The walls are coming down. The #NewFinance ecosystem is alive. And in this post we are going to explore how Business Model Innovation (BMi) is driving the creation of a new generation of dealflow.

+ Time for BMi – Business Model Innovation

Rigid. Opaque. Vertical.

Would be a few of many possible words that would come to mind to describe the world of Finance as we know it today.

Fluid. Transparent. Horizontal.

Is how the Finance industry of tomorrow will look.

The shakeup has begun, and while we don’t know exactly what lies in between yesterday’s world of crony capitalism and tomorrow’s world of boundless entrepreneurship, big moves are already being made.

In recent blogs, we have looked at how BMi is reshaping the food (#realfood) and fashion (#sustfash) industries, today we are going to look at how #NewFinance is the beacon for BMi among the three.

Through a combination of digital platforms and network-as-market theories, Finance is being flipped on its head. Rather than going to a bank to ask for a loan or a venture capitalist for an investment, SMBs and entrepreneurs are logging into their laptop and tapping dispersed networks of investors.

+ DIGITAL Markets

It’s faster, it’s cheaper and it’s engaging. The wisdom and knowhow of those who make the deals flow is no longer being locked down in an investment bank or holed up on the 45th floor of a skyscraper. It’s being distributed and shared, becoming accessible for the average guy and girl with a dream to start their own company.

Not to say that the old grey hairs of Finance will be left on the sidelines; quite the contrary. It’s the mechanism that will change, as the real juicy deals will originate from outside of the traditional intermediaries and be packaged in simpler terms.

And the upside will be explosive. That’s what happens when you start to open the pipelines to previously unserved markets. In the same way that a spark can set a pool of gas ablaze, it only takes a shot of capital to set pent-up demand on fire.

Using BMi as the tool, a host of impact-driven entrepreneurs are bringing their scrappy, scalable upstarts to the global stage and collaborating with others in order to reshape the financial landscape.

What is Business Model Innovation?

A business model is defined as the rationale of how an organization creates, delivers and captures value.

+ The Key Components of a Business Model

Business model innovation is the process of reinventing the business model itself. Rather than being focused on end-product innovation, like derivatives and securitized debt, BMi focuses on changes in the process of exchange across the value chain, whether it be a new pricing structure, collaborative partnership or customer channel. In the end, it is the model itself that SHIFTS, rather than simply the product or service.

How do we bring BMi to the Finance Industry?

It’s already happening.

While most of the traditional finance institutions have gone on with business as usual on a debt-driven consumption model, others are opening the door to a new model of finance based on productivity and creation. Finance BMi is being driven from the bottom up – by entrepreneurs, customers and investors alike – while in the process, the old-school economic theories about efficiency and the free market are being torn to shreds.

Because the whole industry, as we know it today, is predicated on control and ownership, neither of which are conducive to economic ‘efficiency’ in a ‘free-market’ system.

How can markets be efficient when key information is controlled by a few?

+ see The Libor Scandal

How is our system free market when a few ‘own’ and disburse key resources?

+ see New Scientist’s analysis of the Capitalist Network

If we really wanted to have a system where entrepreneurship could thrive and ‘free-market capitalism’ could flourish, it sure wouldn’t look like this.

Governments would enable global currency exchange at fair-market value. Banks would lend to growing small businesses. Investors would take chances on high-impact entrepreneurs. Communities would ‘crowd fund’ cultural and social projects. People would loan money to one another to help make important purchases.

And so that’s how it’s going down. It’s distributed. It’s disintermediated. And most importantly, it’s driven by a collective.

How do we tweak the business model to make this happen?

Click here to download the PDF. View the larger image here.

The finance business model can primarily be broken down into two main categories: retail and investment banking. The retail banking business model is built off of scale, while the investment-banking business model is more centred around dealflow depth and securitization. There are many ancillary service providers who help fill the gaps in the market via partnerships and alliances with the banks.

The primary cost drivers are: staff salaries, real estate, compliance, back-end infrastructure and front-end systems.

While one business model is based on scale (retail) and another more on depth (investment), both are low-margin businesses. Retail banking profitability is dictated by the spread, the difference between the cost of borrowing versus lending, whereas investment banking is a fee-based business where profitability is more related to the bank’s brand and advisory services. So while one side focuses on scaling, the other is more focused on relationships. In the end though, both fall into the low-margin categories, with retail margins originating from the interest-rate spread oscillating between 0.5 – 5 % depending on macro factors, while investment banking fees typically ranging between 1 – 10 % depending on the type of service (M&A, IPO, etc), the amount of the deal and other factors.

Banks, whether retail or investment, can become extremely profitable if they can scale their brand across a number of different channels and create a diversified product offering. That’s why partnerships are so important. Retail banks partner with (or acquire) credit-card issuers, mortgage-origination entities, loan agencies and any other organization that can help them to extend their brand and add more volume. Investment banks build back-end partnerships to source dealflow, capital and advisory services, anything that will help them land the big deals.

But it’s all changing. As these vertical, debt-driven institutions are coming to a point where their business model will become unsustainable. There is only so much ‘free money’ that can be printed, mortgages issued and fees charged. Change is required from top to bottom.

In the Market Beacons section of our #NewEraBiz research on Finance, we analyzed three companies who are breaking away from the traditional mould and finding scalability through network and transparency strategies:

+ A New Era of Business: FINANCE

  1. Seedrs
  2. Funding Circle
  3. Triodos
  • Seedrs was the first regulator-approved crowdinvesting platform in the world. Built on a nominee model, they allow companies to raise up to £150,000 from everyday investors who have as little as £10, and just recently raised £750,000 through their own platform the fund their European expansion;

+ FT – Seedrs EU Expansion

  • Funding Circle is the pioneer of the P2B (Person-to-Business) Lending market and recently raised $37 Million to expand their presence into the US and build on their momentum in the nascent SMB P2P Loan market;
  • Triodos Bank is a Dutch-based entity who are building a ‘sustainable banking model’ on the pillars of transparency and ethics, and taking a lead in the impact and SRI (socially responsible investing) investment sectors.

On a macro level, there are three key areas of focus for sparking Finance BMi:

Given that borders and institutional walls make absolutely zero sense in the Finance world – capital needs to be able to flow – technology is acting as the bulldozer to break down the barriers.

There is a distinctive difference between what is happening in the ‘emerging’ versus the ‘emerged’ economies. Emerging markets are bringing in low-tech solutions to help money move within the boundaries of their country, while emerged markets are using high-tech solutions to remove restrictions on global capital movement.


