Business Model Generation is the best book on this topic I have encountered. We're using it in place of several approaches to business modelling. By business modeling I mean the work processes for the business.
We're in our third year of developing a separate business practice focused on aerospace, defense, and federal government (FedCiv) services for Earned Value, Program Controls, Risk Management, some proposal elements, and other offerings around "programmatic activities." We're at the point now, with field sales, delivery directors, practice manager (me) and a full service team, that it's time to start asking "what are we going to do when we grow up?"
We can across this book in the airport, while waiting for the late plane. It's one of those books that you start to read while holding your Starbucks and then can't put down. It took a couple more trips through the airport before out team decided to actually buy the book. It doesn't fit nicely into the backpack, so I couldn't get anyone to carry it home.
The process defined in the book details the content and relationships between:
- Key activities - the most important things a company must do to make its business model work.
- Key partners - the network of suppliers and partners that make the business model work.
- Key resources - the most important assets required to male a business model work.
- Cost structure - describes all costs incurred to operate a business model.
- Customer relationships - describes the types of relationships a company establishes with specific Customer Segments.
- Customer segments - the different groups of people or organizations an enterprise aims to reach and serve.
- Value propositions - the bundle of products and service that create value for a specific Customer Segment.
- Channels - how a company communicates with and reaches its Customer Segments to deliver the Value Proposition.
- Revenue streams - represents the cash a company generates from each Customer Segments (minus the costs to create earnings).
There are several important things about this book. I'm reading and reviewing two "Agile Management" books. One is focused on "managing agile projects." The other is focused on building "agile management" processes. One is a personal view, the other is a reference based, academically sound treatise based on a broad spectrum of project and domains. The Business Model Generation book is the latter. I prefer the latter. The former is interesting, but too narrowly focused for general applicability.
