The often overlooked Z-Axis of Business Models
Since its first appearance in 2008, Alexander Osterwalder’s Business Model Canvas (BMC) and book, Business Model Generation, co-authored by Yves Pigneur, and produced by Patrick van der Pijl, CEO of Business Models Inc., have absolutely changed the way we look at how businesses create, deliver, and capture value. After thousands upon thousands of published works on the subject, who would have thought that a single page containing nine boxes could open up so many conversations about business models in such a profound and succinct way? To many in the business model innovation and consulting fields, the BMC is the platform by which all work starts.
That said every so often the BMC is derided as a tool too constrained by its 2-dimensional simplicity; by itself it cannot tell the same story that a well written business plan can tell. Why? Via linear, time-based stories, well written business plans always explain where the company plans to go and how it will get there. And, yes, we sometimes see BMC appear as footnotes or in the appendices of business plans. However, they’re almost always there to project a singular future state of the business, and not the entire story of how the business got to that state. However, I am here to tell you that the BMC not only can and should tell a linear, time-based story, it also has a third axis that represents time, called the Z-axis, which will help you link together multiple canvases to tell that story.
To illustrate this point, let’s use a fictitious packaged food startup, called Justin’s Fine Foods (JFF). JFF’s mission is to “Recharge the world with fresh, delicious food.” To achieve this mission, JFF must start from the ground floor focusing, creating a product and package that is not only valued by consumers, it is first seen by retailers as a valuable product to stock on their shelves. What’s more because JFF is just starting, every customer insight is like gold. Hence, the company plans to self-distribute to better understand the market. As you can see, the first BMC is pretty sparse (and perhaps could use a bit of extra color to provide focus). However, as detailed in the olive sticky notes, there are a few key focus areas that JFF must address in this first phase to become successful. Well…at least successful enough to move to the next stage.
Of course, the next stage also looks very different than the first. In this next stage JFF plans to sell online as well as to retailers. To do this, JFF must double down on promotions, advertising, and social media campaigns to attract foodies, its primary consumer. In this case it no longer makes sense to use the same BMC as in the first stage. Hence, as JFF travels through time (down the Z-axis), the company must develop a new set of focal points as illustrated on this new BMC.
Of course, JFF also has no plans on stopping there. Recall the company’s core mission, “Recharge the world with fresh, delicious food.” To recharge the world JFF will need to figure out how to distribute product effectively worldwide. Likely this means no more self-distribution. Hence, JFF continues to move down the Z-axis and creates yet another BMC that reflects the need to distributors and other elements that will help it to be successful.
Finally, in its march across the globe (and forward through time), JFF makes the determination that in order to reach the company’s full potential and mission, its food must be sold by super chains. And, just as you might expect, this stage also deserves its own BMC.
So, as you can see, unless your business is stuck in time, there is no such thing as a single 2-dimensional Business Model Canvas. All businesses – especially new businesses – change over time and so should these planned changes be captured along the Z-axis in corresponding Business Model Canvases. And just as a good, well written business plan will help to tell a story about how a business will achieve its goals and stated missions, a set of Business Model Canvases can be just as effective at telling the same story.
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