You’re holding a handbook for visionaries, game changers,

and challengers striving to defy outmoded business

models and design tomorrow’s enterprises. It’s a book for
the . . .

written by
Alexander Osterwalder & Yves Pigneur

co-created by
An amazing crowd of 470 practitioners from 45
countries

designed by
Alan Smith, The Movement
Busines
Mode
sGeneratio
l
n
This book is printed on acid-free paper. o

Copyright © 2010 by Alexander Osterwalder. All rights

reserved. Published by John Wiley & Sons, Inc., Hoboken,

New Jersey.
Published simultaneously in Canada.

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ISBN: 978-0470-87641-1

Printed in the United States of

America 10 9 8 7 6 5 4 3 2 1
Busines
Mode
sGeneratio
l
A Handbook for Visionaries, Game Changers, and Challengers

n
Written by
Alexander Osterwalder and Yves Pigneur
Design
Alan Smith, The Movement
Editor and Contributing Co-
Author Tim Clark
Production
Patrick van der
Pijl
Co-createdby an amazing crowd
of 470 practitioners from 45
countries

John Wiley & Sons, Inc.

Co-created by: Ellen
Di Resta Michael Matthew Milan Karen Frank Camille Peter Jeroen de Jong
Anton Dila Remko Ralf Beuker Hembrough Lagerveld Andres Froberg Lino Gertjan
Vochteloo Victor Sander Smit Ronald Pilot Alcalde Piani Eric Verstoep Steven
Lombardi Jeremy Norbert Herman Yves Claude Alvaro Villalobos Jackson Devijver Jana
Hayes Atanas Zaprianov Aubert Wim Saly M Bernard Indrajit Datta Thiel Walter
Alf Rehn Linus Malmberg Woutergort Racine Chaudhuri Brand
Jeff De Cagna Deborah Mills- Fanco Ivan Santos Pekka Matilainen Martin Fanghanel Stephan
Andrea Scofield Peter Knol Negrelli Amee Shah Bas van Michael Ziegenhorn Frank
Mason Jan Jess McMullin Lars Mårtensson Oosterhout Gillian Sandfær Niall Meeuwsen Colin
Ondrus Marianela Ledezma Kevin Hunt Casey Henderson Danilo
Simon Evenblij Ray Guyot Donaldson JD Bart Boone John McGuire Tic
Chris Walters Martin Andres Stein Michael Vivian Vendeirinho Marco Raaijmakers
Caspar van Giorgetti Geert van Ralf de Graaf Moriarty Mike Martèl Bakker Marc Sniukas
Rijnbach benmlih Vlijmen Rasmus Lars Design for Schut Khaled Algasem
Rodrigo Miranda Rønholt Norrman Innovation Tom Stefano Mastrogiacoo Jan Pelttari
Saul Kaplan Tim Clark Sergey Trikhachev Corcoran Mark Hickman Yves Sinner
Lars Geisel Richard Bell Thomas Ari Wurmann Dibrov Michael
Simon Scott Erwin Blom Alfred Herman Antonio Robert Reinhold König Kinder Vince
Dimitri Lévita Frédéric Bert Spangenberg Wibe van der Pol Marcel Jaeggi Kuraitis
Johan Sidler Robert van paola valeri John Teofilo Asuan Santiago
Örneblad John L M Kooten Hans Michael O'Connell IV Ray Lai
Craig Sadler Kiggundu Robert Suter Sommers Nicolas Javier Ibarra Brainstorm
Praveen Singh Elm Wolf Schumacher Fleury Gert Lytton He Weekly Huub
Livia Labate Ziv Baida Bill Welter Steens Marije Sluis Raemakers Peter
Kristian Salvesen Andra Larin-van der Michele Leidi Jose Sebastian David Edwards Salmon Philippe
Daniel Egger Pijl Eirik V Johnsen Asim J. Ranjha Palazuelos Lopez Martin Kuplens-Ewart Khawaja
Diogo Carmo Boris Fritscher Peter Troxler jorge zavala Jay Goldman M. Jille Sol
Marcel Ott Mike Lachapelle Ola Dagberg Harry Heijligers Isckia Renninger,
Guilhem Albert Meige Wouter van der Armand Dickey Nabil Harfoush Wolfgang Daniel
Bertholet Pablo M. Burg Artur Schmidt Jason King Yannick Pandza
Thibault Estier Ramírez Jean- Slabber Kjartan Raoef Robin Uchida
Hussainali
Stephane Rey Loup Peter Mjoesund Pius Bienz
ronald van den
Chris Peasner Colin Pons Jones Louis Rosenfeld Ivan Torreblanca
hoff Melbert
Jonathan Lin Sebastian Ullrich Ivo Georgiev Berry Vetjens
Visscher Manfred
Cesar Picos Vacherand Andrew Pope Donald Chapin David Crow
Fischer Joe Chao
Florian Guillermo Jose Fredrik Eliasson Annie Shum Helge Hannisdal
