Generation

President Barack Obama once said, “All across the world…increasingly dangerous weather patterns and devastating storms are abruptly putting an end to the long-running debate over whether or not climate change is real. Not only is it real, it’s here, and its effects are giving rise to a frighteningly new global phenomenon: the man-made natural disaster. ” The President’s words make it clear that climate change is a great challenge which must be faced, and soon. However, it is not the government’s job alone to deal with this crisis. Stopping climate change will be my generation’s greatest challenge.

One of the reasons why climate change is such a formidable obstacle is that the needed change will come slowly. One image that comes to mind is a frog dropped into a pan of scalding water. Of course, the frog will reflexively leap away from the danger. However, if the frog is immersed in lukewarm water, and the water is slowly brought to a boil, the frog will remain and will suffer a serious penalty. My generation is the frog, and “the man-made natural disaster” is the boiling water. The inertia of the past cannot be overcome in a short time. Consequently, the drastic changes needed to combat climate change will not be effected quickly.

However, time is of the essence. Society’s prompt reformation of environmentally destructive habits must be the goal if my generation wishes to subdue this serious threat. To deal with this vast challenge, education as well as reeducation must be made priorities. Not only must scientific knowledge about climate change be made readily available to young people, but the desire for improvement must be instilled in them. As harsh as it may seem, teachers need to constantly remind their students of the worldwide destruction that will ensue should young people fail to act proactively.

Likewise, reeducation must provide a jolt to the older generation, shocking it out of its passive stupor and igniting passion for change. Finally, motivation will play a key role in stopping climate change. Nothing will happen if no one takes action. Balancing the welfare of the earth with personal desires is mandatory. If people ultimately decide to place their comfort above the health of the planet, it would be akin to an act of war against humanity. Thankfully, climate change can be dealt with if everyone takes small, easy steps against it.

This is of paramount importance. Because the earth is the foundation of all man’s success, life without a healthy earth would not be worth living. The greatest test my generation will face is the challenge of stopping climate change. While success may not come quickly or easily, resignation to the imminent prospect of global catastrophe is to abdicate all bonds to our fellow man. Although the world may already have gone a distance down the path to destruction by climate change, there is still hope if everyone takes personal responsibility for the protection of the planet.

Road to Hell 1. The Summary. The case “Road to Hell” by Gareth Evans is a story of two characters with different backgrounds, personalities and points of view and how these two characters interact. John Baker is a successful western chief engineer of the Barracania’s branch of a multinational company who was promoted to production manager of Keso Mining Corporation near Winnipeg. That’s why he had to assign his successor. Baker has been working to prepare Matt Rennalls to be his successor in the chief engineer’s position.

Rennalls, on the other hand, is a young engineer who represents the new generation of patriotic, well-educated Barracania’s professionals. The last meeting between two characters ended up badly. Instead of accepting the chief engineer position, Matt turns in his resignation, insulted by John’s interview. 2. The Problem. This case is the example of how people from different cultures do not take diversity into consideration.

They evaluate and measure each other by their own scales and perceptions, which often lead to serious misunderstanding and conflicts. Misunderstanding causes worse work productivity. 3. The Cast of Characters. John Baker is a successful western chief engineer of the Barracania’s branch of a multinational company. In the case it is mentioned that John Baker is an English expatriate, so we assume that he is white, possibly born in Canada.

Baker thinks he has an edge in working in a foreign country because he has experience in understanding a regional staff’s psychology and knowing exactly how to get along with locals. Matthew Rennalls is a young engineer who represents the new generation of patriotic, well-educated Barracania’s professionals. His four years as a student at London University made him especially sensitive to political, racial and equality issues involving relations between his culture and western influence. 4. The Chronology. Matthew Rennals writes an angry latter with proposal of his resignation. * John Baker and Matthew Rennals have the interview. * John Baker consider the appointment Matthew Rennals as his successor * John Baker is promoted to production manager of Keso Mining Corporation near Winnipeg * John Baker works as chief engineer of the Caribbean Bauxite Company of Barracam’a in the West Indies 5. The Issues. The main barrier to the problem solving is misunderstanding between people with different nationalities and cultures.

Baker knew a lot about Matt’s political views, racial issues sensitivity and intolerance to any discrimination of value of his country and people in the world arena. However, he still made a mistake building his interview from his own perspective. Baker gave some historical and personal suggestions that were not meant to be offensive. However, from Matt’s point of view, the suggestions were totally inappropriate. Through the interview, Baker emphasized several times the importance and leading position of European staff in the company.

