Guestpost: Business Models, Entrepreneurship, and Poverty Alleviation in Kenya

This guestpost tells the special story of how Sebastián Salinas Claro and Joshua Bicknel connected across the globe on the Business Model Hub. They joined efforts in their aim to defeat poverty by teaching entrepreneurship. The results are amazing.

By Sebastián Salinas Claro (with Douglas Cochrane and Joshua Bicknell): My recent journey illustrates the power of social networks and how linkedin and the Business Model Hub brought me to Kenya - all the way from Chile. It was a fascinating experience that all started when I contacted Alex on Linkedin. I told him how I was teaching the Business Model Canvas to disadvantaged youth in the South of Chile with excellent results. He suggested that I post my story on Business Model Hub, which I did. That's where the journey starts.

In August Joshua Bicknel browsed the pages of the Business Model Hub and came across my post. He read about the exciting experience I went through introducing the Canvas in Chile. He decided to contact me, keen to hear more. After a few hours on Skype, I declared my intention to travel to Kenya to work with him on a pilot project. It was quite a commitment from me. Few Chileans travel to Kenya, and it was an even bigger leap considering we had never met. But I took the leap and joined his team in Nakuru, East Africas fastest growing City, in October 2011.
BMGEN goes Kenya

BMGEN goes Kenya
Since then we have been working with unemployed youth supporting them to imagine and design innovative new businesses that create employment and defeat poverty. I want to use this blogpost to discuss some of the insights from this experience, in particular the power of the Canvas as a great leveler. We worked with 4th year Commerce students from Egerton University and unemployed young men and women who never finished high school. Both grasped the Canvas equally fast and applied it to imagine impressive new businesses. In fact, on a number of occasions the non-university students actually impressed us more.
BMGEN goes Kenya
BMGEN goes Kenya
One such occasion was in a session with the Salgaa Sparks youth group. In Salgaa there is no rubbish collection. All waste is either dumped on the streets or burnt. It is a fast growing town and a popular nightspot for transit truckers, so the area is becoming increasingly dirty and unsanitary. Sparks came to us seeking help to develop a solution to this problem. Initially, they didn't imagine starting a business, instead believing the solution to be a volunteer community-cleaning programme. By using the Business Model Canvas we helped them discover a more interesting opportunity altogether.
BMGEN goes Kenya
BMGEN goes Kenya
Firstly, they mapped their idea on the canvas, imagining it as a profitable business, and came up with a rubbish collection scheme. Not a wholly radical idea. A similar schemes exist in other Kenyan settlements. However, they then began to question whether there was any value in the collected waste and soon realized that they could turn the organic materials into fertilizer and sell it to the farmers at $10 a bag. Then they came up with another profitable idea: to rent out their work carts on days when they were not collecting rubbish.
BMGEN goes Kenya
Using the canvas they envisioned, imagined, developed, and refined a very exciting business model with three potential revenue streams. A business that achieves two goals at a time. It cleans-up the environment and provides unskilled youth with jobs. They are currently applying to the Kenyan Youth Enterprise Fund and project that their business will break even in its second month!
BMGEN goes Kenya
Throughout their lives these youth have been excluded because of their social and economic background. By using the Canvas they have, with no formal business training and sometimes not even a high school diploma, produced a very attractive business proposal. This speaks volumes for the capacity of the Canvas as a tool for profound change, empowering communities to start businesses that tackle the current structures of inequality.
BMGEN goes Kenya
We are excited to expand this programme next year. We will take graduates to both Kenya and Chile to work with hundreds of unemployed youth to develop new businesses as we seek to build a global generation of young people with a commitment to defeating poverty through entrepreneurship and not aid. And everywhere we go we will pack the Canvas as the key tool in our arsenal!

Check out our website in www.balloonkenya.com and www.emprediem.com

Signed, Douglas Cochrane, Joshua Bicknell & Sebastian Salinas Claro

There is No Lack of Business Model Innovation Ideas

Currently I am working our upcoming book "Business Model Generation" on a section about ideation: the art of generating innovative business model ideas.

While working on this section I realized that ideas were not necessarily the problem. They exist in abundance within a company or an industry. I've experienced this with multiple organizations. The issue is selecting the right ideas, turning them into something implementable and then actually DOING them.

Regarding the first issue, selection, the biggest problem is that today's organizational and management structures don't allow good business model ideas to become visible. Interesting business model ideas can come from anywhere in a company. Operations, client services, finance... Yet, they have to be selected by management in order to maybe become real options. More often than not they stay invisible. I'm pretty sure that there were many smart folks in record companies that had good busines model innvation ideas. However, the management of these companies preferred to stick to the status quo... and ultimately become disrupted by illegal downloads and challenged by iTunes.

A solution to this is to put a multi-disciplinary business model innovation task force together. One that has the sponsorship of top management and the board. The task force should be composed of people from various levels of hierarchy, from different age groups, with diverse levels of experience, from different business units and with mixed expertise. The diversity will help ideas to emerge, to be discussed, improved and then selected for implementation.


