re going to do--develop better customer relationships, build key resources here, improve our cost structure, etc. It’s a much more tangible way to display why you are making business decisions.
Business Model Canvas & Blue Ocean Strategy
The graph above was a pretty big surprise to us. Blue Ocean Strategy is one of the most successful business books in the past decade and was extremely popular. The Business Model Canvas is a tool that’s easy to download and apply even without our book Business Model Generation. Our tool has very broad uses, while Blue Ocean Strategy is very specific on differentiation.
We do love the tools that Blue Ocean Strategy provides in the book, and we have incorporated them into both of our books -- like the Lean Startup, these methods go hand-in-hand.
Business Model Canvas, Business Model & Value Chain
In this case, we’re comparing a very broad word (value chain) that isn’t just a concept alongside our tool. So I’ve also added in the broader term “business model” to round things out here.
Value chain is an important concept but these days it’s much more about operations within an organization. You could say the value chain model, popularized by Michael Porter in 1985, was the grandfather of all the concepts analyzed here.
The term was extremely popular in production or manufacturing economies--businesses that developed products with clear inputs and outputs. But now we have so many different types of economies, and different business models create different types of value creation.
What’s important to note here is that the value chain is part of the business model, in fact it’s a sub component. The business model is about how a company will configure all of its components to create value.
Business Model Canvas, Business Model Innovation & Disruptive Innovation
Disruptive innovation is a great theory, but the Business Model Canvas is a much broader tool that you can apply to study business models that are disruptive or being disrupted. The Canvas can be used for many things.
What’s incredible is that Business Model Innovation as a term doesn’t do very well. Not as many businesses look at innovation against the actual business model. We’re hoping to change that.