The generation gap is the different generations have different views of the same thing with different ideal. Different environments to create different people and different circumstances produce different thoughts. The emergence of the generation gap in a family is the responsibility of parents and children,parents often complain that children now too do not respect their parents; the children also complain that their parents do not understand children, making the original and the happy family have strife.

It contrary to the point of view for the parents, children have their new insights and cause different thinking ideas, behaviors, habits according to their parents. Parents and children have different psychological characteristics. Children have ideals and aspirations, vision of a better future, thinking broad, have flexible response, creative spirit, fast to accept new things, strong ability of adapting to the new environment and prefer independent thinking.

There has strong sense of innovation, ingenuity, courage to break the stereotypes. However, the lack of social experiences their ideas easily extreme and deal with the problem is not calm. Parents were already undergoing many things, mature wisdom, character, maturity, and in interpersonal communication has a lot of experience. Parents see deep and thorough problem, but sometimes because of traditional attitudes, bondage of feudal ideology, ideological and stubborn, conservative, and so on.

Besides that,the authoritative ideological heavier of some parents, assertive, requires children to unconditionally obey, so the children will be dissatisfied. For example, there is abundant energy of the younger generation, and competition, innovation, independent, unwilling to be controlled by others, giving a “bold and unconstrained” impression. In this regard, the older parents are not understood; feel that children had too much wind. Such deviation is bound on the understanding of direct impact to the attitudes and behavior of both sides, and both sides of the generation gap.

If you both can do a role change, play the role of your opponent, to experience each others emotions, it’s good to change their views, to facilitate exchanges. In this society, the generation gap is a universal phenomenon, it hinders the thoughts, feelings and daily exchanges between parents and children and communication. If the children cannot accept the arrangement of the parents, the children also must be respect their parents, trying to communicate with them, talk with them to explain their ideas like this, sometimes parents and children are also able to reach a consensus.

The common perception of teenagers today is soiled by images of alcohol, drugs, hoodies, crime, disobedience, violence and unintelligence. Most teenagers would counter this with outrage and blame these demeaning interpretations on a small minority and stereotyping in the media; but I am here to say that we bring it upon ourselves to have such a reputation.

I wish I could say I was proud of my generation, but let’s face it: the media aren’t far wrong.

Having been amongst it for many years now, I can safely say that we are a generation of deadbeat, attention seeking, conformist, moaners. Thriving from a lack of discipline, we spend our days free of any common manner: loitering around in a constant sulk, yawning without covering our mouths, wearing caps indoors as if it’s perfectly acceptable.

A rare occasion: when “please” and “thank you” is used in an exchange, when a smile is seen to disprove any hostility, or when vocal responses outside of a pathetic mumble are explored. That’ll be the day.

These are all rules which would appear obvious to the older generation, however in my generation, they are disregarded and branded as old-fashioned. “Who needs standards anyway? Get with the times, I’m not hurting anyone!” we plea, as an excuse to act like slobs and walk around in vests eating pasties in the streets before throwing the wrapping on the floor and wiping our hands on our thighs.

Not only is there a decline in manner, but there is a decline in language. It pains me to watch the Americanisation of British English slowly materialise, and this is more prominent than ever amongst teenagers.

Every sentence is littered with the word “like”, and words such as “whatever” and “dunno” are common responses. Swearing and slang is used to show some sort of rebellion against manner or social inclusion amongst friends… or should I say “mates”. And now – with the increased reliance on mobile phones – text speak is diseasing the English language with its pointless abbreviations. TBH, IDK what’s wrong with speaking properly.

Another embarrassing element of teenage culture is the underage consumption of alcohol, which is now a growing problem amongst teenagers. Flashback 20 years ago and teenagers would be lucky to have a sip of eggnog during Christmas; now, we’re out “on the lash” almost every weekend.

Going out with the general motive of “having a laugh”, stumbling past careless doormen into dingy clubs, awkwardly mingling with people twice their age, and eventually passing out at 4AM without any care or dignity about them and a little nudge towards liver disease.

But why is there the need to drink underage? The fact is that as teenagers, we are resistant to accept our adolescence, we all strive for maturity, all we want is to fit in with the grown-ups. We try and convert our undeveloped minds to fit that of an adult’s by indulging in such substances as coffee, alcohol and maybe (for the extra-mature kids) drugs. We buy lottery tickets the second we turn 16, learn to drive the second we turn 17, and get plastered the second we turn 18. Oh, how mature.

