Business Model Toolbox Review

Developer: Business Model Foundry Gmbh
Price: $29.99
Version: 1.0.1
App Reviewed on: iPad 2

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In order to understand this application’s raison d’être, you need to know about the business modeling concepts as illustrated, figuratively and literally, in the book Business Model Generation by Alexander Osterwald and Yves Pigneur. ISBN 978-0-470-87641-1. If you are thinking of starting your own business, or already own or run a business, no matter how small, for profit or non-profit, understanding the concepts in The Business Model Generation is imperative.

The Book

The Business Model Generation is an approach to, a process for, and a way of thinking about business models for the future. Why? Because as one successful entrepreneur put is so well, “disruption is coming soon to an industry near you” as we have so amply seen with legends like Google, Apple, new industries like social media, mobile technologies, and the 10-people billion-dollar businesses that astonish the most jaded of us. Less commonly known are the success stories of the likes of Swatch, Wii, Lego and Nescafe recounted in the book. So whatever business you are in, don’t get too comfortable. The next generation will drink your milkshake.

The book is nearly 300 pages arranged into five sections: the business model canvas (the Business Model Toolbox app is an eCanvas), business model patterns, design thinking, strategy and process for thinking about and creating next-generation business models. The format is like a coffee-table book with large pages full of illustrations, diagrams, drawings, side bars, tables, lists, exercises and workshop tips. Because of this, and because you will find yourself regularly flipping back and forth through the pages, the book will not translate well into an eBook. Though I would not bet against the creators doing so, brilliantly. Concepts are made real with recent real-world case studies written as short sketches rather than detailed analyses and histories.

In addition to the authors and editor, the credits include a creative director, a producer and 470 “co-creators.” Much more has gone in to this book than text for yet another business management lesson. The team clearly practiced what they preach having bypassed a traditional publishing approach to create a platform (the Hub - http://www.businessmodelhub.com/) from which they shared their writings from the start. The authors tell us that the Hub even contributed a revenue stream that was used to help finance the book’s production - a great example of next-generation business model thinking.

Because critical thinking requires disciplined reasoning, the canvas is “a conceptual map that functions as a visual language with a corresponding grammar.” The canvas is an aid in fostering the understanding of the essence of a business model idea, an aid in enhancing the dialog when ideating and analyzing with a shared language and reference point, an aid in exploring ideas and an aid in visually presenting your discoveries and designs.

Business Model Generation is more than just these fancy words. To disciples of Design Thinking these concepts are as familiar and comforting as your first cup of tea in the morning. The canvas and Toolbox application binds that mindset to big picture thinking. It simplifies by capturing the essence of a business model without the distraction of the details and fosters rapid prototyping and what-if scenarios. After sufficient iterations, for the business models that have survived the selection process, the book shows how the canvas can be used to communicate the model and work through SWOT (strengths, weaknesses, opportunities and threats) analyses. Again, real-world case studies are briefly illustrated to highlight the key concepts.

[caption id="attachment_86242" align="alignnone" width="1024" caption="Example of a fictional t-shirt business model"]

The Application

The canvas is divided into nine building blocks. In the center is the Value Proposition. The left side contains areas for the business's key activities, key assets, and key partners atop the Cost Structure. The right side, atop Revenue Stream, has the customer-oriented blocks customer segments, customer relationships and customer support. The visual aspect of the canvas fosters ideation, creativity and discovery of both compositional elements and the relationships among them required for a real, dynamic businesses.

The application allows you to rapidly create Post-it™ notes, each conveying a single idea about the building block to which it is attached. A note-pad UI element is available if quick, additional notes need to be captured, but is otherwise hidden under the sticky. Most of us have probably performed a similar exercise when brainstorming with a team at work. We do love our sticky notes.

[caption id="attachment_86249" align="alignnone" width="1024" caption="The Post-it™ UI"]

In the book’s case study of Lulu.com, the self-publishing service, in the value proposition block is one sticky note for the self-publishing service and one for the market place for niche content. Authors and audiences go in the customer segment block. A sticky for the Lulu.com web site in customer segment channel connects the value proposition to customers creating a revenue stream. This written description may make the tool seem at the same time a little too abstract and simplistic, but the visual model on the canvas makes the business pattern clear and easy to explain. Chapter two of the book walks you through five business model patterns and real world cases from important concepts from business literature. Lego’s use of the Long Tail pattern is one of the more memorable cases in the book.