  • Crowdinvesting, where companies like Seedrs enable anyone in Europe, no longer just the UK, to invest as little as £10 in any startup company looking for £150,000 or less in Europe

+ FT – Seedrs spreads across Europe target=“blank”

  • Money Movement, where companies like Transferwise, based out of the UK, facilitate global money transfers between bank accounts, saving customers from having to fork over huge fees just to make a wire transfer through their bank

+ Transferwise


  • SMS Money Transfer, where services like M-Pesa enable everyday Kenyans and other Africans to send money between one another using SMS on a basic cellular phone

+ Businesses with Bang! M-Pesa

  • Mobile Banking, where companies like CARD Bank, in partnership with the Grameen Foundation, take advantage of existing mobile networks to build banking service solutions for the previously “unbankable” in the Phillipines

+ How CARD Bank activated 480,000 poor Savers

Taking the ‘borders-are-silly’ analogy, #NewFinance is being driven by distributed networks who are connected via platforms, creating entirely new channels for driving dealflow and connecting with customers.

In the emerged markets, this can be seen in the form of crowd-based platforms, while in emerging markets, channels are being created to help impoverished citizens and communities form networks and access capital.


  • Crowd Lending, where companies like Funding Circle create an entirely new channel for SMBs looking for a loan, making the approval process much faster and the fees lower
  • Sustainable Pipeline, where companies like Triodos help finance businesses who meet certain ethical criteria and build a community of customers around those entities, creating a new channel for ‘sustainable’ businesses


  • Crowd Micro Finance, where organizations like Aliança Empreendadora in Brazil help micro-entrepreneurs in low-income communities access to capital through their Impacto crowdfunding portal

+ Impulso platform

The movement towards new forms of currencies is in motion. Part of the transition away from the current system is based on the need to move away from purely debt-driven, government-issued currencies and create new forms of exchange between people (P2P).

In emerged markets, new currencies are sprouting up to help spawn new digital ecosystems. In emerging markets, alternative currencies are being developed to help citizens spend their money in local businesses, as typically 90% of the money spent in low-income communities flows out to global conglomerates.


  • Digital Dinero, where currencies like Bitcoin are enabling a new method of peer-to-peer payment via a digital currency which can be exchanged for real money. Despite its overhyped valuation and flawed structure, it does provide a signal that bona-fide digital currencies will be emerging in the future.


  • Local Currency, where the Sampaio in São Paulo helps steer citizens in the urban neighborhood of Campo Limpo to spend their $Reais on local businesses and build a flourishing community

+ Catarse: Banco União Sampaio

Overall, if capital is going to flow, we can’t have a million barriers, a thousand fees and a few controllers. Thanks to technology and a growing realization of the need to redistribute dealflow, the #NewFinance movement has come to life. In both emerged and emerging markets, countless examples of BMi exist to show how a few tweaks of the BM can create big impact, both locally and globally. And the beauty is, this is only the beginning.

Have you seen any great examples of FINANCE BMi?

+ Time For BMi

PLAN – the Business Model

Sassy. Sexy. Sustainable.

That’s the future of fashion. And in this post we are going how Business Model Innovation (BMi) is the mechanism to bring it back there.

+ Time for BMi – Business Model Innovation

Not Sassy. Nor Sexy. And certainly not Sustainable.

That’s the fashion industry of today. Why?

Because it’s not sassy to buy a $10 halter top from a fast-fashion brand that’s made on the back of slave labour in Bangladesh.

Nor is it sexy to rock boots and bags mades from the skin of scarce species.

And it’s certainly not sustainable to buy clothes from the fashion houses that destroy the worlds most precious and sensitive ecosystems in order to stock their High-Street shops.

So we need a new vision for fashion, one that is sassy, sexy & sustainable, no compromise.

Unlike the Food industry, which we covered in our initial BMi post, there is no household brand that represents what #sustfash (sustainable fashion) is all about; there is no Whole Foods for #sustfash, at least not yet anyways.


Rather, the fashion industry is being led through its metamorphosis by a collective of edgy upstarts & nueluxe brands who are starting from scratch; their designs, materials, business practices and processes are nothing like today’s High-Street fashion brands.

Recycled materials, upcycled designs, tribal patterns and sustainable sourcing characterize how these brands operate. We are moving past the point of burlap bags and hemp overalls, #sustfash is sexy and sassy, far more than its predecessor, the soon-to-be-dead industry of all-that-matters-is-your-image fashion. #SustFash has a soul, a pulse.

As an example, Ser Sustantavel com Estilo (be Sustainable with Style), a Brazilian blog that is on the beat of the #NewEraBiz of fashion, recently launched their runway series SP EcoEra 3.

Wholesome. Colorful. Real. Vibrant. That’s where the #sustfash movement is taking the future of fashion. Defined as – environmentally responsible, socially just, economically viable and culturally appropriate – sustainable fashion is starting to rock the runway.

Not to be completely outdone, a few big brands are starting to realize that you can only run a business with an ignorance-is-bliss / look-at-our-numbers attitude for so long. In the same way people want real, organic food, they want straight-up, sustainable clothes. The demand is building and the market potential is huge.

Will the new fashion industry meet somewhere in the middle, combining the scrappiness and brand purity of the upstarts with the scalability and experience of the icons?

Could be …

But in either case, the real breakthrough potential for fashion is related to Business Model Innovation (BMi). Because stocking a few sustainable brands in the department stores won’t move the dial. You need to create scalable entities and collective units capable of reshaping the world’s High Streets, replacing the icons of today’s fast-fashion / snakeskin-luxury world with spunky, scaleable & sustainable brands. Not just one or two, but hundreds and thousands.

What is Business Model Innovation?

A business model is defined as the rationale of how an organization creates, delivers and captures value.

+ The Key Components of a Business Model

Business model innovation is the process of reinventing the business model itself. Rather than being focused on end-product innovation, such as new materials or designs, BMi focuses on changes in the process of exchange across value chain, whether it be a new pricing mechanism, supply-chain partnership or distribution channel. In the end, it is the model itself that SHIFTS, rather than simply the product.

How do we bring BMi to the Fashion Industry?

As a first step, let’s talk about what we want to BMi towards. We need hundreds and thousands of brands that can deliver on the sustainability side without compromising the design side. Ethics and aesthetics, hand in hand.

The challenge with changing the fashion industry is that there are so many moving pieces, and the logistics/cost pressures required to make a fashion brand fly are immense. With all the factors, including materials, labour, supply chain, distribution, sourcing – it’s a lot of work.

But there are a few mid-size luxury brands, such as Brunello Cucinelli (Italy) and Osklen (Brazil), that are showing that it is possible to deliver on design without sacrificing everything else.

Given our meet-in-the-middle market thesis on the evolution of the future of fashion, it would be brilliant to have heaps of brands who can move into the mainstream market, making it both unfashionable and uncool to purchase a $5 sweatshop T-shirt or a $40 pair of plundered-ecosystem leather shoes.

How can we tweak the business model to make this happen?

Click here to view the bigger image. Download the full PDF here.

