5 years, 7 months ago

Building Networks with Business Models: Two approaches that will help you to understand and improve your value network

<p>In an earlier posting we addressed <a href=”http://www.bizzdesign.com/blog/7-applications-of-the-business-model-canvas/”>7 applications of the Business Model Canvas</a>. Sure, we can agree that the Business Model Canvas is very useful for establishing, evaluating and reinventing businesses. But we should not only highlight the countless possibilities of it for a single enterprise. We need to synthesize our understanding of Value Chains and the Business Models and look for the next level of analysis: Value Networks.</p><p>In this blog we will highlight a less addressed aspect from the Business Model Canvas that is rooted in Value Network thinking. There are multiple methods and even tools that support the analysis of Value Networks which is regarded as the collaborations, interactions, and exchanges between business actors. You might have heard or read about <a href=”http://www.amazon.com/Mobile-Service-Innovation-Business-Models/dp/3540792376″ target=”_blank”>STOF</a> and <a href=”http://e3value.few.vu.nl/” target=”_blank”>e3-value</a>. But apart from academic research, Value Networks are less represented in practical settings today. Why? Because of the rapidly increasing complexity of Value Networks – soon we lose track when we think about relations between multiple actors involved in our business such as suppliers, customers, governments, partners, NGO’s. Therefore in this blog we will explain how the simplicity of Business Model Canvas can be used to highlight Value Networks. We discuss an external network approach as well as a more internally oriented network approach.</p><h3>The network is the challenge</h3><p>Imagine a pension fund with three business units – one for asset management, one for customer advice and a third one for customer relationship management and administration – that attempts to broaden its service offerings. We can use the Business Model Canvas to guide this effort. First, we establish the pension fund’s current Business Model Canvas. Then we formulate our goal – which is to broaden the current service offerings. Step by step we elaborate desired Business Model Canvases that include different new service offerings. Finally we selected the most feasible Business Model Canvas for implementation. Business as usual – except that until now we have limited ourselves to only the Business Model Canvas of the pension fund.</p><div class=”captionImage leftAlone” style=”width: 561px;”><img class=”leftAlone” src=”http://www.bizzdesign.com/assets/BlogDocuments-2/business-model-canvas-pension-fund.png” alt=”Business Model Canvas pension fund” title=”The main goal is to reach our customers, provide them with our value proposition, and get paid” width=”561″ height=”417″/><p class=”caption”>three main elements of the business model canvas: key partners, enterprise and customers</p></div><p>Although external elements like key partners (1) and customers (3) are included in the Business Model Canvas, at the end of the story the emphasis is on the business model of a single enterprise (2). It seems that key partners are just there to be included in our Business Model Canvas. We also take customers for granted. The main goal is to reach our customers, provide them with our value proposition, and get paid.</p><p>Today more than ever, an isolated view on an organization is not feasible. We are not suggesting that the Business Model Canvas only provides an isolated view. Instead, we want to add some additional support to the Business Model Canvas to broaden and deepen its application from the perspective of Value Networks. This support comes in the form of a Networked and an Aggregated Business Model Canvas.</p><h3>The chained network approach</h3><p>Lets think about the pension fund example again. In addition to the single enterprise view of the Business Model Canvas we should also consider the canvases of our partners and customers for broadening our service offerings. That way we will be able to highlight the interactions of the pension fund and its actors for the sake of the pension fund and its actors –so basically focusing on the Value Network instead of a single company in order to retrieve additional insights that might not be highlighted through a single Business Model Canvas.</p><p> </p><div class=”captionImage leftAlone” style=”width: 600px;”><img class=”leftAlone” src=”http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600210-canvases-of-partners-and-customers.png” alt=”chained network approach” title=”Does the entire Value Network benefit from newly offered services of the pension fund?” width=”600″ height=”210″/><p class=”caption”>consider the canvases of our partners and customers for broadening our service offerings</p></div><div class=”captionImage leftAlone” style=”width: 561px;”><div class=”captionImage leftAlone” style=”width: 561px;”><span style=”font-size: 11px;”>By representing the Value Network through Networked Business Model Canvases we could answer new questions like: How can we broaden our service offerings through the current Value Network? What improvements can we implement? Does the entire Value Network benefit from newly offered services of the pension fund?</span></div></div><p>Now we are able to involve our partners as well and benefit as a group from the applications of the Business Model Canvas by:</p><ul><li>considering the potential improvement for all value network actors;</li><li>identifying (un)equal distributions of risks, costs and profits for actors based on changes in the value network;</li><li>and using the capabilities and knowledge of all actors to improve the value network;</li><li>Address opportunities of <a href=”http://en.wikipedia.org/wiki/Disintermediation” target=”_blank”>disintermediation</a> concerning removal of intermediaries from a value chain;</li><li>Apply (elements of) the unbundling pattern (page 62), concerning specialization. In commoditizing markets successful organizations focus on either Product Innovation, Customer Relationship Management or Infrastructure Management. Also see <a href=”http://www.amazon.com/Discipline-Market-Leaders-Customers-Dominate/dp/0201407191″ target=”_blank”>Tracy &amp; Wiersema’s value disciplines</a> and <a href=”http://en.wikipedia.org/wiki/Porter_generic_strategies” target=”_blank”>Porter’s generic strategies</a>.