Carlos Meca
Armando Maldonado Aguilar Adriel Haeni Bruce MacVarish Valentin Crettaz Maria Droujkova
Mario Morales
Eduardo Míguez Lukas Prochazka Göran Hagert Dave Crowther Leonard
Paul
Anouar Hamidouche Kim Korn Markus Gander Chris J Davis Belanger
Johannesson
Francisco Perez Abdullah Marc Castricum Frank Della Rosa Fernando Saenz-Marrero
Rob Griffitts
Nicky Smyth Nadeem Rory Nicholas K. Christian Susan Foley
Marc-Antoine
Bob Dunn O'Connor Niemann Christian Schüller Vesela Koleva
Marc Faltheim Ricardo Dorado Stephan Jose Alfonso Edwin Beumer Manuel
Nicolas De Santis John Smith Linnenbank Liliana Lopez Eric Dax Toscano John
Antoine Rod Jose Fernando Schreurs Donielle Denneboom Sutherland
Perruchoud Bernd Eddie Quintana Reinhard Buie Adilson Mohammed Mushtaq Remo Knops
Nurnberger Patrick Jeffrey Huang Prügl Chicória Gaurav Bhalla Juan Marquez
van Abbema Terje Terrance Brian Asanka Warusevitane Silvia Adelhelm Chris Hopf
Sand Moore nse_55 Moore Jacob Ravn Heather Marc Faeh
Leandro Leif-Arne Gabi Hampus Jakobsson McGowan Phil Urquhart Wood
Jesus Karen Bakker Edler Marko Seppänen Adriaan Kik Sang Yim Lise Tormod
Davis Tim Herbert Björn Erwin Fielt Julián Domínguez Noel Barry Curtis L. Sippel
Turmelle Kijl Olivier Glassey Laperal Marco W J Vishwanath Abdul Razak
Anders Sundelin Chris Finlay Francisco Conde Derksen Edavayyanamat Manaf George B.
Renata Phillippi Philippe Rousselot Fernández Dr. Karsten h Rob Manson Steltman Karl
Martin Kaczynski Rob Schokker Valérie Chanal Willrodt Patrick Rafael Burrow
Frank Wouter Verwer Anne McCrossan Feiner Figueiredo Mark McKeever
Bala Vaddi Jan Larsen Dave Jeroen Mulder Linda Bryant
Andrew Jenkins Schmiedgen Fred Cutherell Emilio De Giacomo Jeroen
Dariush Ghatan Ugo Merkli Collopy Jana Di Prisco Franco Gasperoni Hinfelaar Dan
Marcus Jelle Görs Patrick Darlene Michael Weiss Keldsen
Ambrosch Jens Dave Gray Foran Edward Goetzman Francisco Andrade Damien
Hoffmann Steve Rick le Roy Osborn Mohan Nadarajah Arturo Herrera Roger A.
Thomson Ravila White Greger Fabrice Delaye Sapunar Vincent de Shepherd Morten
Eduardo M Morgado David G Luna Hagström Sunil Malhotra Jong Povlsen Lars Zahl
Rafal Dudkowski Arellano Joyce Alberto Saavedra Jasper Bouwsma Kees Elin Mørch
António Lucena de Hostyn Thorwald Remco de Ouke Arts Groeneveld Langlo Xuemei
Faria Knut Petter Nor Westmaas Jason Kramer Lillian Alexander Troitzsch Henk Bohlander Tian Harry
Ventenat Vincent Theodor Thompson Brett Patching Sushil Chatterji Verwayen
Peter Eckrich Sandra Pickering Howard Brown Clifford Thompson Tim Parsey Riccardo Bonazzi
Shridhar Trond M Emil Ansarov Jorgen Dahlberg Georg E. A. André Johansen
Lolla Fflòvstegaard Frank Elbers Christoph Mühlethaler Stampfl Markus Colin Bush
Jens Larsson Jeaninne Horowitz Horacio Alvaro Ernest Buise Kreutzer Iwan Alexander
David Sibbet Gassol Lukas Feuerstein Viana Markus Alfonso Mireles Schneider Korbee J Bartels
Mihail Krikunov Nathalie Schroll Richard Michael Steven Ritchey
Edwin Kruis Magniez Giorgio Hylke Zeijlstra Zandink Schuster Ingrid Clark Golestani
Roberto Ortelli Pauletto Martijn Cheenu Fraunhofer IAO Beck Leslie Cohen
Shana Ferrigan Pater Srinivasan Cyril Tor Rolfsen Grønsund Antti Amanda Smith
Bourcier Jeffrey Gerardo Pagalday Durand David M. Weiss Äkräs EHJ Benjamin De
Murphy Eraña Haider Raza Jamil Aslam Kim Peiter Peet Ronald Pauw Andre
Lonnie Sanders III Ajay Ailawadhi Oliver Buecken Jørgensen Poulton Macieira Wiebe
Arnold Adriana Ieraci John Wesner Stephanie Diamond Ralf de Jager Raym
Wytenburg David Daniël Giesen Price Axel Friese Stefan Olsson Weidenhammer Crow
Hughes Paul Erik Dejonghe Gudmundur Kristjansson Anders Stølan Craig Rispin Mark Evans
Are you an entrepreneurial
spirit?
yes no