While the teenagers race towards maturity, the parents try their hands at being young and hip just once, and are slated beyond belief. We speedily climb the ladder of maturity, whilst our parents wait at the top fuelling us with food, money and too much damn freedom.

Aside from acting mature, teenagers have other means of flaunting their independence, such as fashion. A teenager’s sense of fashion is something which often confuses the older generation, and no wonder. Teenagers are now walking around with gaping holes in their ear lobes, absurd hair colours and pieces of metal skewered through their face, it’s like we’ve regressed to the days of the freak show.

The reason for this is that we see fashion as a way of self-expression, it’s a contest to see who can have the most unique look, and this often leads to a rather outlandish outcome. However, this is no excuse for wearing sunglasses and caps indoors or girls caking their faces in make-up and wearing revealing outfits. The current state of fashion is a gargantuan mess: people trying to stand out and people trying to fit in with those who stand out; that is the general idea. And the result: a cacophony of cries for attention.

Something that is corresponding amidst most teenagers is the constant need to complain, it’s almost as if we enjoy it. Even if we were living the perfect life, we’d probably whine about how it’s “too perfect”. Facebook is used as a platform for voicing such dire grievances as “EASTENDERS CANSELLD 4 THA FOOTIE! OMG!” or “ME MAM BURNT ME CHIKEN NUGETS!” – freedom of speech at its best.

Money is an aspect which often spurs complaints: we complain about our lack of money, so we get a job and complain about how bad that is, then we earn money and spend it on trivial things. Then the cycle repeats, over and over and over.

Maybe there’s nothing wrong with us complaining, I mean, it’s not like there are people worse off or anything.

It’s not easy wielding such a pretentious outlook at my age, it’s a constant struggle, withstanding the strain of influence inflicted by fellow teenagers. Alas, few are those who choose a country walk over a pub crawl, Tchaikovsky over Tupac, broadsheets over booze. “Stuff the rules, we just wanna have fun!” Will a game of chess and some homemade shortbread entice you? Thought not.

Both Remarque’s “All Quiet on the Western Front” and Hemingway’s “The Sun Also Rises” relate to the theme of hopelessness during the lost generation. Remarque’s story is set during the war from a younger German soldier, Paul, through him the suffering and difficulties are presented as fruitless and with out a main goal to look forward to when they return home. Throughout the military travels of the younger soldiers like Paul, Remarque’s view on wars disadvantages on people are clearly stated through the eyes of Paul.

Towards the end of his life, he grows happy to die and is glad to pass away from all the pain emotionally and physically he and his comrades had to endure during the battle. Carrying on through the book is the sense of empty hopelessness that nothing will become good and there is nothing to look forward to after their arrival home. On the other side, Hemingway’s older veteran characters, Jake and Brett, play the role of two empty people who are looking for direction in life after the devastating war.

Jake however becomes a redeemable character through his journey to overcome his psychological and physical damage from the war and gains sympathy. However Brett does not earn any more respect or accomplishes any growth in overcoming her war wounds. This takes its own path in the end when Jake moves on from Brett’s taunting attitudes and starts to gain his balance in life again. Hemingway’s hopelessness is conveyed more positively than Remarque’s critical outlook on war. Throughout both book the characters struggle with their emotional difficulties to stay attuned to their prewar lives and struggle with hope for the future.

However Hemingway takes the path of a more positive ending while Remarque creates a happy doom for his brave, suffering characters. There are many parallels between the characters in each book enough though the themes and perspectives are entirely different. The main point serves the same purpose, whereas the lost generation was hopeless unless they rarely saw a glimpse of the future after recovery. The tone of the overall book has an almost empty and predictable attitude about it, the men have no hope for themselves, and they do not convey a sense of need to get home or to survive but merely to continue to take orders until the end.

The hopelessness conveyed by the characters in “All Quiet on the Western Front” is the kind of hopelessness when you know you cannot personally change the outcome of your fate knowing the future results in death. Most of the reality of the brutal war is exposed through battles or bluntly stated by another distraught soldier. A sense of urgency is not present when knowing that at any moment a comrade could be returning with “screams of intolerable pain. [Knowing] every day that he can live will be howling [with] torture” (72).

