In this article, we cover the Business Model Navigator Methodology, which in my opinion is among the most effective ways to craft a business model. The BMI Lab gave us the opportunity to feature all the Business Model Navigator Patterns identified by the research of Oliver Gassmann, Karolin Frankenberger, and Michaela Csik.
All the materials and resources suggested are not linked to affiliations. I don’t earn anything from those suggestions, and I decided to feature the Business Model Navigator Methodology because I think it is an extremely valuable framework for anyone interested in business modeling.
Why is business modeling such a hot topic?
Business modeling has become a critical topic which rose of interest in the late 90s, until it became ubiquitous, after the rise of digital businesses and the dot-com era:
How the terms “business model” and “business models” grew exponentially after the 1990s
The reason business modeling has become such a popular topic is that with the rise of tech companies and digitalization, a competitive advantage isn’t captured anymore with product and processes.
Instead, the ability to assemble a unique business model has become a key element.
In this article, we’ll take into account the Business Model Navigator methodology developed by Oliver Gassmann, Karolin Frankenberger, and Michaela Csik.
Indeed as explained in “What is a business model?” there is a single way to assess, understand and describe a business. There are several methodologies, each with a set of assumptions about the critical components of any business. Among those on FourWeekMBA, we covered:
- Business Model Canvas
- Lean Startup Canvas
- Value Proposition Canvas
- Blitzscaling Business Model Innovation Canvas
- Growth Hacking Canvas
Each of those tools is quite useful from several standpoints. For instance, a business model canvas is an excellent place to start to have a complete framework of any business by looking at components such as key customers, partners, channels, and so on.
Instead, a framework and tool like Blitzscaling canvas (I created this canvas by starting from the Blitzscaling book) is an excellent place to start if you need to assess whether your company or startup has all the key ingredients to scale up.
We’ll focus now on the business model navigator, which I found among the most effective tools to dissect any business, given its simplicity and effectiveness.
What’s a business model according to the Business Model Navigator Methodology?
As pointed out by Oliver Gassmann, Karolin Frankenberger, Michaela Csik in The St. Gallen Business Model Navigator:
The business model can be defined as a unit of analysis to describe how the business of a firm works
In short, a business model is how the different bits and pieces of a company come together to form a whole, a sort of organism, which grows, survive and thrive in the marketplace.
Therefore, as defined in the book Business Model Navigator “a business model provides a holistic picture of how a company creates and capture value.”
The Business Model Navigator Methodology
The Business Model Navigator Methodology uses a simple framework to dissect a business model which looks at who, what, how and why of a business.
Those four dimensions allow you to map any company’s business model by having a complete picture of its engine. For instance:
The Who focuses on understanding the target customer.
The What helps to map the value proposition or the products and services offered and how they compel your target customers
The How defines the value chain or the set of activities the company undertakes to execute the value proposition
And the Why is about financial viability and how the company can balance between cost structure and revenue generation to achieve profitability
What is a business model pattern?
The BMI Lab gave us the opportunity to feature all the 60 Business Model Navigator Patterns identified by the research of Oliver Gassmann, Karolin Frankenberger, and Michaela Csik:
- CASH MACHINE
- CROSS SELLING
- CUSTOMER LOYALTY
- DIRECT SELLING
- EXPERIENCE SELLING
- FLAT RATE
- FRACTIONAL OWNERSHIP
- FROM PUSH-TO-PULL
- GUARANTEED AVAILABILITY
- HIDDEN REVENUE
- INGREDIENT BRANDING
- LAYER PLAYER
- LEVERAGE CUSTOMER DATA
- LONG TAIL
- MAKE MORE OF IT
- MASS CUSTOMIZATION
- NO FRILLS
- OPEN BUSINESS MODEL
- OPEN SOURCE
- PAY PER USE
- PAY WHAT YOU WANT
- PERFORMANCE-BASED CONTRACTING
- RAZOR AND BLADE
- RENT INSTEAD OF BUY
- REVENUE SHARING
- REVERSE ENGINEERING
- REVERSE INNOVATION
- SHOP-IN SHOP
- SOLUTION PROVIDER
- TARGET THE POOR
- TRASH-TO CASH
- TWO-SIDED MARKET
- ULTIMATE LUXURY
- USER DESIGNED
- WHITE LABEL
- SENSOR AS A SERVICE
- OBJECT SELF-SERVICE
- OBJECT AS POINT OF SALE
A business model is a holistic picture of a business and how its bits and pieces come together to form a whole, that becomes a financially viable organization able to serve a target audience, through a value proposition executed via a value chain. While there are several tools, frameworks and methodologies to assess a business model, the Business Model Navigation Methodology by Oliver Gassmann, Karolin Frankenberger, and Michaela Csik from BMI Lab is – in my opinion – among the most valuable methodologies to assess any business model.
Suggested reading: The Business Model Navigator
I suggest you read the book if you want to have a deep understanding of the topic and the framework we discussed:
Resources for your business:
- Business Strategy: Definition, Examples, And Case Studies
- What Is a Business Model? 30 Successful Types of Business Models You Need to Know
- What Is a Business Model Canvas? Business Model Canvas Explained
- Blitzscaling Business Model Innovation Canvas In A Nutshell
- What Is a Value Proposition? Value Proposition Canvas Explained
- What Is a Lean Startup Canvas? Lean Startup Canvas Explained
- How to Write a One-Page Business Plan
- What Is Business Development? The Complete Guide To Business Development
Handpicked popular case studies from the site:
- The Power of Google Business Model in a Nutshell
- How Does Google Make Money? It’s Not Just Advertising!
- How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
- How Amazon Makes Money: Amazon Business Model in a Nutshell
- How Does Netflix Make Money? Netflix Business Model Explained
- How Does Spotify Make Money? Spotify Business Model In A Nutshell
- The Trillion Dollar Company: Apple Business Model In A Nutshell
- DuckDuckGo: The [Former] Solopreneur That Is Beating Google at Its Game