The fashion business model can be primarily broken into two main categories: mainstream retail and luxury. Mainstream retail’s business model (ie. Zara) is built off of scale, while luxury’s model is built off of margin.

The primary cost drivers are the materials, designers and labour.

The primary revenue streams are product sales, through both branded and wholesale channels. Distribution Channels is at the core of the fashion business model.

While retail’s business model is based around scale, and luxury’s model around margin, both operate on very high profit margins. From the remnants of the Bangladesh tragedy, a Mango invoice was found showing that the company produced a shirt for $4.45 and sold on High Street in London for $46. Luxury’s margins would likely be even higher because their scale is much smaller. Overall, the typical fashion brand is going to markup products with a gross margin of 75%.

Given all of the moving pieces and logistical components, fashion brands work in a lot of partnerships. Whether it is for materials, design, production, logistics, etc., fashion enterprises rely heavily on their partners to keep everything in motion. In most cases, this is why established brands argue that it is so difficult to become ‘sustainable.’

In the Market Beacons section of our #NewEraBiz research on Fashion, we analyzed a handful of companies that are making moves in an unconventional fashion. These are brands who are shaking up the model in some way, all but one ( in ways that revolve around sustainability:

  1. PUMA
  3. Eileen Fisher
  4. Catalytic Clothing

+ A New Era of Business: Fashion

  • PUMA is taking on the ultracompetitive sports apparel industry using sustainability as their core strategy. Unlike NIKE, who is focused on Material R&D (link to Sustainability …), PUMA is building their business model on transparency and developing collaborative strategies with sustainable partners (ie. PUMA Wilderness Collection);
  •, the Brazilian fashion social network launched in 200x by two former investment bankers, is selling ‘big data’ packages to brands based on user interaction with key products;
  • Eileen Fisher, the wildly popular New-York women’s clothing line, was built on casual style and a commitment to ethics; however, small ‘sustainable’ tweaks to the business model, such as the Eileen Fisher Repair Program (started in 2005), are what have really helped turn ;

On the macro level, there are three key areas of focus for sparking Fashion BMi:

Materials are one of the key cost drivers in the fashion business; similar to FOOD, the shift from GMO products (ie. cotton) requires a significant shift in agricultural practices and will take time to scale. There is also, however, a significant opportunity to make breakthrough technological advances to speed up the sustainability curve.

  • Cooperatives, where Fashion growers who are farming sustainable crops (ie. Organic Cotton) form cooperatives to help build their collective clout. Inversely, smaller fashion brands can create buying cooperatives to purchase sustainable materials from producers;
  • Nanotechnology, where with new nanotechnologies firms take an approach like Catalytic Clothing in order to bring cool new materials to the small-scale designers who can bring them to the market in imaginative and innovative ways;
  • Collaborative Partnerships, when two different entities find alignment in their motives, there are no limits to what can happen.

Ex. Brazil’s Osklen, a global sustainable-luxury leader, partnered not with another brand, but a country. Italy, a place known for its history of craftsmanship and design, and Osklen have come together to research six new ‘sustainable’ materials and study their potential in the market.

Given the logistical challenges and supply-chain complexity in the Fashion industry, technology can play a huge role in the evolution of the business model.

Beyond Enterprise systems to track inventory and manage suppliers, new brands can use technology to take transparency and brand experience to a whole new level.

  • Material Tracing, where enterprises use technology to trace their entire garment-creation process, from end to end, and show consumers

ex. Rapa Nui – award-winning ‘From Seed to Shop’ transparency

  • Fitting, where companies enable their customers to get a feel for the garment from the comfort of their home by embedding new technologies into their eCommerce store

ex. Embodee – Digital Garment Experience

  • Experience Apps, where companies show how their product(s) fits into their market’s lifestyle and uses technology to help expand their experiences

ex. PUMA Run Navi app

Given that distribution is at the core of the fashion business model, brands need to focus on building new channels via the Web. Especially new #sustfash enterprises, who can use the digital medium to build their market and grab their attention, then enable on-the-spot purchasing.

  • eCommerce, where established eCommerce enterprises scale their channels to help bring new sustainable brands to market, and new upstarts use ecommerce to disintermediate the channels and cutout costly middlemen.

Ex. eTailer Yoox has created the Yooxygen platform for its shoppers who crave chic #sustfash clothing. New startup Evocha is bringing high-quality garments to European shoppers at mainstream prices.

  • Networks, where startups like harness the power of the social web to create new networks of fashion-focused consumers;
  • Clickable Video, where companies take advantage of technologies to enable consumers to purchase garments while they watch a runway show on any one of the main digital media networks.

In the future, fashion brands will start to model their business model around nature. Models built around Closed Loop, Zero Waste and Biomimicry are closer to becoming a reality with each passing day.

Overall, fashion needs to come back to its couture roots while embracing the needs of contemporary culture. BMi is the key to enabling #sustfash to reach a point where it can scale and compete against today’s heavyweights. When this happens, fashion can come back to being sassy, sexy and sustainable, full stop!

Have you seen any great examples of FASHION BMi?

PLAN – the Business Model

The food industry is ripe for a revolution. And while many companies have helped jumpstart the #realfood revolution by bringing in organic, there are few examples of food companies using business model innovation to spark scalable change. That’s why in this blog we are going to look at how BMi can be used to go beyond organic and reinvent our entire food chain.

Business Model Innovation – it’s the theme du jour these days on the blog as we start exploring ways to use it to shakeup some big industries. In our last post, we talked about a few inspiring BMi examples and shared some basic BMi strategies; however, in this post, we are going to get down and dirty, and take a look at how to sow seeds using BMi to bear fruit in FOOD.

+ Time for BMi – Business Model Innovation

When we think of companies that have really shaken up the food industry for the better in the last few years, the first company that comes to mind is Whole Foods. In fact, over the course of the last decade, Whole Foods has become the beacon for what we call the #real-food revolution. Thanks to their leadership, organic has become less of a hippy-homestead symbol and more of a food-conscious-family staple. Step into any Whole Foods store at lunch hour in New York City, for example, and you will see a construction worker entering in one door and a yoga teacher the other.

+ The #NewEraBiz in NYC

And yet, for all their hard work and commitment to reinventing the food supply chain, their business model is anything but innovative. They, like all other major supermarkets, have three key revenue streams:

  • grocery product sales;
  • eat-in market;
  • branded line of products.

Their business model is based on high markup and low wages; recently they have started to compete more with the mainstream market on price, but this is the model which has made them a tremendously profitable and allowed them to reach their current scale.

And while Whole Foods has had a tremendous effect on transforming the supply chain, shedding light on genetically-modified foods, and bringing real food back to dinner tables, it pales in comparison to the potential enabled by BMi.

What is business model innovation?

A business model is defined as the rationale of how an organization creates, delivers and captures value.