The implementation issue is more challenging. It requires the willingness of top management and the board to experiment and allow for bottom-up ideas to emerge. Unfortunately, it also requires taking some risks to play with new ideas in the field. But if you look at the major record companies today, the risk of inaction is even bigger. I would argue for maintaining a portfolio of business models of which some may even cannibalize the existing main business model.

A great example of a business model portfolio can be found within Nestlé's coffee business. While the Swiss multinational became big in coffee with Nescafé it's current growth engine is now Nespresso. Nespresso sells espresso machines and pods to the high-end of the market. What is impressive is that Nestlé is internally challenging its new multi-billion espresso-pod money-making machine. They expanded their business model portfolio in coffee with Dolce Gusto, a Nescafé sub-brand targeting the lower end of the market. Dolce Gusto's business model is quite similar to that of Nespresso with some tweaks. Nespresso sells to the higher end of the market, while Dolce Gusto sells to the lower end. Nespresso doesn't sell pods through third party retail, while Dolce Gusto does. Though they are both targeting different customer segments, Dolcé Gusto is still cannibalizing Nespresso to a certain extent. Respect for Nestlé that they allow for this internal competition!

Publishers, Update your Business Model!

Book publishers, I think your business model is expiring! If you don't update it now, you will suffer the same fate as the music industry: "cluelessness" of what to do to fight steeply declining revenues!

I am by no means an expert of the book publishing industry. My only qualification is being a huge buyer of books and being an aspiring author with a business model innovation book I am working on. The innovation behind the book: I am not alone in writing this book, but my co-author and I are working with another 250+ 470+ co-authors who paid to be part of the book writing. Oh, I almost forgot, we not working with a publisher... I never even submitted a manuscript to a publisher...

Here four substantial trends off the top of my head that will rock the book publishing industry and their business models (trends which you probably know, but are not taking seriously):

Distribution is a commodity and attention is scarce

Publishers and retailers used to controlled distribution. That gave them the power to promote authors and their books. With Amazon.com, self-publishing sites such as Lulu.com and the rise of e-books that power is gone because anybody can (print and) distribute a book. The name of the game is now capturing attention in a world of abundance and the absence of distribution scarcity. The publisher’s role of the gatekeeper is soon gone. We are entering the ultimate meritocracy. Books will be successful without a major publisher if they can capture the attention of potential readers through the mastery of the tools of the attention economy: blogs, communities, search engine optimization (SEO) and viral marketing. Readers will catapult a book to success if their attention can be captured. We have already seen this happen sporadically in the music industry.

New business and revenue models will dominate the landscape

Traditional revenue streams from selling books are prone to die. Learn from the music industry: Apple is now the dominant force in digital music and has replaced the incumbent players with a completely different business and revenue model. They sell music online, but they earn most from selling their iPod hardware. Or look towards the artist that give away their music and earn their revenues from increased concert sales or special edition albums. They use “free” as a way to capture attention and earn from new revenue streams.

Authors want to be liberated from the handcuffs of publishers

Very few authors get lucrative royalties or a substantial advance from their publishers. Royalties usually run around 5-10% of the book price. You have to sell VERY many books to live from it decently. In addition publishers don’t allow you to do most of the interesting stuff: experiment with new formats, revenue models and online communities. Hence, new authors have little interest to work with publishers and many of the most lucrative successful authors will run as soon as they have the courage: Paulo Coelho is famous for his stance against the publishing industry and their traditional methods.

New experimental formats will emerge

Books will be written by communities, they will come in versions (like software: cf. the unbook movement by my friend Dave Gray), they will have innovative intellectual copyrights (e.g. creative commons) and novels will have multiple endings. They will take advantage of multimedia by integrating online content and they will be delivered to digital readers like the Kindle. There are absolutely no limits to imagination of how the “books of the future” will look like. Sadly, publishers (with notable exceptions) lack the required imagination to exploit the new opportunity space.

UPDATE
: Richard Baraniuk's talk at TED on textbooks: Goodbye, textbooks; hello, open-source learning:
http://www.ted.com/index.php/talks/richard_baraniuk_on_open_source_learning.html

Apple iPod - Business Model Example Series: Issue 2

This week I was in Madrid to work together with XPLANE, the leading company when it comes to visual thinking in strategy & business. XPLANE will help me with the visuals for some examples and processes in my upcoming book on business model innovation.

Together with Pablo Ramirez of XPLANE we worked on several things, including the business model of the Apple iPod. Here is a first sketch - open for your input & feedback...

Don't hesitate with comments & feedback. This is most certainly one of the examples we will use in the book. At every workshop & event I do, the Apple iPod comes up because of its influence on the music industry.