</li></ul><h3>The aggregated network approach</h3><p>In addition to a networked Business Model Canvas we can also establish an aggregated Business Model Canvas for the pension fund. Think about the individual business units that are part of the pension fund. While customers may perceive the pension fund as one entity, business units could be independent in terms of their financial performances. Each business unit operates independently and is responsible for own results and achievements. However, because all business units are part of the same pensions fund, the might be using each other’s assets, serve similar customers and share similar partners. Actually a customer could be advised by one business unit on his savings and investment plans, while the same investments could be managed by the assets management business unit. Along the process the customer wants to experience being served consistently by one organization – the pension fund – instead of separate business units. Providing such consistency is obviously important for the pension fund and its business units. But how can they start addressing related issues? And all business units have other internal and external customers as well….</p><p>That is when the aggregated Business Model Canvas comes into play. First we need to establish the individual Business Model Canvases of the pension fund and its business units. Then we need to examine the relations between building blocks across the network by connecting the Business Model Canvases.</p><p> </p><div class=”captionImage leftAlone” style=”width: 600px;”><img class=”leftAlone” src=”http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600219-Aggregated-Business-Model-Canvas.png” alt=”aggregated Business Model Canvas” title=”Along the process the customer wants to experience being served consistently by one organization instead of separate business units” width=”600″ height=”219″/><p class=”caption”>The aggregated business Model Canvas asks more questions</p></div><p>Again this allows us to answer additional questions like: How can we improve our corporate business model? Is each business unit aligned properly with the corporate organization? What similar partners are used by the different business units? Do we collaborate sufficiently to provide consistent service quality to our customers? Where are opportunities for synergy?</p><p>Now we are able to understand our internal model and consider our business models as complementary parts of the same aggregated model. Benefits of applying this internal network approach are:</p><ul><li>Aligning the whole with its parts</li><li>Learn from each other: using the capabilities and knowledge of all actors to improve the network</li><li>Understand and learn how costs and value creation are distributed throughout the organization in more detail then seen when only creating an enterprise view</li><li>identifying (un)equal distributions of risks, costs and profits for business units based on changes in the value network;</li><li>Understand and manage differences in the business unit’s business models</li><li>Understand and benefit from synergies between the different business models</li></ul><h3><span style=”color: #e3004a; line-height: 14px;”><span style=”color: #e3004a;”><span style=”line-height: 14px;”>Conclusions and advice for applying business model networks in practice</span></span></span></h3><p><span style=”color: #e3004a; line-height: 14px;”><span style=”color: #e3004a;”><span style=”line-height: 14px;”> </span></span></span>Supported by the alternative application suggestions of het Business Model Canvas discussed above, we recommend you to:</p><ol><li>Establish your current business model canvas</li><li>Establish the business model canvases of your internal and external customers</li><li>Establish the business model canvases of your internal and external partners and suppliers</li><li>Interconnect and aggregate the business model canvases</li><li>Assess the effectiveness of the network in term of experienced pain and gain by each partner</li><li>Elaborate opportunities to improve the networks performance as a whole</li><li>Work out these opportunities by following each dependency relation through the network, taking into account pains and gains addressed by each actor in the network</li><li>Establish an integrated implementation plan for the whole</li><li>Establish detail implementation plans for each partner</li></ol><p>Whether the additional Business Models concern internal or external customers and partners, in both cases you will benefit from the additional insights – you will improve your understandings of your own business model as well as the business models of your stakeholders and together you will be able to identify improvement opportunities in your value network. At the end of the day no business operates on its own. Every organization has to collaborate to different extends with multiple actors. Trends that are already here to stay, and trends that should be on your agenda today, all underline the importance of collaboration and require insight in your network. Supply chain management, co-creation, open innovation, knowledge sharing, social enterprise, big-data, predictive analytics.<br/><strong><em>“Understanding your business model is only a first step in understanding your value network.”</em></strong></p><p>We look forward to helping you achieve your goals in the new, networked, normal!<br/>BiZZdesign organizes <a href=”http://www.bizzdesign.com/training/business-model-management/”>training on Business Model Innovation</a> in London (UK), Brussels (BE) and Amersfoort (NL – <a href=”http://www.bizzdesign.nl/training/business-model-management/”>see our Dutch website</a>). More about BiZZdesign’s Business Model Management services, examples and a reference to recent webinars on this subject can be found <a href=”http://www.bizzdesign.nl/consultancy/business-model-management/”>here</a>. Feel free to download the <a href=”http://www.bizzdesign.com/tools/business-model-canvas-module/”>free trial version of our Business Model Canvas tool</a> from our website.</p><p> </p><p> </p>

