Network-Based Business Model Canvas

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essays / orgdesign

This is a business model framework I adapted for network or platform based businesses from an original IDEO slideshare. The goal is to be able to plot a business model across these buckets that not only creates value for customers – but creates value FROM customers, as well.

Some explanation …

Costs: here I’ve broken down costs into two camps, stealing from the software engineer Fred Brooks, accidental vs essential. Essential costs (and complexity) are related to the problem directly at hand, so what it costs to produce the value itself. Accidental costs (and complexity) accrue over-time based on how you do business and how you grow your business (problems that competitors might not have inherited). Accidental costs are usually costs that the consumer ultimately won’t pay for. The value of differentiating between the two is that it forces you to look at your business from an objective vantage point in order to identify inefficiencies.

Single User VS Network Value: it’s important, especially for innovation-based firms, to design their business models to foster ecosystems and spur network-based growth. You can usually unleash innovation just by asking the question, “What value can we deliver to our customers as members of our network?”

Balancing Pricing VS Scale: I thought it was important to mention scale in the same breath as pricing simply because pricing decisions have dramatic effects on how the business scales.

Market & Connectedness: if you really want to build a networked-based business, you have to spend some time thinking about how the markets you want to tap are connected and how they are identified and reached, especially in digital environments.

Adaptation & Growth: I’m not a big fan of long-term central planning (simply because its a turkey-shoot), instead I’m interested in how organizations will structure themselves and their business units to be more adaptive. These organizations should be rapidly taking in information from their internal relationships (from partners and customers) and from outside threats to devise and prototype mutated offerings. Sometimes this means trying out new products and services and sometimes this means partially discontinuing old products and services.

Ultimately, I’m not sure if I’ve added value or just complication to the original tool, I guess using this to drive conversations would help me understand which outcome I’ve accomplished. I’ve probably destroyed the whole this-can-be-done-in-15-minutes value of it, at least. It was a fun exercise for an hour or so, nonetheless.

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