+ The Key Components of Business Model

Business model innovation is a process of reinventing the business model itself, rather than focusing on end-product innovation, such as technological, material, etc. This could include simple changes, such as pricing mechanisms, distribution channels or forging new partnerships. In the end, it only the model that needs to change, not the product itself.

How do we bring BMi to the food industry?

First of all, we need to know what the objective is. From our perspective, it’s the return of #realfood to the masses, and it goes far beyond organic.

In a marketplace that is dominated by ten major brands, and a supply chain saturated with GMO inputs (approximately 80%), we need to build a whole new stable of food companies who have both the brand and distribution power to take on the giants.

Graphic sourced from the Huff Post, and the article has 25K+ Likes …

As a starting point, there’s a target: to replace the ten mega multinationals – who strive for profitability at all costs – with a global network of real-food enterprises.

What can we do to tweak the business model to make this happen?

Looking at the business model of the typical food enterprise, it is pretty simple.

The primary cost drivers are inputs (ie. ingredients) and salaries, along with the cost of production equipment and facilities.

The primary revenue streams are product sales, whether through retail or wholesale channels, and for many prominent retail chains, franchising fees.

Click here to view the bigger image. Download the full PDF here.

Depending on the nature of the business, margins can range drastically, from razor thin in the case of most major supermarkets, to fat-cat juicy, as is the case with most premium products and brands. The major moneymaking factor comes through scalability – for retail products, it’s through global distribution, for cafés and restaurants, it’s typically through national expansion.

In the Market Beacons section of our #NewEraBiz research on Food, we highlighted several enterprises that are shifting the dialogue around the dinner table through their trailblazing efforts, including:

  1. The Peoples Supermarket
  2. LYFE Kitchens
  3. Real-Time Farms
  4. Credibles

+ A New Era of Business: FOOD

Beyond being innovative in their own right, each of these entities has used BMi to bring their business to the masses:

  • The People’s Supermarket uses a volunteer workforce to staff its store, and can therefore offer its products at a strong discount;
  • LYFE Kitchens is building a technological system, similar to McDonalds, to streamline and scale its all-organic fast-food offering;
  • Real-Time Farms charges a subscription fee to restaurants, caterers and grocers to use their crowdsourced farm and artisan guide;
  • Credibles has built on the crowdfunding business model and developed their own form of currency to help spur local food businesses.

On a macro level, we see three key areas of focus for sparking Food BMi:

Ingredients are the key cost driver in the food business; therefore, the key to being able to offer lower prices on organic (etc) products and compete against traditional GMO offerings is to focus on cutting the costs of ingredients.

While much of the focus is on expanding the organic (etc) supply chain through agricultural means, new collaborative models need to be developed to help bring down the cost using BMi.

Some ideas for this include:

  • Collaborative buying schemes, where multiple companies in the same industry build collectives to buy ingredients in larger quantities from growers and vendors
  • ‘Hacking’ to increase transparency in the market and shed light on the pricing structure and other variables in key input markets

Ex. Food-Tech Connect’s Hack/Meat Program

  • Open Source Product Development, where companies, suppliers and distributors work in tandem to bring new products to market.

There are already smaller derivatives of these types of ventures underway, as many entrepreneurs and food pioneers are already beginning to experiment in this space. The key is to remember that collaboration is more important than competition, and that the whole industry needs to be overhauled- there will be more than enough of this pie for everyone once the ball really gets rolling.

Technology is the great equalizer for small companies, and food is one of the industries where technology can be used to create scale and efficiency in ways that were traditionally only available to big companies.

Beyond ERP systems at the supply chain and inventory management level, companies can use technology to build rapidly scalable entities and connect across the ecosystem to source better ingredients, find new partners and enter new markets.

Some ideas include:

  • Operation Scaling, where companies such as LYFE Kitchens use the power of technology to add efficiency to production lines and save costs on menial staff labour;
  • Smart Sourcing & Data Mining, using sites like Real-Time Farms to find local producers and databases to find high-level information related to market, consumers (ex.% of the population who are lactose intolerant), etc;
  • Mobile Payment Applications to enable customers to pay more efficiently and reach a broader market, especially for single SKU companies and restaurant chains.

Ex. Sweetgreens salad chain partners with LevelUp to develop their own mobile payment app

Many companies already employ technology in small ways to help them become more efficient, but it is those who can implement technology into their core business model that will see the big results in the long term.

Getting products into key supermarkets and retails stores has always been the key hurdle for new food companies face. Up to this point in history, the strategy has always been to work with distributors and agents (ie. middlemen) and offer a percentage of sales made in return.

But in the network economy, companies can start to focus on reaching customers directly and bypass the middlemen.

Some ideas include:

  • eCommerce, developing a strong online business right out of the gates and making full profits on every item sold;
  • Networks, using social media and actively engaging with specific online communities to promote new products and special offers towards;
  • Mail, distributing a new product via registered mail

Ex. Graze in the UK delivers its weekly snack packs via Royal Mail

Rather than focusing on vendors and distributors, the new network economy will allow future businesses to build people-powered networks and kickstart their companies via online channels.

Overall, the food landscape is ripe for BMi on multiple different levels across markets globally. Those who can take advantage of network strategies to connect across the ecosystem, and build lean enterprises via BMI, will have competitive advantages that last for the long term. The time has come to stop picking the low-hanging fruit and start harvesting the bumper crop.

Have you seen any great examples of FOOD BMi?

PLAN – the Business Model

September has arrived. The shakeup is in full swing. And while the medium is variable, BMi (Business Model Innovation) is the mechanism, and that’s what we will explore in the following post.

With old-world businesses on the downfall, the #NewEraBiz is shooting up through the cracks to fill the gaps; but to make the this process happen requires new models, new business models to be precise.

While everything new and exciting gets broadly categorized under the umbrella of innovation, let’s break down the different types:

  • technological innovation brings new technologies to our lives that increase efficiency, enhance comfort and aid us in discovering the unknown;
  • social innovation brings new processes, concepts and structures to help meet the world’s most pressing social needs;

Yes these types of innovation are fundamental pillars of society, but they are not the key variable in the ‘world-changing’ equation; business model innovation is. And if necessity is the mother of invention, BMi is the mother of big change and sustainable impact.

What is BMi?

A business model is defined as the rationale of how an organization creates, delivers and captures value. Innovation is defined as executing new ideas to create value.

Business model innovation is a process of reinventing the business model itself in order to deliver and capture enough value associated with the new creation to bring it to market. While the actual definition is tricky, SustainAbility ‘settled’ on the following definition:

“ a new or novel form of exchange at some point along a company’s value chain.”

+ How Firms Innovate Their Business Models for Sustainability

Not exactly posterboard material for inspiration, but very practical in the sense that a company wants to SHIFT on their current value chain by and develop a new model to capture that value.