5 years, 7 months ago

From Business Design to Business Change (#2) – Be John Malkovich!

<p><span style=”font-size: 11px; line-height: 19px;”>What interests me is that in many cases success in our work is not about the content per se (see </span><a style=”font-size: 11px; line-height: 19px;” title=”From Business Design to business Change” href=”http://www.bizzdesign.com/blog/from-business-design-to-business-change-1-the-content-paradox/#Blog series: business design to business change”>post #1 </a><span style=”font-size: 11px; line-height: 19px;”>of this series). Let me start this blog by recommending a somewhat strange, but brilliant and award winning movie ‘</span><a style=”font-size: 11px; line-height: 19px;” title=”1999 American comedy-fantasy film written by Charlie Kaufman and directed by Spike Jonze” href=”http://en.wikipedia.org/wiki/Being_John_Malkovich”>Being John Malkovich</a><span style=”font-size: 11px; line-height: 19px;”>’. It is – quite literally – about entering the head of John Malkovich. This is exactly what I try to keep in mind when meeting new clients. Seeing reality through John’s eyes. It became my associative reminder: “Be John Malkovich,  be </span><em style=”font-size: 11px; line-height: 19px;”>[Client’s Name]</em><span style=”font-size: 11px; line-height: 19px;”>! “.</span></p><p><span style=”font-size: 11px; line-height: 19px;”> </span></p><div class=”captionImage left” style=”width: 214px;”><img class=”left” src=”http://www.bizzdesign.com/assets/BlogDocuments-2/Being-john-malkovich.png” alt=”Being John Malkovich” title=”There is not one reality” width=”214″ height=”317″/><p class=”caption”>Be aware of the subjective reality in business change</p></div><p> </p><p><span style=”font-size: 11px; line-height: 19px;”>Although of interest, I do not just mean diving into the requirements regarding my client’s business problem – this is all content. What I mean is taking it a step further. What drives my client? What are his/her fears or frustrations? What are his/her shortcomings? What is the meaning of this context for my design approach? I have experienced that having a somewhat deeper understanding of my client’s pain and gain (see below) pays off. It has improved my approach towards a business solution and has helped me gaining trust and acceptance. The Empathy Map below has, apart from my John-motto of course, helped me in changing my perspective.</span></p><h2>The Empathy Map</h2><p>The Empathy Map is a technique developed by <a title=”Go to the EXPLANE website” href=”http://www.xplane.com/”>XPLANE</a> and presented in the book <a title=”Book: business Model Generation” href=”http://www.amazon.com/Business-Model-Generation-Visionaries-Challengers/dp/0470876417/ref=sr_1_1?s=books&amp;ie=UTF8&amp;qid=1280587028&amp;sr=1-1″>Business Model Generation</a>. It looks like this:</p><p></p><div class=”captionImage leftAlone” style=”width: 600px;”><img class=”leftAlone” src=”http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600456-empathy-map-for-business-design.png” width=”600″ height=”456″ alt=”” title=””/><p class=”caption”>Empathy map</p></div><p>The Empathy map is most often used to develop imaginary client profiles for customer segments. I used it for the first time in the field of <a title=”Business Model Management” href=”http://www.bizzdesign.com/consultancy/business-model-management/”>business