7 differences between the Profit Making Machine and the Business Model Canvas
It has been about 10 years ago now since Alexander Osterwalder and Yves Pigneur strated their conquest of the world with their Business Model Canvas. At the time when they launched their ground-breaking work around business modelling, no one could have guessed the impact it would have in the business world, but also for numerous non-profit and governmental organisations. Today, it is used all over the world by strategists, consultants, entrepreneurs, managers, start-up gurus, etc. For many it is a basic instrument for governance and management, a reference, a handhold.
But in some cases, it has also proven to be a source of irritation. Often, the Business Model Canvas is imposed by well intended advisors, without offering solid fundaments, making it impossible to grasp. This leads to endless discussions on the canvas itself and how to use it, rather than on the organisation that is being looked at. It is clear that this should never be the intention.
Next to those situations, one could also have some remarks on the construction of the Business Model Canvas itself: are all essential components present? Is it not possible to place certain processes, targets or activities in more than one element in the canvas? After filling in the full canvas, do I really have a much clearer idea than before?
From very early after the publication of the Business Model Generation book, I have been an adept and a fan of the Business Model Canvas. But along the way I have also discovered that the model can be improved. Just like anything else in life. And that is a good thing, if not, business modelling experts would be out of work in no time.
By launching the Profit Making Machine Framework, we have the ambition to tackle a number of elements from the Business Model Canvas we thought could use improvement. Below you can find an overview of those elements.
Although the Business Model Canvas excels in its simplicity, we thought we could simplify things even more by building the whole model on only 6 basic elements: Pain, Resolution, Offering, Format, Infrastructure and Turbulence (PROFIT). Each of these six elements is in its turn filled by answering 3 simple questions. Finding an answer to these questions may be far less easy, but that of course is the whole point of the exercise.
- Addition of some essential elements
Some things never really found their place in the Business Model Canvas. We felt that these elements are however key when building a successful business model. The most important that come to mind are the elements Resolution and Turbulence. Attention for vision, credibility and values on the one hand and attention for external influential factors on the other hand, seem essential to us when describing a business model.
The order of things
Although the Business Model Canvas chooses on purpose not to give a clear order of thing in its model – there is an order described in the book, but one is free to respect that order or to ignore it – we have seen that in real life, users of the canvas are really helped by giving them a logically built pattern. That is why we have chosen to implement a fixed order of things along 6 consecutive steps.
The hardest part in creating the Profit Making Machine model, was finding the right logical build-up of the whole story. By making the customer pain the central point, we found the right approach. Starting from the customer pain, we move on to the visionary element and then on to the specifics of the offering. This offering needs to be packaged and offered in an attractive way. To be able to do that, you need people and resources. And last but certainly not least: we are not operating in the void: there is a large number of external elements that have a direct influence on the success of our organisation. And to complete the circle, theses elements also have a direct impact on the customers needs and wishes.
Easy to remember
To remember the 9 elements of the Business Model Canvas and to place them in the right spot, you really need some experience with the model and its workings. When we created the Profit Making Machine model, we chose to use the acronym PROFIT that helps you remember the name and order of the different steps. This will help you to quickly reconstruct the elements and place them in the right order.
Implemented in a Framework
It is absolutely possible to use the Profit Making Machine model on its own, but we recommend that you make it a part of a broader Framework. Next to the model itself, we want to achieve another goal: to create a business or organisation which is sustainable (profit), customer centric (making) and efficient (machine). We have also developed a methodology. Implement the Profit Making Machine into your business DNA: Design, Nurture and Abort.
- Dynamic versus static
Finally, we also wanted to move away from the static element of a canvas. The visual concept of a canvas is valuable in the process but should not be a goal on itself. We kept the idea of using a canvas as a tool but by incorporating it into a framework, we also introduced a clear dynamic in the whole concept. This dynamic characteristic is visualized by the attractive and recognisable drawing of the machine. And be honest, a machine does have a more dynamic look to it compared to a canvas, right?