The lack of urgency communicates that death is a causal event during war and the witnesses are used to the terrible sight of mangled or dead bodies. Some even accept that they will one day become like those they see in pain and fear life over death. “Every face can be read” on the appearance of each soldier who knows they are subject to the “embrace” of “the front” (53). Faces can easily be read because the same fate awaits all the soldiers, death and no hope. The characters see no future and are trudging along in an empty cycle.

The circle is completed with unfilled desires to keep living when the discovery of Paul with “his face [of calm expression] as though almost glad the end had come” establishes that he was happy to leave pain, suffering and damaged forthcoming opportunities to a peaceful afterlife (296). The lost generation shared a “common fate [which] ruined [them] for everything” upcoming in the future to better their lives such as a family or a job offer as mentioned by various characters but created disappointment at the realization their dreams would not come true.

This contributed to the plummeting feelings the lost generation carried with them. Hemingway disguises his characters want for redemption and amount of hopelessness they feel. The book has a more up beat consistency than “All Quiet on the Western Front” and more is said in what the Jake is not saying than what he and Brett bluntly state. Brett cannot be with Jake because she would “tromper” or commit adultery since Jake cannot satisfy her needs sexually (62). Instead Jake secretively takes a prostitute out to dinner but ends up dumping her on his friends while he leaves with Brett.

Jake did not sleep with the prostitute, Georgette, because he felt ashamed and helpless about his physical injury from the war. He does not feel man enough to sleep with a prostitute, he feels discouraged about his future plans and ability to gain happiness as part of the lost generation. To fill the void opened from war, Jake, Brett and their comrades drink to escape their persisting troubles and pains. Jake has a miserable life and to make it better he finds it easier to get drunk and not fix his problems. “ ‘Don’t get drunk, Jake,’ she [Brett] said. ‘You don’t have to. ’… ‘Don’t,’ she said. You’ll be alright. ’” Brett reassures Jake (245). The pain and emptiness ceases with alcohol and distracts from the wars wounds. Contrasting to Paul and the other lost generation soldiers in “All Quiet on the Western Front”, Jake proves he is able to redeem himself and looks to the future. Jake uses religion as a parallel to his emotional stability. When starting out Jake was not religious and just went through the movements of going to church and “being a good Catholic”, however as he progresses he finds that he should care more about religion and has a want to be more involved.

The parallel of him wanting to be more involved is when he breaks away from Brett and starts off new; and for the first time believes in his future after he returned from the war. Jake’s break through occurred when he “stoop up, gripped with [his] toes on the edge of the raft as it tipped with [his] weight, and dove cleanly and deeply, to come up through the lightening water, blew the salt water out of [his] head, and swam slowly and steadily to shore” (242). As Jake comes out of the water, he symbolizes a baptism and the rebirth of himself into a more understanding and less negative man.

Along with becoming less frightened of the future Jake was able to let go of Brett and her ability to draw men in. He finally cleansed himself of her and his past troubles and looks to days ahead. Rarely does Jake interact with a genuine character, more often does he associates with deceptive, greedy, manipulative or mean people of the lost generation. The main character that is sympathetic is Jake, he battles the most with his physical injury and because of that, Brett puts him through emotional misery.

Even as Brett “kissed [Jake he] could tell she was thinking of something else” and finally understood that she just used him for her own personal benefit (245). After his “baptism” Jake was close to moving on from Brett and almost did until she pulled him back in again. The fact that Brett is thinking about someone else is the last straw for Jake and he is done with her. From this kiss on, Jake is cold and a little immature towards Brett. This signifies his final connection with her emotionally and he takes steps to begin a new life. Brett consciously talks bout her other men with Jake while she knows how he feels about her. She almost flaunts them in front of Jake by complimenting them saying “he’s my sort of thing” (247). Brett is attracted to the bad boys who show her attention but aren’t controlling. She disregards Jake as a candidate for her commitment and love since he cannot satisfy her sexually; she only uses him emotionally then ditches him when a better offer comes along. She is aware she cannot be with him and it hurts him to see her go off with men, however she does nothing to change this.

She even goes as far as to bring the men over to Jake’s place to have a drink. Because of her blatant disrespect for anyone but herself she is not a redeemable character and no sympathy is given to her. Jake is the only character that deserves sympathy while Brett does not even deserve respect from Jake. Similar to sympathy, Jake becomes a redeemable character towards the end of his journey with Brett after the war. He clearly stands opposed to Brett who is neither sympathetic nor redeemable. During Jake’s baptism and revelation, he proves to want to redeem himself, if not to others at least to himself.