model management</a>. I find it equally powerful for existing individual clients. It is a collaborative tool for teams (workshops) but I use it for myself on the back of a napkin as well. The following is what I do to get inside my client’s head. Please note I adjusted some of the standard questions in the technique to fit my purpose here: </p><p><span style=”font-size: 11px; line-height: 19px;”>1. Tape a big flip over sheet to the wall, in landscape orientation;</span><br/><span style=”font-size: 11px; line-height: 19px;”>2. Draw the head of the manager in the centre – with resembling characteristics for more empathy, and fun – and draw the template around it, with keywords. You can also download the </span><a style=”font-size: 11px; line-height: 19px;” title=”Download the empathy map poster in PDF” href=”http://ebookbrowse.com/empathy-map-poster-pdf-d341627585″>empathy map poster template</a><span style=”font-size: 11px; line-height: 19px;”> </span><span style=”font-size: 11px; line-height: 19px;”>and print a poster;</span><br/><span style=”font-size: 11px; line-height: 19px;”>3. Enter the client’s head and answer the following questions one by one by placing sticky notes on the sheet (in this order).</span></p><div><span style=”font-size: xx-small;”><img class=”left” src=”http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600279-empathy-map-questions-for-business-design.png” alt=”Empathy map questions” title=”Ask these quentions about your client” width=”600″ height=”279″/></span></div><div><div><div><div><div><div><div><div><div><div><div><div><div><div><div><div><span style=”font-size: xx-small;”><br/></span></div><p> </p><p> </p><p> </p><p> </p><p> </p><p> </p><p> </p><p> </p><p> </p><p> </p><p><span style=”font-size: 11px; line-height: 19px;”>4. Analyse the results above, and answer the following questions:</span></p><p><span style=”font-size: 11px; line-height: 19px;”><img class=”left” src=”http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600172-empathy-map-final-questions-for-business-design.png” alt=”Empathy map questions” title=”Final quentions about your client” width=”600″ height=”172″/></span></p><p> </p><p> </p><p> </p><p> </p><p> </p><p> </p><p><span style=”font-size: 11px; line-height: 19px;”><br/></span></p><h2><span style=”font-size: 11px; line-height: 19px;”>The result</span></h2><p>Below I present a case I made anonymous. Let us call my client Kees – team manager, 62 years old, insurance company, 5000+ employees, big change ahead. The result could look like this:</p><p> </p><div class=”captionImage left” style=”width: 600px;”><img class=”left” src=”http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600463-Results-empathy-map-Alex-Hendriks2.png” alt=”Empathy map result” title=”This is what is inside your clients head!” width=”600″ height=”463″/><p class=”caption”>If you’re working on buniess change, you should know what is inside your clients head</p></div><p>By entering the head of Kees for about an hour, I changed my perspective and gained some valuable insights for consulting him in the design and change challenges in his project.</p><p>Please share your experiences and ideas on this with me at <a title=”E-mail Alex” href=”mailto:a.hendriks@bizzdesign.com”>a.hendriks@bizzdesign.com</a>, or leave a comment. </p></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div>

