Alexander Osterwalder: Talking About Business Models | Summary and Q&A

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February 6, 2012
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Stanford eCorner
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Alexander Osterwalder: Talking About Business Models

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Summary

In this video, the speaker discusses the concept of a business model and the need for a shared visual language to discuss and understand business models. The speaker shares their experience of asking people what a business model is and realizing that there are various interpretations of the term. To address this, the speaker introduces the idea of using visual representations to map out business models, making discussions clearer and more effective. The speaker also mentions their research on the topic, which resulted in the development of a proposition called "The Business Model Ontology."

Questions & Answers

Q: What is a business model?

A business model is a term that is widely used, but often understood differently by different people. While some may associate it with strategy, others may relate it to channels, profit, product, technology, or processes. It is essential to have a better discussion and understanding of what a business model truly entails in order to effectively find or reinvent one for a product or existing company.

Q: Why are words not enough when discussing business models?

Words alone are often insufficient for a meaningful discussion about business models. Smart individuals may be in the same room, using a variety of words, but may not truly understand each other. This cognitive dissonance is called "blah blah blah" and was brilliantly explored by Dan Roam in his book "Blah, Blah, Blah: What to Do When Words Don't Work." To avoid this issue, it is crucial to have a shared visual language that enables the sketching and mapping of business models, as visual representations provide clarity and facilitate better communication.

Q: What motivated the speaker to explore a visual language for business models?

The speaker began their exploration of a visual language for business models with the aim of finding a shared method of communication. They wanted to understand how a visual language could be developed to effectively discuss and convey business models. This led to the speaker starting a PhD research project titled "The Business Model Ontology - a proposition into design science approach" to delve deeper into this topic.

Q: What is the significance of the speaker's PhD research on business models?

The speaker's PhD research on "The Business Model Ontology" gained attention when they made it available online. People started reading and downloading it, and even using it in various companies. This response indicates that there is significant interest in the topic and confirms that a visual language for business models is indeed valuable and relevant.

Q: How can a visual language help in understanding business models?

A visual language provides a way to visually depict and map out business models. By using visual representations, such as diagrams or sketches, discussions about business models become clearer and more effective. Visualizing a business model allows for a better understanding of its various components, relationships, and key elements. This shared visual language facilitates collaboration, communication, and innovation in the realm of business models.

Q: Can you provide an example of how a visual representation of a business model can aid understanding?

Certainly! Imagine a business model canvas, a widely used visual representation tool. It consists of various elements, such as customer segments, value propositions, channels, customer relationships, revenue streams, key activities, key resources, key partners, and cost structure. By filling in each element and illustrating the connections between them, one can gain a comprehensive overview of the business model, identifying strengths, weaknesses, and areas for improvement. This visual depiction provides a common understanding for all involved and encourages productive discussions.

Q: How does having a shared visual language benefit businesses?

A shared visual language for business models offers several benefits to businesses. Firstly, it enhances communication and collaboration among team members, allowing for a clearer exchange of ideas and perspectives. Secondly, it helps in aligning various stakeholders' understanding of the business model, resulting in better decision-making and strategic planning. Additionally, a visual representation facilitates the identification of opportunities for innovation, as it enables a holistic view of the business model and its potential areas of improvement.

Q: How does the concept of a visual language relate to design thinking?

Design thinking emphasizes the use of visual tools and techniques to understand, ideate, and communicate ideas. The concept of a visual language for business models aligns with the principles of design thinking, as it encourages the use of visual representations to gain insights and effectively convey complex concepts. By incorporating a visual language into the design thinking process, businesses can enhance their creativity, problem-solving, and innovation capabilities.

Q: Are there any limitations or challenges associated with using a visual language for business models?

While a visual language for business models provides numerous benefits, it is essential to be aware of certain limitations and challenges. Firstly, not everyone may possess strong visual thinking skills or be familiar with visual tools, which can hinder effective communication and understanding. Secondly, creating accurate and comprehensive visual representations requires careful consideration and expertise, as oversimplification or misrepresentation can lead to misunderstandings or faulty interpretations. Lastly, maintaining the relevance and applicability of a visual language as businesses evolve and change can be a challenge, requiring continuous adaptation and updates.

Q: How can businesses begin incorporating a visual language for their business models?

To start incorporating a visual language for business models, businesses can begin by learning and familiarizing themselves with existing visual tools, such as the business model canvas or other relevant frameworks. Exploring books, resources, and online tutorials on visual thinking and representation can also be helpful. It is essential to encourage a visual mindset among team members and provide opportunities for practicing and applying visual communication techniques in discussions and meetings. As businesses begin to embrace a visual language, the benefits of improved understanding, collaboration, and innovation in the realm of business models will become evident.

Takeaways

The video highlights the importance of having a shared visual language to effectively discuss and understand business models. While the term "business model" is widely used, there is often a lack of clarity and shared understanding of its meaning. By utilizing visual representations, businesses can enhance communication, align stakeholders, and identify opportunities for innovation. However, it is important to overcome challenges such as limited visual thinking skills and the need for continuous adaptation. Incorporating a visual language for business models can greatly enhance creativity, problem-solving, and strategic planning within organizations.

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