He is aware that he is not the most religious man but tries to convince himself otherwise to morally feel better. Jake is Catholic and by the end of the book becomes more religious and understands the meaning of religion rather than just going through the motions at church. He values the importance of God when Brett states she does not really care for him or religion since it’s a waste of her time. Jake at least holds on to that the whole book and increases his religious activities and symbolism towards the end. Not only does Jake morally and mentally redeem himself but he also redeems his time wasted on Brett.

One of their last interactions Jake unmistakably communicates his annoyance and irritation with Brett, “ ‘You like to eat, don’t you? ’ she said. ‘Yes,’ I said. ‘I like to do a lot of things. ’ “ (250). Jake becomes fed up with Brett’s constant lack of acknowledgement that he is always there for her and not some one to use when her love life is not thriving. He grows tired of constant games and realizes there is nothing left for them together. After more small talk is exchanged between the two, Jake is ready to let her go for good and finally gains enough confidence that everything will be okay with out Brett.

Brett tries to make herself sound more appealing to Jake by explaining, “it makes one feel rather good deciding not to be a bitch” (249). Other than making the decision to not be a bitch, Brett makes no other attempt to redeem herself or acknowledge that she played with Jake’s feelings and ruined part of his life for holding on to him for such a long time. She cannot get over her self absorption to realize she messes with men for her own benefit whether it be money or sex, and doesn’t care who she hurts along the way, mainly Jake. There is no evidence that she is a redeemable, sympathetic or a caring character.

Although she has issues because she, too, is considered the lost generation, that does not give her the right to act above everyone else and hurt Jake. Jake also traumatized by the war does not use women to make Brett jealous or ever hurts her. He is always there when he is needed to support her dramatic lifestyle. Brett has no compassion for anyone but herself therefore making her unredeemable and Jake redeemable. Although each stories have their differences in almost all aspects there is one overall main point: the lost generation was hopeless and it was a difficult time for those people.

Each book expresses the same bigger picture but is differently executed. Jake’s tone which represents the overall feel of the book communicates the idea of a ghostly and missing man looking for a happier path in life to escape his sadness and pain. He rarely finds little pleasures and mostly describes scenes as dark or dark imagery, only a few times is light mentioned when redemption or renewal of a character is occurring. Paul’s description of the war gives off a more pessimistic tone as he always comes back to the idea that the lost generation has nothing to return to at home.

However he finds simple pleasures more enjoyable and tries to make the most of them. Both characters portray a sense of despair and loss of direction in life but differently executed. Hemingway chooses to exhibit his characters as striving to change their lives while Remarque’s turns negatively towards death and meaninglessness. Hemingway does not refer to the war but instead barely mentions it or Jake will see military like actions between people symbolizing the war and the lost generation.

The fact that Hemingway does not mention the war, yet the book is about war, further proves that in Hemingway’s writing, what is not being said is more important. The tone is important to both novels to relay the same message but entirely different outcomes and themes. The lost generation was a sad hopeless group of veterans who, if not killed, had to aimlessly go through life feeling like there was no purpose or they didn’t belong. Hemingway and Remarque’s classic novels illustrate the hard times during and after the war and the many similarities that are present.

Spontaneous Generation and Cell Theory 1. Tradition thought is very hard to overcome- even with solid evidence to support new ideas * Social pressure has effect on acceptance of scientific ideas and technological advancements * Science is a social/political enterprise * New ideas often met with resistance * Sometimes ostracisms, persecution, death * Microscope helped to overturn some strange ideas * Disease processes * “spontaneous generation” Attitudes and skills of scientific inquiry (questioning, predicting, observing and recording) are required to provide unbiased and factual info * Investigations must follow ethical guidelines and results must be reproducible under controlled conditions * Example of way that science, technology and society are linked is found in development of the current understanding of the way living cells function * Microscope provided technology to explore the world of microscopic particles and organisms * Then possible to obtain evidence for or against generally accepted opinions or theories about living things

Spontaneous Generation 2. Believed that life can emerge from non-living matter 3. A superstition- people unaware of microscopic forms of life * e. g. mice created from mixing wheat husks with sweaty undergarments * Maggots and flies emerge spontaneously from raw meat * Francesco Redi * Example of scientific method * Believed flies laid eggs on meat * Experiment to prove hypothesis Limited access to meat (air, no fresh air, flies, no flies) 4. Idea that life could emerge spontaneously from non-living matter = widely accepted from time of the Romans through to the 19th century * Even in time of Robert Hooke and Antoni van Leeuwenhoek * Believed that to produce mice, you put a sweaty underwear and husks of wheat in an open jar and after 21 days, the sweat and husks would combine and change the husks into mice 5. 668, Francesco Redi (Italian physician and poet) questioned belief that maggots appeared from raw meat * He believed that flies laid their eggs in the meat * Set up experiment to test his hypothesis * Set out flasks containing raw meat but some were sealed, some were covered in gauze and some were open to the air * Controlled the access of flies to the meat * Maggots were found only in the flasks that were open and accessible to flies to lay their eggs * Despite evidence, idea of spontaneous generation still thrived 6.

