The idea created in the ideation process must be finetuned before it can be realised. Methods such as the Business Model Canvas shape the idea with regard to the effects on the business model, and help to decide whether its implementation is worthwhile from a commercial perspective. The method is as simple as it is effective, if it is applied correctly.
Stories of business plans written on the back of a beer mat or sketched out in a restaurant on the back of a napkin are the stuff of legends. Though this seems bizarre to those of us who are used to concepts running to several hundred pages with extensive appendices on performance indicators and financial indicators, it can actually be helpful to reduce everything to the bare essentials when evaluating a business idea. Once the idea is created, it must be shaped and evaluated, all as quickly as possible to keep the time-to-market to a minimum to gain a head start on the competition. One current method for structured finetuning and development of an idea is the Business Model Canvas (BMC). This method is used to condense the process as far as possible, and also to visualise the idea, resulting in a basis for discussion which fits on one single page.

“The Business Model Canvas method is used to create a robust, successful and sustainable business model from a single idea.”

In the course of business modelling, target customers are segmented, the value proposition worded and the channels through which the company can present its value proposition to customers are identified. The cashflows are also analysed: Where must money be invested and where is profit generated? Where can money be saved? The core issue is how can a solution be found to a specific customer requirement, and how can this solution be designed so that it can earn revenue?

The Business Model Canvas is ideal for describing an existing business model in a concise format, for creating a general understanding of the core business and for developing insights for its further development, including adaptation of new ideas. It is also a powerful communication tool for showing the function of a new business model. Various stakeholders who have their own views of the priorities and need to implement an idea must be involved in the development and elaboration of new business models. The fact is that a new business idea can lead to disruption, and therefore understanding and acceptance must be supported throughout the company.

The Business Model Canvas shows how the business model can work as a whole and how its individual elements can interact. To do this, the company and its products are broken down into basic components, and these are visualised in the form of a pre-designed poster. Using the compact, concise format, the key business model assumptions can be recorded as sketches and handwritten text during a meeting. The participants can sketch out a concept chart in the literal sense without losing key elements. Time can then be taken to compare the raw concepts and to evaluate their commercial benefit. This tool also helps to prepare a business idea to be presented to management for a decision on implementation. The method is simple to apply and follows the approach of “fail fast, fail early, fail often” for the more agile the environment the quicker the feedback, and the shorter the feedback loops the steeper the learning curve. This produces pragmatic solutions for future innovation quickly and with a minimum of effort.

“The Business Model Canvas is an extremely efficient tool, enabling you to concentrate on the essentials when developing new business ideas.”

A cautionary note: although the method and the resulting business model sketch appear to be clear and schematic, a certain expertise and experience is needed to control and manage the multi-level process needed to scrutinise, evaluate and refine a business idea. Ideally this management task should be handed over to an impartial external expert who has no qualms about addressing the “pain points” from an objective viewpoint. The expert must get the right people on the right levels to join the team, ask the right questions and encourage all those involved to be creative. This expert therefore needs a broad knowledge of interactive techniques and a good sense of how this can be individually and flexibly tailored to the specific company and its needs. The consultant should also have knowledge of the upstream and downstream phases in the innovation process and have the right tools to hand for each step, therefore enabling the customer to create commercially viable and profitable business models, starting with the idea itself to its validation and right through to the engineering (FIG. 3).

While the method alone cannot develop a sound, successful business model from an idea, it does specify a structure that a skilled consultant can use to fill with the necessary tailored content, depending on how far the customer has progressed with the idea.

Example 1: USING THE BUSINESS MODEL CANVAS (BMC) TO PREPARE AN ORGANISATION FOR DIGITALISATION

A non-governmental organisation (NGO) needs a new, cutting-edge website. Since this is a highly operational need, we are engaged to search for a suitable partner to implement the idea. In meetings on the objectives and expectations of the new online presence, it is quickly found that there is no broad understanding within the NGO on the purpose and performance of such a presence. In order to address the homepage properly from the outset, it is considered important that the business model itself and the individual services for various customer groups are scrutinised and developed. A further difficulty lies in the fact that the NGO is faced with a trend towards professionalisation and commercialisation in its sector, which is still not seen as relevant to what it does. A series of workshops is arranged in which – together with the board members – the sector, the recipients of the non-profit services and the services themselves discuss and evaluate the cost structures, income streams and measures to optimise resources and activities. By applying the Business Model Canvas, a business model is gradually developed, visualised on an A0 poster and displayed in a central location. The business model is fine-tuned in front of the poster or in passing during daily work; additions are noted on Post-It notes and elements are rescheduled and reassigned. Following these discussions, the resulting business model is summarised on one page (FIG. 4).