Are you constantly thinking about how to

create value and build new businesses, or
how to improve or transform your
organization?
yes no

Are you trying to find innovative

ways of doing business to
replace old, outdated ones?
yes no
If you’ve answered
“yes” to any of
these questions,
to our group!
welcome
You’re holding a handbook for visionaries, game
changers, and challengers striving to defy
outmoded business models and design
tomorrow’s enterprises. It’s a book for the
business model generation.
Today countless innovative business models
are emerging. Entirely new industries are
forming as old ones crumble. Upstarts are
challenging the old guard, some of whom
are struggling feverishly to reinvent
themselves.
How do you imagine your organization’s
business model might look two, five, or ten
years from now? Will you be among the
dominant players? Will you face competitors
brandishing formidable new business
models?
This book will give you deep insight into the nature of business But the scale and speed at which innovative business models are
models. It describes traditional and bleeding-edge models and their transforming industry landscapes today is unprecedented. For entre-
dynamics, innovation techniques, how to position your model within preneurs, executives, consultants, and academics, it is high time to
an intensely competitive landscape, and how to lead the redesign of understand the impact of this extraordinary evolution. Now is the
your own organi- zation’s business model. time to understand and to methodically address the challenge of
Certainly you’ve noticed that this is not the typical strategy or man- business model innovation.
agement book. We designed it to convey the essentials of what you Ultimately, business model innovation is about creating value, for
need to know, quickly, simply, and in a visual format. Examples are companies, customers, and society. It is about replacing outdated
presented pictorially and the content is complemented with exercises models. With its iPod digital media player and [Link] online store,
and workshop scenarios you can use immediately. Rather than writing Apple created an innovative new business model that transformed the
a conventional book about business model innovation, we’ve tried to company into the dominant force in online music. Skype brought us
design a practical guide for visionaries, game changers, and challengers dirt-cheap global calling rates and free Skype-to-Skype calls with an
eager to design or reinvent business models. We’ve also worked hard innovative business model built on so-called peer-to-peer technology. It
to create a beautiful book to enhance the pleasure of your is now the world’s largest carrier of international voice traffic. Zipcar
“consumption.” We hope you enjoy using it as much as we’ve enjoyed frees city dwell- ers from automobile ownership by offering hourly or
creating it. daily on-demand
An online community complements this book (and was integral to car rentals under a fee-based membership system. It’s a business
its creation, as you will discover later). Since business model model response to emerging user needs and pressing environmental
innovation is a rapidly evolving field, you may want to go beyond the concerns. Grameen Bank is helping alleviate poverty through an
essentials in Business Model Generation and discover new tools online. innovative business model that popularized microlending to the poor.
Please consider But how can we systematically invent, design, and implement
joining our worldwide community of business practitioners and these powerful new business models? How can we question,
research- ers who have co-created this book. On the Hub you can challenge, and transform old, outmoded ones? How can we turn
participate in discussions about business models, learn from others’ visionary ideas
insights, and try out new tools provided by the authors. Visit the into game-changing business models that challenge the
Business Model Hub at [Link]/hub. establishment—or rejuvenate it if we ourselves are the incumbents?
Business model innovation is hardly new. When the founders of Business Model Generation aims to give you the answers.
Diners Club introduced the credit card in 1950, they were practicing Since practicing is better than preaching, we adopted a new model
business model innovation. The same goes for Xerox, when it for writing this book. Four hundred and seventy members of the
introduced photo- copier leasing and the per-copy payment system in Business Model Innovation Hub contributed cases, examples, and
1959. In fact, we might trace business model innovation all the way critical com-
back to the fifteenth century, when Johannes Gutenberg sought ments to the manuscript—and we took their feedback to heart.
applications for the mechanical printing device he had invented. Read more about our experience in the final chapter of Business Model
Generation.
Seven Faces of The Senior Executive
Jean-Pierre Cuoni,
The Intrapreneur
Dagfinn Myhre,
The Entrepreneur
Mariëlle Sijgers,

Business Chairman / EFG International

Focus: Establish a new business
Head of R&I Business Models / Telenor
Focus: Help exploit the latest
Entrepreneur / CDEF Holding BV
Focus: Address unsatisfied customer

