Book Review: Business Model Generation

By Chris Wendel

****

Self-published – $25 – 278 pages

"Business Model Generation" is a book that grabbed my attention during a recent search for small business-related book titles. What appealed to me was the idea of a business book dominated by illustrations rather than tedious narrative.

It is safe to say that there is no other book like "Business Model Generation." This free-style formatted book is a comprehensive method of assessing how a business can operate in today's virtual internet era, where efficiencies can be developed quickly and alliances with other companies is an essential part of growing a business. In short, there is a lot more to becoming a successful business these days than opening a store on Main Street and relying on "word of mouth" for customers to walk through the door.

Co-created by a team of 470 practitioners from 45 countries, "Business Model Generation" challenges entrepreneurs "to defy outmoded business models and design tomorrow's enterprises." While this might seem like heady stuff for a small local business owner, there is an opportunity to use "Business Model Generator" to analyze a profitable direction and decide where a company should be five to six years down the road. The point is that today's business has the opportunity, if planned correctly, to make rapid leaps forward and visualize, thus creating its future.

The author asks businesses to address Nine Building Blocks:

1. Customer Segments: (Who will use the product?)

2. Value Proposition: (Why will they use the product?)

3. Channels: (How will the product be delivered to the customers?)

4. Customer Relationships: (How will you develop and maintain contact with your customers in each segment?)

5. Revenue Streams: (How is revenue generated from which customer segments?)

6. Activities: (What are the key things that you need to do to create and deliver the product?)

7. Resources: (What assets are required to create and deliver the product?)

8. Partners: (Who will you want to partner with?)

9. Cost Structure: (What are the main sources of cost required to create and deliver the product?)

Just answering these questions honestly would be a major accomplishment for many businesses. But taking those answers and placing them in a prioritized process is the essential part of this book.

The examples provided tend to be behemoths such as Amazon, Google, and Apple's iPhone, which might not seem like pragmatic examples for smaller businesses. These business models did though evolve from ideas to dominant corporate forces in a relatively short period of time. Google, when one thinks about it, was nothing more than a university research project just 16 years ago.

Using some of the techniques in this book, we can see examples in our own region of companies that do business in innovative ways. Grand Traverse Pie Co. comes to mind, with its production systems combined with a distribution model that includes a network of 15 retail stores (company owned and franchises), along with Internet and mail-order sales.

Design is heavily emphasized in the "Business Model Generation." From the customer's perspective, design is a key (and often an overlooked or underfunded) component of developing a business concept and value proposition. Too many times great concepts end up presented inadequately because of the lack of investment in the front-end design.

The illustration-heavy content that initially lures one into "Business Model Generation" does require major amounts of time and effort to implement, especially with a group of people. For the experienced business owner that needs a strategic plan for going forward, this book is the right choice. For those with the next great idea, "Business Model Generator" is also a good starting point.

Chris Wendel serves the Grand Traverse region as a business consultant and lender with Northern Initiatives, a private, nonprofit community development corporation that provides rural entrepreneurs with access to capital, information and markets. BN

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