Because without a new mechanism to capture value, and generate sustainable cashflow, we are left with another technology that collects dust on a workbench or another social venture that inspires a few people in a boardroom but never actually reaches its intended target. To bring the types of ideas to fruition that make fossil fuels obsolete or access to clean water universal, there needs to be a business model there to back it.


According to the authors of the upcoming book ‘The Risk Driven Business Model …’ (HBR, 2014) who have studied hundreds of business models in their thesis:

“we often see that groundbreaking technology rarely achieves mass adoption without a corresponding innovation in the business model around the sale/use of the technology.”

We could substitute ‘social innovation’ in for ‘technology’ as well, but overall, the point is clear, we need to focus on the target:

“there are numerous innovative technologies that are waiting for an innovative business model that will facilitate their use and adoption, and there are numerous business model innovations that can make everyday activities more sustainable.”

To be able to survive through the ups and downs of bringing something truly innovative to the market, we need to create models that will enable organizations to profit and grow sustainably. BMi is the foundation, the fundamental building block for the #NewEraBiz.

Let’s look at three examples from all different parts of the world to illustrate this point:


Tesla: US-based electric car pioneer led by iconoclast Elon Musk

BMi: developed battery-swap system so that drivers can charge cars (approx. 90 sec) faster than they can refuel conventional cars at a gas station. Tesla identified the biggest barrier to mass-scale adoption of electric cars as the battery, so they developed an innovative way to deal with this problem that would put them on even footing with gas-powered cars. While drivers will have to drop the fresh battery off on the return leg of their journey and pay a ‘transport fee,’ this BMi could be enough to convert a few more customers to Tesla, enough to build critical mass.

Fast Pack Swap Event from Tesla Motors on Vimeo.

+ More about Tesla from the Lumos Blog

M-Pesa: simple SMS money-transfer system that revolutionized Kenya and other surrounding African markets

BMi: Vodafone realized the solution to this problem was not a high-tech mobile solution, but a low-tech communication one. So they built a bare-bones SMS app and trained a countrywide network of M-Pesa agents to collect and transfer the money; in the process, they created a new business model for one of the world’s most successful ‘mobile’ apps.

+ more on M-Pesa from the Lumos Blog

Catarse: the top crowdfunding platform in Brasil, Catarse is building a platform that empowers Brazilians to reinvent their collective realities via collaborative financing

BMi: While still a work in progress, Catarse is starting to move away from Kickstarter’s product-driven rewards model and focus on tapping into the power of Brasil’s social capital. Using a subscription-based curation model, where campaigns are categorized and packaged based on social issues and then targeted at specific members of the community, Catarse hopes to hone in on more specific themes and drive social innovation through its network. Catarse makes 13% on all funds raised through its platform.

+ More on Catarse from the Power of Sharing

In all three cases, the technology used to initiate the solution takes a back seat to the BMi. Each example showed the potential for scalable social impact, but didn’t stray from the objective of developing a sustainable business model.

Let’s look at three strategies to answer the next part of the #NewEraBiz BMi equation:


Target select networks of people who are most closely affected by the problem you are trying to solve and take an open and transparent approach to engaging with them.

Use social media and rich medium (ie. video) to open the conversation, reach out to community leaders and influencers, and use feedback to form market-entry strategies.

example: Catarse published a blog prior to launching in order to engage the Brasilian creative community and source their first four projects

Work with a local partner. Make use of any technology that already exists. Align incentives so that everyone is motivated to make the venture work.

example: M-Pesa worked with mobile operator Safaricom and microfinance institute Faulu to develop their pilot project and entry strategy into the Kenyan market.

When you have a vision, the only way to make it a reality is by continuously experimenting.

example: Tesla’s battery-swap system. Will it lure more people towards Tesla? More than likely, but there is only one way to truly find out.

Overall, the SHIFT is happening and the #NewEraBiz is gaining progressively more momo with each passing day. But we need more, much more. To accelerate the SHIFT and drive greater impact, we need to focus less on the ideas and more on the model. While the medium is variable, the mechanism is BMi – let’s make it happen!

What great examples have you seen of BMi?

+ DIGITAL: InterC Strategy

PLAN – the Business Model

The world 2 point O (2.0) is upon us. The 2.0 buzzword, used to characterize the diffusion of technology and social media into traditional markets, is permeating every industry and vertical on the planet. One industry in particular, fashion, is starting to see profound effects as a result of this shift, which is why in this edition of Business Model Breakdown we are going to analyze Fashion 2.0.

Around the world, the movement has begun to create open and borderless markets powered by social connections. It’s what we call ‘the collaborative economy.’ With technology as the enabling factor, enterprises are becoming empowered to efficiently develop and mobilize the people and resources they need to make their mark. That’s how the world 2.0 is happening.

But what’s behind this movement?

Beyond the impulse to create enterprises and ecosystems that are social, the real reason is rooted in the desire for democratization. Tired of watching big brands and multinationals dictate the rules of engagement, global communities are mobilizing to develop open, transparent markets and shift the focus from consumption to creation.

And no other industry in the world fits this profile more closely than fashion. With hordes of heritage and fast-fashion brands driving the style agenda, the emphasis has shifted from creativity and natural beauty to profitability and manufactured looks. Now, consumers and designers alike are collaborating to counter the trend and bring fashion back to its roots.

While some focus on the technology side of Fashion 2.0, we are going to focus on the social side: user-generated content, co-created fashion lines, community lookbooks, these are just a few examples of how Fashion 2.0 is evolving from this perspective.

Fashion 2.0

User-Generated Content

Rather than the brands defining the content and setting the style bar, what if the customers themselves began to write, record and create the content about the brands they love and the looks they roll with. And not just on their own personal blogs, but on the brand’s site itself.

Burberry developed Art of the Trench, which shows photos of customers rocking the iconic Burberry trenchcoat. While some photos are specifically commissioned by Burberry, others are uploaded by customers themselves; users can vote and comment on their favorite photos and share with their networks.

Community Lookbooks

As a strategy for brands to sell their wares, they create lookbooks, visual collections of selected garments that help customers visualize new clothing lines as part of a look. Naturally though, many customers have their own version of how the new clothes could be combined, and not all of them will be from the same brand. So people have started creating community lookbooks, customized versions created by users and voted on by the community.

The Brazilian website,, was created for just that reason. On the site, which blew past more than a million users last year, users can create their own lookbooks from an assortment of brands, vote and comment on other lookbooks, and connect with community members.

Co-created Fashion Lines

Since forever, major fashion houses have brought in sought-after designers from the top fashion schools to design their new collections. But those who attend those establishments represent only a tiny fraction of the collective design talent out there. That’s why brands are starting to tap into that latent talent by integrating their customers into the design process (co-creation).