Model
model in an old industry techno- logical developments with needs and build new business
Jean-Pierre Cuoni is chairman the right business models models around them
of EFG International, a private Dagfinn leads a business model unit Marielle Sijgers is a full-fledged

Innovation bank
with what may be the industry’s
at Telenor, one of the world’s ten
larg- est mobile telephone
entrepreneur. Together with her
business partner, Ronald van den
most innovative business model. operators. The telecom sector Hoff, she’s shaking up the
With demands continuous innovation, and meeting, congress, and hospitality
EFG he is profoundly transforming Dagfinn’s initiatives help Telenor industry with innovative business
the traditional relationships between identify and understand sustainable models. Led by unsatisfied
bank, clients, and client relationship models that exploit the potential of customer needs, the pair has
managers. Envisioning, crafting, and the latest technological invented new concepts
executing an innovative business developments. Through deep such as [Link], which
model in a conservative industry analysis allows on-the-fly booking of
with established players is an art, of key industry trends, and by meetings in untraditional locations.
and develop- ing and using leading-edge Together, Sijgers and van den Hoff
one that has placed EFG analytical tools, Dagfinn’s team constantly play with new business
International among the fastest explores new business concepts and model ideas and launch the most
growing banks opportunities. promising concepts as new ventures.
in its sector.
The Investor The Consultant The Designer The Conscientious
Gert Steens, President & Investment Bas van Oosterhout, Senior Trish Papadakos, Entrepreneur Iqbal Quadir, Social
Analyst / Oblonski BV Consultant / Capgemini Consulting Sole Proprietor / The Institute of You Entrepreneur / Founder of Grameen
Focus: Invest in companies with the Focus: Help clients question their Focus: Find the right business Phone
most competitive business models business models, and envision model to launch an innovative Focus: Bring about positive social
Gert makes a living by identifying the and build new ones product Trish is a talented young and economic change through
best business models. Investing in Bas is part of Capgemini’s designer who is particularly skilled innovative business models
the wrong company with the wrong Business Innovation Team. at grasp- ing an idea’s essence Iqbal is constantly on the lookout
model could cost his clients millions Together with and weaving it for innovative business models
of euros and him his reputation. his clients, he is passionate about into client communications. Currently with the potential for profound
Understanding new and innovative boosting performance and renewing she’s working on one of her own social impact. His transformative
business models has become a competitiveness through innovation. ideas, a service that helps people model brought telephone service
crucial part of his work. He goes far Business Model Innovation is now a who are transitioning between to over 100 million Bangladeshis,
beyond the usual financial analytics core component of his work because careers. After weeks of in-depth utilizing
and compares business models to of its high relevance to client projects. research, she’s now tackling the Grameen Bank’s microcredit network.
spot strategic differences that may His aim is to inspire and assist design. Trish knows she’ll have to He is now searching for a new model
impart a competitive edge. Gert is clients with new business models, figure out the right business model for bringing affordable electricity to

constantly seeking business model from ideation to implementation. To to bring her service to market. She the poor. As the head of MIT’s

innovations. achieve this, Bas draws on his understands the client-facing part— Legatum Center, he promotes

understanding of the most powerful that’s what she works on daily as a technological empowerment through

business models, regardless of designer. But, since she lacks for- innovative businesses as a path to

industry. mal business education, she needs economic and social development.
the vocabulary and tools to take on
the big picture.
 Design

Table of Contents
The book is divided into five sections: 1 The
Pattern
Busi- ness Model Canvas, a tool for describing,
analyzing, and designing business models, 2
s
Business Model Patterns, based on concepts from Canvas
leading business thinkers, 3 Techniques to help Strateg
you design business models, 4 Re-interpreting
strategy through the business model lens, and 5 y
A generic process to help you design innovative
business models, tying together all the concepts,
techniques, and tools in Business Model
Generation. }The last section offers an outlook on Afterwor
d
five business model topics for future exploration.
Finally, the afterword provides a
peek into “the making of” Business Model
Outlook
Proces
Generation.
s
1 Canvas 2 Patterns 3 Design 4 Strategy 5 Process
14 Definition of a 56 Unbundling Business 126 Customer Insights 200 Business Model 244 Business Model
Business
Model Models 134 Ideation Environment Design Process
16 The 9 Building 66 The Long Tail 212 Evaluating Business ◆ Outlook
Blocks 146 Visual Thinking Models
4 4 The Business Model 76 Multi-Sided 262 Outlook
Canvas Platforms 160 Prototyping 226 Business Model
88 FREEas a Business Model Perspective on Afterword
170 Storytelling Blue Ocean
108 Open Business Models Strategy 274 Where did this book
180 Scenarios 232 Managing Multiple
come from?
Business Models
276 References