Monday, 8 May 2017

Introducing the Enhanced Business Model Canvas

The Enhanced Business Model Canvas combines the Business Model Canvas with the Operating Model Canvas proposed by Andrew Campbell, Mikel Gutierrez and Mark Lancelott in their recent book by the same name (see to the right).

In suggesting this combination, the authors argue that it provides a more operational perspective to the left-hand side of original Business Model Canvas, directly addressing "important issues such as people, organization structure, location and information systems that are critical to the operating model, but often given too little attention when thinking about the business model."

Here is an example of what an Enhanced Business Model canvas for Uber might look like.


(Please note: I have constructed this canvas by way of example only, using publicly available information without any privileged knowledge of Uber. As such I cannot vouch for its accuracy. If you do disagree with anything in this example, it will only serve to demonstrate the usefulness of the tool in fostering understanding.)

The above example was drawn in StratNavApp.com the collaborative online tool for business strategy development and execution.

In simplistic terms, the  Enhanced Business Model Canvas does provide more context and granularity than the original Business Model Canvas. For starters, it considers 11 elements of the business model, compared to the original. If we consider each of the changes in turn:
  1. Locations and Organisation have been added. These are both welcome additions. If Michael Porter's work on the strategic importance of location is not enough to convince you, just think of the importance of, for example, Silicon Valley to the tech sector. With regards to Organisation, please see my previous blog about why Structure follows Strategy.
  2. Key Partners and Resources have been removed. I would argue that they have, in fact, been replaced with Suppliers and Information respectively. In both cases, the new category appears to be slightly narrower than the original.
    1. In the case of suppliers, I think the greater specificity is probably a good thing. Distributors, for example, may be a Key Partner, but they probably fit more logically on the right side of the model, which focuses on customers, under Channels.
    2. The addition of Information is very welcome in today's data intensive, big data-driven world. And whilst other Resources, such as a preferential Location, now have a home of their own, others, such as patents or exclusive contracts may struggle to find a home in the enhanced model.
  3. Key Activities have been renamed as Processes and placed within a horizontal chevron shape, instead of the non-descript block in which all of the other elements reside. I am neutral regarding the name change. Arguably, the shape and orientation of the category make absolutely no difference to the analytical process. However, I can't help feel that the change highlights the active nature of the Key Processes, and also serves to make the model more distinctive.
Only time will tell whether the Enhanced Business Model Canvas will achieve the popularity of the original. For now, StratNavApp.com offers the ability to use either. Undoubtedly, it does add something to the debate on how best to understand, represent and analyse operating and business models, and I'd certainly be interested to hear your thoughts in the comments below.