5 years, 7 months ago

EA Roadmap for success: Architecture Principles and models

<p>In this 10th posting we will cover the topic of using <em>architecture principles</em> and <em>architecture models </em>in tandem. Both focus on different aspects of Enterprise Architecture work / documentation and complement each other as we will see shortly.</p><p> </p><div class=”captionImage left” style=”width: 600px;”><img class=”left” src=”http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600375-Roadmap-for-success-architecture-principles-and-models.png” alt=”Principles and Models Enterprise Architecture” title=”10th posting in the Roadmap for sucess series” width=”600″ height=”375″/><p class=”caption”>The 10th posting in the series Roadmap for success</p></div><p> </p><h2>EA manifestations</h2><p>There are many definitions of architecture around, all focusing on different aspects: ontological definition, process, framework, language and so on. In our opinion, the ANSI/IEC/IEEE 42010 standard does a good job of explaining what architecture really <em>is</em>. In order to <em>know</em> what the architecture (of a system) is, we need to answer two questions:</p><ul><li>What is its fundamental organization?</li><li>What are the principles guiding its design and evolution?</li></ul><p>These questions not only give insight in how to <em>document</em> architecture (models for fundamental organization, principles for principles guiding design and evolution), they also give insight in how the instruments of Enterprise Architecture can be used to add value to the organization: gain insight in the fundamental organization of the enterprise at a high(er) level of abstraction, and develop a road map to help steer the organization to where it wants to be.</p><p>In this posting we zoom in on the two manifestations of Enterprise Architecture: models and principles. There is of course a lot more to be considered in the context of an Enterprise Architecture practice (governance logs, design decisions, exceptions granted, strategies, road maps and so on), but those are outside the scope of this blog post.</p><h2>Models</h2><p>The first type of architecture documentation to be considered is the use of <em>models</em>. A wide range of models have been proposed and used successfully over the last few decades. Some more formal, other informal (PowerPoint still seems to be a popular modeling tool). A lot can be said about the merits of a formal or informal approach. The figure below lists a few:</p><p> </p><div class=”captionImage left” style=”width: 600px;”><img class=”left” src=”http://www.bizzdesign.com/assets/BlogDocuments-2/_resampled/resizedimage600577-Enterprise-architecture-formal-vs-informal.png” alt=”Enterprise architecture models” title=”Formal and informal enterprise architecture models” width=”600″ height=”577″/><p class=”caption”>Enterprise Architecture models: formal and informal models</p></div><p>In our experience, the combination of formal models with flexible visualization mechanisms tends to work best in practice. As such, <a title=”Open modeling language for architects to model and communicate Enterprise Architecture” href=”http://www.bizzdesign.com/consultancy/enterprise-architecture-management/archimate/#ArchiMate”>ArchiMate</a>® is a good candidate as the language was specifically designed to cater for various different stakeholders. Also, with good tool support it is also possible to generate tables, change the graphic shape of concepts and relations and so on: anything to improve the communication about the fundamental organization of a system with various stakeholders.</p><h2>Principles</h2><p>Some claim that architecture (of a system) <em>is</em> a set of principles. While we agree that the use of principles is key to a solid architecture approach, we feel that this may be one step too far.</p><p>Principles in the context of architecture work are <em>normative statements of direction</em>; they guide the design and evolution of a system. As such they tend to take the form of a ‘regulation’, an ‘abstract rule’ which may or may not be SMART. The typical template for principles includes such things as meta-data (who wrote it, when, what was the revision history and so on), a brief statement of the principle itself, a rationale or explanation, and a section that discusses its implications (for architecture designs).</p><p>Various templates have been proposed (e.g., TOGAF™), and many books have been written (we recommend the book by Proper and Greefhorst).</p><p>Regardless of form and template: principles guide the design of an architecture. To see why, consider the situation where two systems are designed that (functionally) solve the same problem, but adhering to a completely different set of principles! For example, a portal solution for an informational problem may adhere to the principle that all systems must be customer facing, whereas a call center solution for the same informational problem may adhere to the principle that customer-contact is always through human interaction.</p><h2>ArchiMate</h2><p>The ArchiMate® language has been around for a while now, and is widely used to model various aspects of (enterprise) architectures. Since its second edition – in which the language is better aligned with the TOGAF™ framework – it also includes a motivation extension which has the <em>principle</em> concept. This concept can be linked to any core concept using the <em>realization relation</em>, to indicate concepts in the architecture where this principle manifests itself. This <em>good practice</em> is highly recommended!</p><h2>Next posting</h2><p>If you’d like to know more, please contact the authors directly at <a title=”E-mail Bas van gils” href=”mailto:b.vangils@bizzdesign.com”>b.vangils@bizzdesign.com</a> / <a title=”E-mail Sven van Dijk” href=”mailto:s.vandijk@bizzdesign.com”>s.vandijk@bizzdesign.com</a>, or leave a comment. The next post in this series is about governing projects. It is scheduled to be posted between 8<sup>th</sup> and 12<sup>th</sup> of April. </p>

6 years, 5 months ago

What impacts should Enterprise Architecture have?

Footprints on fresh snow(photo credit: dru!)Walking on fresh snow is one of my favorite activities, as I enjoy leaving the first footprints in the soft, fluffy snow.  My impact on the snow is evident to those that come after me.  What impacts…

6 years, 5 months ago

6 Rules of Thumb for Enterprise Architecting

What rules of thumb guide your EA efforts?(photo credit: Sanna R) This is the second half of my 12 heuristics for Enterprise Architecting.  I have already started using some of them to guide me in EA exercises, for example heuristic #7.  And…

6 years, 5 months ago

Architecture of my life: continued

Continuing down the life architecture path (photo credit: .:Adry:.)My earlier post Architecture of my life generated a lot of interest, which was encouraging, but it also stressed me to follow up with updates as many readers asked for that.  …