Mod Cloth, an online women’s clothing store specializing in vintage and retro, recently completed their ‘Make the Cut’ competition where users submitted designs for an upcoming collection and the community voted on it. Now that the winning design has been selected, the next step will be put into into production and sell it on the company’s website.

While that all sounds cool and exciting, the question is, where is the business model in all this?

Business Model

Beyond just a branding tool for fashion houses, communities and shopping portals are being created to create socially-driven experiences. Rather than just click and buy, users are immersing themselves in the content, interacting with the community and expressing their tastes through their own creations. It’s evolving from the traditional one-way, you-buy-we-sell experience, towards an open-ended ecosystem where anyone can buy, anyone can design and anyone can sell.

And behind this engagement is a big business model.

View the larger full-size image(). Download the Fashion 2.0 BM Canvas (PDF).

To illustrate our point, we will use, the social fashion community that started in Brasil. The company was created by two former investment bankers in 2008; the duo started building an e-commerce clothing website on the weekends for their wives, when they realized how big of a need there was for a site that centralized around user-generated content. Now they are a full-scale startup which recently launched in the US.

Their business model has several revenue streams (present and future), all of which centre around the community:

Present BM:

  • Affiliate Clicks

When users create customized lookbooks, they include a selection of garments from a range of potential fashion brands, big and small. If someone from the community sees a piece of clothing on a community members’ lookbook, they can click on that item and be taken directly to the brand’s website in order to purchase the piece of clothing. In this case, the click will be marked and tracked back to the site where it originated, earning the platform a commission on the sale.

  • Sponsorship

Brands can sponsor certain areas of the main community pages in order to have their clothes featured; it’s a way to promote without creating an explicit ad.

In this case, has the ‘Look do Dia’ (Look of the Day), which in this particular case is sponsored by e-Closet. The assumption here is that e-Closet has paid to have their clothes featured there, but that is not known 100%.

Next-Level BM:

  • Data & Analytics

With so much rich interaction happening on the site, the 3rd potential source of revenue will be related to data and analytics. Currently, offers brands the opportunities to create ‘Brand Pages’ for free. As the community grows and user interaction with brands’ content increases, can start to use that data to analyze trending styles, understand user behaviors and forecast future patterns, all of which would be valuable to brands on the site.

Polyvore, the US-based equivalent of, incorporates analytics into their site to measure trends about hot products (ie. wide-brimmed hats). While it is unclear whether they would actually sell these analytics to brands, it looks like they are currently using it to increase traffic to top-selling products, which would help increase their affiliate revenues.

  • Advertising

Finally, we would expect to see advertising become a substantial revenue stream in the future as well. Ideally, they would take the time to develop an advertising-as-content strategy; otherwise the ads will diminish the quality and feel of the site.

Polyvore has ads on the side of their website from major brands as soon as you click off the main page.

The key for any company operating with the Fashion 2.0 business model is that they focus on enhancing the user experience without making the Facebook mistake – building their business model for corporate interests using advertising – so that the community can continue to grow without users losing trust in the platform.

In fashion in particular, there are a lot of big brands with a lot of money to spend who will be keen to jump on board to new sites like this in order build their presence. The risk is the site will become cliché and commercial and develop a consumption-driven community rather than a creation-driven community.

Another key is to develop partnerships with entities that have an aligned vision. In’s case, their major partner is Intel. Beyond just the capital injection, Intel can help them move into the US market, which is clearly high on their radar. Intel clearly has an interest in Brazil as well, the 3rd largest PC market in the world and has a highly-connected Internet population.

While what and other similar Fashion 2.0 sites are doing is interesting, there is a lot of room to develop it further and bring the impact of the business to a whole new level.

What lies beyond for Fashion 2.0?

Future BM

  • Sustainability

With ‘sustainable’ fashion brands just starting to get the #momo behind them, the next generation of Fashion 2.0 platforms need to start mixing values and ethics into online communities, rather than just style.

To make this happen, education needs to be integrated into the platform design, so that users know what to look for (ie. which materials are sustainable) and how to find design-driven brands that make being sustainable stylish. From there, the community can evolve and influential users can use their clout to drive business to up and coming brands and share in the profits.

+ Avant Garde: Moving Fashion Forward

  • Gen Y

The shifting demographics globally represent a huge opportunity for the first group of communities/platforms who can figure out how to make a custom-tailored Gen Y experience, especially in fashion.

Given that our generation is wired to be social, are very values-driven in our purchasing decisions, and will go to great lengths to find brands that can deliver full-spectrum performance, there is a need for new-era platforms that bring a visual, immersive and playful experience to commerce. Beyond just the cliché business trends like ‘gamification’ and ‘social commerce,’ people in our generation are looking for authentic experiences from real brands. Add in the ability to be tribal and connect with the brands that we love, and you have the future of fashion e-commerce for Gen Y.

Overall, Fashion 2.0 is an exciting movement that can bring badly-needed creativity and connectedness back to the industry. It’s part of a shift to a more collaborative economy, one that requires new business models and a new view on markets. For those enterprises who understand the ecosystem mentality and can build trusted platforms, the opportunity is massive.

PLAN – the Business Model

Back in the summer of 2010, in search of a catchy name for a blog series about business models, ‘Business Model Breakdown’ (BMB) came to life. After nearly three years, it is our most visited set of posts and the only series being actively rolled out on the blog. In that light, we look back to the beginning of BMB and break down the best of the bunch.

Here we go …

BMB Top 5

Original BMB post (June 28, 2010):

+ Business Model Breakdown: Quirky

Most Popular BMB post:

+ Business Model Breakdown: PayPal

view the PayPal Canvas

Most Tweeted BMB post:

+ Business Model Breakdown: Android

view the Android Canvas

+ (Tweet History on Topsy)

Most Research-Intensive BMB post:

+ Business Model Breakdown: Collaborative Consumption

image taken from Uncluttered Whitespace

view the Collab Consumption Canvas

Lumos Favorite BMB post:

+ Business Model Breakdown: Etsy

view the Etsy Canvas

Newest BMB post:

+ Business Model Breakdown: Fashion 2.0

download the Fashion 2.0 Canvas

Other BMB Posts

BMB : Crowdfunding

+ Business Model Breakdown: Crowdfunding

BMB : ASTA Networks

+ Business Model Breakdown: ASTA

BMB : Community Lend

+ Business Model Breakdown: Community Lend

BMB : Mobile Apps

+ Business Model Breakdown: Mobile Apps

BMB : Freemium

+ Business Model Breakdown: Freemium

And that’s the break down of the BMB series. Of course none of it would have happened had Alex Osterwalder et al not brought the concept to life.

What is your favorite BMB post?