Once the nouns and verbs and the business pattern have emerged, the Toolbox allows you to go further with a quick sketch of the numbers. Post-it™ notes on the cost structure building block are enabled with a Cost Calculator where fixed costs, variable costs and other costs may be added. Touching the calculator icon on the top bar reveals a bubble with the totals for the appropriate Post-it™ notes. Touch the bubble to bring up the revenue or cost calculator. Help notes, organized hierarchically for drill down on the details, provide guidance for the particular building block in which the Post-it™ note resides. Touch the question-mark icon on the sticky note to toggle them on and off.

Post-it™ notes in the Revenue Stream building block are enabled with a Revenue Calculator where you can enter numbers for sales, subscriptions, pay-per-user amounts, licensing, etc. Each of these categories provides cells for sub-values specific to the revenue model. For example, for subscription-based revenue, there are cells for the number of subscriptions, price and subscription period. The canvas automatically brings these numbers down to the bottom, like a spreadsheet, to display the profit or loss for the complete model.

[caption id="attachment_86250" align="alignnone" width="1024" caption="Cost calculator"]

There are 12 basic revenue and cost models available. The ease of use and simplicity is consistent with the canvas’ goals for rapid ideation and iteration. You will need a real spreadsheet or other financials modeling tool to get to the next level. Models can be exported via email as an image or CSV file attachment. The CSV file can be imported in to a spreadsheet application as a starting point for a more sophisticated financial modeling. Unfortunately, there is no save, revert or undo/redo, which helps keep it simple, but could be a little annoying before you become accustomed to it.

In addition to the nice guide notes in the application, there is a learning center with one well-made video, Intro to the Business Model Canvas. The learning center contains a note stating that more tutorials are coming soon. I hope they keep that promise as the intro is very well done. More videos would be a great compliment to the book and help justify the expense of the application.

Who will find this application worth the price?

It would seem that Business Model Foundry would do itself a favor by creating a trial or entry-level version in order to give potential buyers a chance to get over the sticker shock and experience how beautiful this app is and how well it works. But there are probably a few good reasons that they chose not too. Possibly anyone already familiar with The Business Model Generation is already in love with the concept and can’t wait to get their hands on such a tool. And probably anyone not familiar with the BMG will not appreciate such a tool, even as nice as the guiding features are, and will wonder what the big deal is. It is likely that this application is mostly bought as an up-sale from the book. Enthusiasts of The Business Model Generation concept will likely be enthusiastic buyers, as well.

The book is required reading for Founder Labs, an intensive five-week pre-incubator program whose mission is to launch new mobile ventures, where rapid business model prototyping is fundamental. I’ve also seen its concepts used in a venture philanthropy work shop. But before I had even completed half of the book, I discovered I could use Business Model Generation and the Toolbox app to better understand the business models of startups I have been speaking with in the search for my next work adventure. The rapid prototyping and iteration it affords work very well with my need to analyze a number of potentials in a brief period of time with only few publicly available details. It was extremely easy to sketch in the basics and to add refinements as I learned more.

Reuse Value

Unlike a word processor or spreadsheet, users will probably not be using this tool year after year. They might, but more likely, once it takes them to the next place, whatever their goal was in buying, they will move on. After all, day-to-day life intrudes and we must get on with managing the business for which we are responsible. But reuse is a very real part of its value. A single users may create dozens of models before they are done. It is, after all, about rapid prototyping and iteration. And savvy business owners will be giving their model(s) a check up from time to time.

Overall, this is a very robust and responsive app intuitive in its use. Other than the concept of business model generation, the learning curve is almost nil. There are few negatives. Surprisingly, however, there is no free-form, felt-tip pen-like drawing on a top-level layer or on the Post-it™ notes. That’s an interesting oversight given that the book says “Drawings can be even more powerful than Post-it™ notes”. And indeed, the book is replete with such drawings. No zooming is available either. It’s not a necessity, but a nice to have nevertheless. It would be especially nice for presenting to a group in order to bring focus to a single building block or other element. There is also very little configurability. You have a choice of two fonts for the stickies, for example. Large and not so large. That is to a purpose, of course. But something you may find unnecessarily limiting.

Business Model Foundry created Toolbox for iPad so that it “combines the speed of a napkin sketch with the smarts of a spreadsheet.” That is an apt description, though maybe over stated. Its design is definitely focused on rapid prototyping and iteration. With minimal features that would otherwise get in the way, like formatting, and the canvas duplicate button, the user is biased toward this work style. In this, they have excelled.