At a glance it becomes clear which audience is being addressed by a service, what sort of image is being portrayed and which value proposition is being made. In the meantime, the website goes live. Yet the Business Model Canvas has produced new channels and measures from the business model presenting a cost-benefit optimised corporate image to the public.

Example 2: DEVELOPING NEW MARKET OPPORTUNITIES WITH THE BUSINESS MODEL CANVAS (BMC)

The market sector outlook for a high-tech industrial enterprise is somewhat negative. Falling sales and a reactive customer relationship places the business model under scrutiny. As an external consultant engaged to find a solution, we start with a root cause analysis. Industry knowledge as well as technical expertise are brought to the table – and in particular the innovation process from ideation to development, right through to service design and concept creation is covered. An integral part of this process is the development of various models by the BMC method with regard to their effects on the business model. All Business Model Canvases are distributed during the decision-making process and discussed in regard to their advantages and drawbacks for business development. All relevant company stakeholders – management, marketing, Chief Innovation Officer, R&D, finance and sales – are always involved in this discussion to obtain a broad view. The processes are managed with a number of workshops and the customer is enabled to build up its own problem-solving expertise. A solution is finally agreed on with the help of the individual Business Model Canvases; detail is added to the solution and prepared for the Management Pitch. The result is an application based on the final concept which improves the interaction between company and customer as an advanced service and creates new market opportunities.

News from ERNI

In our newsroom, you find all our articles, blogs and series entries in one place.

  • 06.12.2023.
    Newsroom

    Streamlining software development: The journey from multiple to unified requirements management tools

    Productivity in software development is slowed down by managing specifications across various requirements management (RM) tools. Although moving to a single, updated RM tool involves an upfront investment, the long-term benefits are considerable. These include increased process efficiency, enhanced collaboration, superior traceability, improved software specification quality, cost reductions, scalability and better integration with other RM tools, among others.

  • 22.11.2023.
    Newsroom

    Recognising trends: An insight into regression analysis

    Data plays a very important role in every area of a company. When it comes to data, a distinction is made primarily between operational data and dispositive data. Operational data play an important role, especially in day-to-day business. However, they are not nearly as relevant as dispositive data. This is because these data are collected over a longer period of time and provide an initial insight into the history or the past.

  • 08.11.2023.
    Newsroom

    Why do we need digital transformation for medical devices?

    For hospitals, it is not up for discussion as to whether they want to digitalise. The increasing age of the population in western countries and the progressive shortage of medical professionals mean that without digitalisation, the healthcare system will not be able to provide the quality that patients want in the future.

  • 25.10.2023.
    Newsroom

    Mastering the challenges of mobile app testing: Strategies for efficient quality assurance

    Discover the unique challenges faced in testing mobile applications and learn how to overcome them effectively. From selecting suitable devices and operating systems to leveraging cloud-based test platforms, test automation and emulators, this article provides seven essential strategies for optimising your mobile app testing process.

  • 11.10.2023.
    Newsroom

    Incorporating classical requirements engineering methods in agile software development for a laboratory automation system

    Traditional agile methodologies can sometimes struggle to accommodate the complexity and regulatory requirements of laboratory automation systems, leading to misalignment with stakeholder needs, scope creep, and potential delays. The lack of comprehensive requirements documentation can result in ambiguous expectations and hinder effective communication among cross-functional teams.

  • 27.09.2023.
    Newsroom

    Unveiling the power of data: Part III – Navigating challenges and harnessing insights in data-driven projects

    Transforming an idea into a successful machine learning (ML)-based product involves navigating various challenges. In this final part of our series, we delve into two crucial aspects: ensuring 24/7 operation of the product and prioritising user experience (UX).

  • 13.09.2023.
    Newsroom

    Exploring Language Models: An overview of LLMs and their practical implementation

    Generative AI models have recently amazed with unprecedented outputs, such as hyper-realistic images, diverse music, coherent texts, and synthetic videos, sparking excitement. Despite this progress, addressing ethical and societal concerns is crucial for responsible and beneficial utilization, guarding against issues like misinformation and manipulation in this AI-powered creative era.

  • 01.09.2023.
    Newsroom

    Peter Zuber becomes the new Managing Director of ERNI Switzerland

    ERNI is setting an agenda for growth and innovation with the appointment of Peter Zuber as Managing Director of the Swiss business unit. With his previous experience and expertise, he will further expand the positioning of ERNI Switzerland, as a leading consulting firm for software development and digital innovation.