+ Business Modelling 2.0
+ The Advent of Collaborative Commerce+

Building Blocks – PLAN – the Business Model

Business modelling – it’s a process typically used by companies to create and develop new business models. On its own, it can be quite useful; but in today’s open and connected world we can take it to the next level. That’s why in this blog post we are going to look at business modelling with a twist and show how to integrate the social component into the modelling mix.

Since essentially our inception, we have been writing about business models. It has been an exploration that coincided almost directly with the launch of the Business Model Generation (BMG) book by Alexander Osterwalder – we started our blog in early 2010, the book came out in mid 2010.

Our earliest posts looked at what a business model actually is, as despite having graduated from business school, we didn’t (embarrassingly) truly know what a business model was.

+ Business Model – What Is It?

After learning the basics, we started using the canvas to analyze business models and help develop ideas. The beauty, it seemed, was in having some basic structure to develop an idea and to put the focus on creating a viable model that fits onto one page rather than a fluffy plan that takes thirty (not that you don’t need a plan).

Then we started openly dissecting innovative and popular business models in what has now become our most popular set of blog posts, Business Model Breakdown.

+ Business Model Breakdown

While we don’t fully subscribe to the theories that the business plan is dead or put the canvas on a holy grail, the whole ‘business model generation’ concept is certainly a challenge to the concepts preached by the old boys of the business world’s most prestigious institutions. The same institutions who failed to foresee the financial crisis in 2008 and who, for the most part, have continued to teach the business-as-usual ideals in its wake.

The whole BMG book and canvas came like a bit of a spring rain in the arid deserts of business literature, both in terms of content and physical design. From our perspective, it has helped to bring an entirely new focus to the planning process.

And that’s why, in the age of the social internet, there is a great opportunity to use newly created tools like the business model canvas and collaborate across the networks. Because the secret to getting a business off the ground has nothing to do with where you graduated from or how many years you occupied the C-suite, and everything to do with being the right person in the moment to push an idea into the market. The key is to ensure that the idea has a sustainable business model behind it so that it doesn’t just become a hobby; and that’s where the business model canvas comes into play.

So we are going to talk about one way to do it.

Assuming that you have an idea, you are analyzing a new opportunity in the market for your company, or any combination of the two:

Download the initial 72-page preview of the business model canvas and / or read about the nine key components of the canvas on our blog:

+ Key Components of a Business Model

Print out a copy of the business model canvas by downloading the PDF below:

+ Business Model Canvas (PDF)

Now apply what you have learned about the key components of the business model canvas to your idea / business. You should either go to the store and buy poster board and Post-IT notes to make a big copy of the canvas, or print off a bunch of copies of the PDF; this way you will be able to experiment.

This is not an activity that you should be timing yourself on. Experiment with different ideas for revenue streams, partners, channels to connect with customers, etc. And get colourful in the process!

After you are confident that you have developed a model that you can share with other people, then it’s time to think about the 2.0 part of business modeling. Download a copy of the Powerpoint (PPT) business model canvas:

+ Business Model Canvas (PPT)

Fill out the PPT with the model you developed at home. After you have filled in the model, save it locally and also load it into Google Drive. Now you have three ways to share the canvas:

  • you can share the physical canvas with people around you in your home/community/office;
  • you can share the PPT model by email, as Powerpoint is practically ubiquitous and can even be read using Apple Keynote;
  • you can use the Google Drive version to collaborate live with your Gmail / Google+ contacts.

With a canvas in hand / online, you can then start to share it with people who you think can help you move it forward. It’s not so much about finding people who fall in love with the idea at first sight, but rather finding those with domain experience / market intelligence / a good head on their shoulders to give you critical feedback. By using different channels and soliciting feedback from more than just the people who immediately surround you, you can incorporate diverse opinions into the development of your canvas and develop real confidence that you are on a good path moving forward.

Download the business model canvas. Learn the concepts. Incorporate your idea. Get feedback.

It’s a simple and social to way to begin.

There is also an iPad app for canvas creation (Business Model Toolbox), and an online community dedicated to developing business models (Business Model Hub), for those who are interested.

And voila! That’s our way to do business modelling 2.0.

+ DIGITAL: InterC Strategy
+ Time For BMi

PLAN – the Business Model

Android, Google’s open-source mobile OS (operating system), has taken the mobile industry by storm. In just over a year, Android has gone from a 2% market share in the US, to 28%, and is on the verge of overtaking RIM and Apple as the most popular smartphone platform. While it’s no secret that Google’s decision to open-source the Android platform has been the catalyst for this high-speed growth, what’s less obvious is the business model behind Android. In this version of Business Model Breakdown, we explore Android’s business model and how Google plans to leverage the platform to position itself for the global smartphone revolution.

On Novemeber 5, 2007, Google announced that it was entering the mobile smartphone industry with the creation of Android OS, an open-source mobile platform. At the time, reactions were mixed and skepticism was high – breaking into the smartphone industry was seen by some as a PR move with little chance of success. Now two years later, major competitors including RIM, Apple, and especially Nokia, are looking over their shoulder as Android continues to cut into their market share.

To make Android the overnight success (by smartphone industry standards) that it is, Google partnered with hardware device manufacturers, including Samsung, HTC, Motorola and LG, to create smartphones that run Android OS. Google’s partners create the hardware, and Google delivers the software. By opening up the Android platform, Google laid the groundwork for developers to create the apps and functionality that make it a robust OS.

As Android prepares to take over Nokia and Apple for smartphone supremacy in the next few years, many are wondering where Google makes their money – after all, someone has to be paying the bills for those coders to develop new versions of the platform every few months. Other than the obvious revenue sources, like apps, Google’s business model for Android is part of a long-term strategy to make Google a player in the bold new digital world that will be shaped by mobile devices.

Google’s move into mobile was spurred by the realization that the mobile experience will redefine everything, including search, and that to maintain a long-term competitive advantage in the search advertising space, their bread and butter, they needed to be a mobile player. A recent blog post by Google CEO Eric Schmidt titled ‘Preparing for the Big Mobile Revolution’, shows how focused the company is on developing their mobile capabilities to help proliferate Android devices around the world. And despite the Android strategy being early stage, there’s already strong evidence that it’s working.

Click here to see full size image

According to eWeek, Google generated $130 million from mobile ads on Android devices in 2010, or $5.90 average revenue per user (ARPU). By 2012, that number is expected to be ten times what it is today, or $1.30 billion, with an ARPU of $9.85. Going forward, the company hopes to target 1 billion users around the planet with the Android platform, a lofty expectation, but one that could be realized given that they currently activate about 300,000 handsets per day.

Overall, it appears that Google has mobilized its resources and shifted its strategy to take advantage of the mobile revolution. With the rapid global uptake of smartphones, the continued mobile ecosystem development, and the high level of innovation, Google is hoping to emerge as the leader of the pack in the global smartphone industry. Doing so would help solidify the company’s business model and ensure that they remain as big a player in the search ad space after the mobile revolution as they were before.

