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Friday, May 10, 2013

Map the Business Model, then the Business Process Model (I).


Mapping the Business Process Model of an organization can be a difficult task, but it is even more difficult if you don´t understand clearly what is its business model. You may think, what is the difference?

A Business Model, in words of Alexander Ostelwarder, "describes the rational of how an organization creates, delivers and captures value". So, it is very useful to understand how the organization makes money, delivering value to its clients, and what are the principal cost elements.

A Business Process Model is a representation of the current (or future) processes of the organization, i.e. the way of how the organization works. If you see both definitions, the Business Process Model must support the Business Model. If not, your processes will not help to deliver the expected value to its clients.


To map the Business Model, I have employed with success the method of "Business Model Generation" of Alexander Osterwalder and Yves Pigneur. You should start using the "Business Model Canvas" (shown below) starting from the Customer Segment back to the Key Partners, filling up all relevant aspects of the business in this model.



When you have clear the Business Model, I recommend to identify the capabilities required to make reality the Value Proposition. For example, if one of your value proposals to your clients is "Innovative products", you should have a clear Product Innovation and Development capability in your Business Process Model. All your Value Propositions have to have (or be part of) a Capability in your Business Process Model.

If you use a Business Process Model with a structure of the type "From the Client to Support", use the Business Model to map:

- Client Related Capabilities with the information collected in the Customer Segment, Customer Relationships, Sales Channel and Revenue Streams segments.
- Operational Capabilities with the information collected in Value Proposition and Key Activities.
- Support Capabilities with the information from Key Resources, Key Partners and Cost Structure.


More references:
http://www.businessmodelgeneration.com/book


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