Book Chunk Project - prototype

Yves Pigneur's and my book on the topic of "Crafting Innovative Business Models" (working title) is only due in May 2009 (approx.). That is way too long to wait. Many people asked us for early access. Hence, I thought it could be a good idea to distribute the book content in separate chunks before.

The slides below outline the draft of this idea of giving interested people early access to our writing for 24.- $US (or maybe a little more). By subscribing to this so-called "book chunk project" you will get several things (suggest more...):

  • first & exclusive access to raw book content
  • influence authors
  • x installments of book chunks (in a non-linear order - as we write them)
  • 50% discount off the final book (approx.)
  • participate in exclusive book chunk webinars
  • access to templates
  • being part of the business model innovation community

I would be interested in your comments on this and if you would be willing to buy such an early and exclusive access. Do you think the pricing is too low? Any suggestion is welcome. In the meantime have a look at the slides that outline this idea that I would launch very soon if I feel an interest from your side:

Book Chunk Project - prototype
View SlideShare presentation or Upload your own. (tags: book project)

Long Tail Business Models

In today's blogpost I'm sharing a couple of reflections on long tail business models. It is be part of the upcoming book in a section that illustrates some popular management theories & concepts through the business model canvas.

Enjoy the slides:

Long Tail Business Models
View SlideShare presentation or Upload your own. (tags: innovation design)

you can download the slides on slideshare.net:
http://www.slideshare.net/Alex.Osterwalder/long-tail-business-models-presentation/

What the Web has done for me...

I thought this anecdote about how the Web has worked for me might be interesting to you, because this year I am starting to fully reap the benefits of the opportunities that the Web offers freelance thinkers and entrepreneurs like myself.

4 years after launching this blog I can now earn a living from the work generated from this site (i.e. workshops, conference talks and advice). More interestingly is, however, that my approach to fostering business model innovation is starting to be used throughout the globe. This might have been less surprising had I written a book with Harvard Business School Press or had I been professor at a business school like Wharton. Yet, neither is the case. The popularity of my work has mainly come from my web activities...

Now I'm not writing all this to brag. After all, the reach of my work is still absolutely small-scale and I still have a long way to go to get anywhere near the impact levels of thinkers like Henry Chesbrough, John Hagel or even gurus like Gary Hamel or C.K. Prahalad. I'm writing this to show that business concepts that stick with users can now reach a global audience without going through the traditional channels like top publishing houses and Ivy League Business Schools.

Here are the ingredients that made the Web work for me:

  • I write 1-2 posts per week (a bit less at the moment), which is the equivalent of about 2-8 hours time investment
  • Almost all I think, write and do is available for free on my blog. E.g. most of the slides I present at conferences are available on my blog (with a little time lag).
  • I pay attention to getting my blog well referenced in Google. Try googling the expression "business model innovation".
  • I got my work and thinking referenced on Wikipedia.
  • I posted a video recording of my first well paid speaking engagement online. This led to new speaking engagements because people could see me in front of an audience.

The results are the following:

  • My blog now has 20'000+ pageviews/month (growing steadily)
  • 780+ blog feed subscribers (RSS) follow my postings
  • I am starting to get high profile conference invitations (alongside gurus like Henry Chesbrough and Michael Porter)
  • My business model canvas is being applied in places I would have never dreamed of

Paradoxically, I am now writing a book to reach the next level of impact. However, intuitively I know that the book can only succeed if it embraces the Web in new and innovative ways. It will be quite a challenge to reach the world without the marketing might of renowned publishing house...

Your recommendations and insights are highly welcome...

Up-coming Business Model Innovation Workshops & Events

The next few weeks and months I will give some open workshops and will be participating in a couple of events. It would be a pleasure to meet you there! Besides that I am doing a series of private events for corporations (don't forget you can hire me ;-)

Open Workshops

  • 24 Sept. 2008: Amsterdam, Netherlands. Venue: ULURU. Business Model Design & Innovation Workshop (sign-up / few seats remaining)
  • 10 Oct. 2008: New York, US. Venue: Center for Architecture (sign-up)
  • 29 Oct. 2008: Amsterdam, Netherlands. Venue: ULURU. Business Model Design & Innovation Workshop (sign-up)
  • 8. Oct. 2008: Toronto, Canada. Venue: Rotman School of Management. Business Model Design & Innovation Workshop (sign-up) & separate 1h conference talk (sign-up)
  • Nov. 2008: Kigali, Rwanda (to be confirmed).
  • Nov. 2008: Cape Town, South Africa (to be confirmed).

Talks@Events

  • 10. Sept. 2008: Utrecht, Netherlands: Media Congress (web)
  • 11 Sept. 2008: Dublin, Irleland: Innovation Forum 2008 (web)
  • 16 Oct. 2008: León, Mexico: Innovation Event Tecnológico de Monterrey

Unfortunately, I am not present in Asia in the next couple of months. Maybe a local entrepreneur with a strong network sees this as an opportunity to invite me there...