The business model canvas
Using the same business-model canvas, Figure 3.6 shows how Skype’s business model disrupted the telecommunications providers. In its first five years, Skype had over 400 million users, experi- enced over 100 billion free calls, and generated 2008 U.S. revenues of $550 million.
As a strategic-thinking exercise, first use the business-model canvas to describe the company’s current business model (keep entries very brief). Regard each of the nine elements as a source for business-model innovation; elements can be changed one at a time or several at a time.
As you can see, it requires a great deal of creativity and strategic thinking to come up with feasible and purposeful ways of improving the business model to help the company be more successful.
Source: Alexander Osterwalder and Yves Pigneur, Business Model Generation: A Handbook for Visionaries, Game Changers, p. 44. Copyright © 2010 John Wiley & Sons. Reprinted with permission.
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CHAPTER 3Summary
Summary
In Chapter 1, you learned that strategic planning is a process designed to choose the best strategy a company can follow as well as decide on its purpose, vision, and objectives. Because strategic thinking, done well, produces potential strategies to follow and suggestions for innovating its busi- ness model, it is an indispensable prerequisite to doing strategic planning.
This chapter explored the complex concept of strategic thinking—what it is and how to do it. Stra- tegic thinking includes the constant search for a better strategy, the constant search for a better business model, and the constant search for a “blue ocean,” situational monopoly, or uncontested market space. It also includes developing alternative futures or scenarios to reduce future risk and guide strategic choice.
Searching for a better strategy involves playing a different game—not being like your competitors, being entrepreneurial (looking at things from a customer’s perspective and looking for opportuni- ties all the time), and finding more opportunities (the chapter presents a number of useful tech- niques for coming up with opportunities, like Abell’s three-dimensional business-definition model, structured brainstorming, and identifying strategic frontiers).
Finding a “blue ocean” is made easier using two related techniques—the strategy canvas and the four-action framework, both created by the authors of the book Blue Ocean Strategy. Finding a situational monopoly is easier and, ironically, upends our mental model of a monopoly (illegal in the United States although the situational monopolies described here are quite legal).
The chapter presents the most useful technique for developing alternative futures—scenario planning. To derive the full benefits, a company wanting to use it should get expert consultation because of its complexity.
Key Partners (KP)
Maximum Outsourcing
Roughly Similar Voice Offering
Global Reach Without the Limitations of a Network
Cost Structure of a Software Company 90% Free Usage, 10% Paying
Key Activities (KA)
Software Development and No Network Maintenance
No Infrastructure
Automated Mass Customization
Software Distribution 100% Low-Cost Channels
Value Proposition (VP)
Customer Relationships (CR)
Cost Structure (CS)
Revenue Streams (RS)
Key Resources (KR)
Channels (CH)
Customer Segments (CS)