+ DIGITAL: InterC Strategy
+ Time For BMi

PLAN – the Business Model

If you have done any online shopping over the years, then there is a good chance that you have used PayPal to make a purchase or two. While many technology companies built in the late ‘90s were wiped out in the subsequent dot-com stock market crash, PayPal pulled through. Today we will look at the business model behind the e-payment behemoth, and analyze how it leveraged the model to pioneer the world of online transactions.

In 1999, Peter Thiel and Max Levchin created a company called Confinity, which launched PayPal that same year as an application to transfer money electronically between mobile devices. When it became clear that the idea didn’t have as much merit as the duo thought, they began looking at different markets and set their sites on the growing Internet. More specifically, they focused their attention on a fledgling e-Bay, which at the time was only accepting payments in check and money order via US Mail. It was the opportunity they were looking for.

While they weren’t the only company to zone in on the opportunity, they were the first to exploit it. Other companies struggled to implement e-currencies, while PayPal took advantage of existing technologies and infrastructure to build a low-tech payment system. The company’s medium for transfer was e-mail, a technology that nearly everyone embraced at that point in time; the funds for the transactions were transferred from the users’ credit card or bank account, which were issued by American financial institutions.

To reach the masses, the founders knew that they had to find a way to implement a brokerage business model. In a brokerage business model like PayPal, it is the classic chicken-and-the-egg scenario; which comes first, the chicken or the egg?

In order for the business model to be successful, there needs to be a significant user base on both sides of the transaction. With PayPal, buyers were excited to use the service because it made it much easier to buy something on e-Bay. Once buyers were on board, merchants and sellers began accepting PayPal because of the increased transaction volumes and the new payment options. With substantial user adoption on both sides of the transaction platform, PayPal began to prove the viability of its business model.

(see full size image)

While the company had initial success scaling its user base, the real rise of PayPal didn’t begin until the industrious Elon Musk stepped into the game. In 2000, Musk orchestrated a merger between his company,, and Confinity, and sparked PayPal’s scalability by initiating an aggressive marketing campaign; new sign-up referrals were offered $10 and the user base grew from 12,000 to 2.7 million between January and August 2000.

Despite a growing user base, it took the company some time to determine the best way to monetize users. Initially, it planned to exclusively generate revenue by earning interest on funds in users’ PayPal accounts. Before long, however, it realized the drawbacks of this approach and changed the model to a commission structure. Unlike many online e-payment companies who charged merchants setup and fixed account fees, PayPal decided to make account setup free and charge based on a percentage of the transaction. The seller, not the buyer, pays the transaction fee, which ranges from 1.9-2.9% depending on monthly transaction volume.

The rapid growth of PayPal continued through 2001. In 2002 the company went public on the Nasdaq exchange, before it was acquired by e-Bay for 1.5 billion in stock that same year.

Following the acquisition by e-Bay, PayPal began to grow its user base internationally through the e-Bay platform. After the company successfully penetrated the international market, it began focusing on growing the user base outside of e-Bay. To accomplish this, it increased the PayPal platform’s functionality, beefed-up the sales force and added new options for both buyers and merchants, including a mobile payment system based on text messaging.

One of the keys to PayPal’s success has been its ability to keep the platform secure. After some well-publicized incidents in the early years, the company has subsequently devised a unique account verification policy, created the Captcha technology and implemented an optional security key, among other initiatives. The results have been amazing, as PayPal’s fraud rate of 0.41% remains well below the industry average of 1.5% despite being one of the most targeted sites on the web.

Overall, PayPal’s success in trailblazing the online payment industry is a result of its ability to effectively find and implement a scalable business model. Despite challenges and setbacks, the company’s founders endured and created a simple, innovative e-transaction system that now serves 300 million users. It’s another example of a low-tech solution to large-scale problem, and provides a great model for anyone looking to build a scalable solution for a global marketplace.

+ Download a copy of the business model canvas (click here)

+ BM Breakdown – ETSY
+ The Advent of Collaborative Commerce+

Crowdfunding Strategy – Summary

Building Blocks – PLAN – the Business Model

What we can offer

+ Twitter : @LumosBusiness

+ Pinterest : Visualize Trends

+ Google + : Hangout

+ RSS : Subscribe

Knowing what a business model is and what types of different models exist is great; however, to take steps towards creating the right business model requires knowledge of the essential components. Today, we will look at what these key components are and how they integrate together.

This week, I ordered a copy of the print version of Alex Osterwalder’s book, “Business Model Generation.” I was inspired by the content, vision and authenticity of his message, not to mention the fact that the business model canvas is a brilliant way to identify the essential elements of a business model.

Today, I’m going to break down the components of a business model and draw the connection between them and the overall success of the business. I will refer to Mr. Osterwalder’s business model canvas (pictured above) to identify these key components and share what I have learned about his team’s creation up to this point.

The canvas contains nine components that collectively integrate to form the entire business model, including the following:

Value Proposition: What unique value does a company’s product or service create for customers.

Customer Segments: What group(s) of customers is a company targeting with its product or service

Customer Relationships: How does a company plan to build relationships with the customers it is serving

Customer Channels: What channels does a company use to acquire, retain and continuously develop its customers

Revenue Streams: How is a company pulling all of the above elements together to create multiple revenue streams and generate continuous cashflow

The components listed above represent the right side of the canvas and combine to form the revenue generating mechanism of the business. Listed below are the components that combine to form the cost structure of the business on the left side of the canvas.

Key Partnerships: What strategic and cooperative partnerships does a company form to increase the scalability and efficiency of the business

Key Resources: What assets and knowledge does a company possess that allow it to deliver its value to customers in ways that other companies can’t

Key Activities: What activities does a company engage in that allow it to execute its strategy and establish a presence in the market

Cost Structure: What are the costs associated with each of the above elements and which components can be leveraged to reduce costs.

Example of the Android business model. Click here to see the larger canvas.

The nine components of the canvas combine to create a complete overview of how a company will go about creating a business that matters to customers. Each component represents a crucial building block in the construction of the overall business. With competition getting stiffer, customers becoming more demanding and the pace of change gaining speed everyday, it is important to see things in the big picture and build something that people get excited about.

By plotting your business on the canvas, it forces you to ask critical questions and think creatively about whether or not your business is focused in the right areas. Once you start thinking about your business on a bigger scale, it becomes easier to identify opportunities and address any areas of weakness.

+ Download a copy of the business model canvas (click here)

+ BM Breakdown – Collaborative Consumption
+ A New Era of Business – FOOD

Crowdfunding Strategy – Summary

Building Blocks – PLAN – the Business Model

What we can offer

+ Twitter : @LumosBusiness

+ Pinterest : Visualize Trends

+ Google + : Hangout

+ RSS : Subscribe