John Needham (proving that living things could be produced from non-living matter) boiled chicken broth and put it in a flask and sealed it * Everyone accepted that boiling killed micro-organisms since boiling was a common method of removing substances that would make one ill * However, in his experiment, micro-organisms continued to appear * Suggested that there was a life force that produced spontaneous generation 7.

Lazzaro Spallanzani (Italian priest) claimed that there were micro-organisms in the air that were responsible for the new growth * Re-did Needham’s experiment but drew off the air in the flask, nothing grew in the remaining broth * Critics suggested that all Spallanzani had shown was that air was required for spontaneous generation to occur * Spontaneous generation theory continued to be accepted 8. 859, French Academy of Sciences announced a contest for the best experiment to prove or disprove spontaneous generation * Louis Pasteur used the work of Needham and Spallanzani with important change * Before boiling meat broth in flask, Pasteur heated the neck of the flask and bent it into an “S” shape * Air could reach the broth but micro-organisms and other particles would get caught in the S- bend * Nothing grew in this broth but if the flask were tipped so that the broth reached the S-bend in the neck, moulds would later appear 9.

Pasteur controlled his experiment in that he used the same broth, same type of flasks and same light and temperature conditions * Controlled variables (conditions that are held constant throughout an experiment): broth type, flasks type, light, temperature * Manipulated ariable (condition deliberately changed in an experiment): access of dust to the flask * Responding variable (condition that changes in response to the manipulated variable in an experiment): ability to grow mould in the broth * Had experimental control, a part of the experiment which the manipulated variable is not changed in any way from its normal condition * Flask in which dust had normal access to the broth after boiling * Result: moulds occurred * Experiment treatment Prevent the access of dust to the broth, resulting in evidence of no growth of mould * To allow access of dust to the broth very briefly, resulting in evidence of mould growth * Strong evidence that says that spontaneous generation doesn’t occur, but also that micro-organisms are found in the air * His work opened new doors to microbiology, immunology, biochemistry and gave credibility and new importance to the processes of conducting controlled experiments, maintaining detailed records of observations, and connecting results to conclusions

The Cell Theory 10. Importance of cell as the functional unit of life was recognized with the improvements in lens technology and increased number of observations made by scientists in several countries 11. 1833, Robert Brown identified an important cell structure, the nucleus, in study of orchids * Saw an opaque granular spot within the cell * Others had seen it too but he was the first to recognize at this cell structure must have something for cell function 12. 1838, M. J.

Schleiden observed that all plants were composed of cells and he proposed that the nucleus was the structure responsible for the development of the remainder of the cell * Discussed his work with a friend (Theodor Schwann), who was studying animal physiology * Schwann believed that there must be similarities btwn plant and animal tissue * When Schwann searched for opaque spots in animal tissue, he found structures that resembled the cells that botanists were studying in plant tissue and the nucleus structure that Brown and Schleiden had identified 13. 839, Schleiden and Schwann proposed the cell theory as a result of observations of plant and animal specimens through the microscopes * All plants and animals were composed of cells and that the cell was the basic unit of all organisms 14. 1859, cell theory was further extended by Rudolf Virchow’s statement that all cells arise only from pre-existing cells Cell Theory 15. All living things are made up of one of more cells and the materials produced by these cells 16. All life functions take place in cells, making them the smallest unit of life 17.

All cells are produced from pre-existing cells through the process of cell division 18. Applies to all living things regardless of size, shape or number of cells involved * Subcellular particles (viruses and prions) fall into category that is neither living nor non-living although they may exhibit certain characteristics of living cells 19. Evidence in support of cell theory came from Pasteur’s experiment to investigate the concept of spontaneous generation in micro-organisms * Cell theory has become the cornerstone of the study of biology

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 designed by Alan Smith, The Movement An amazing crowd of 470 practitioners from 45 countries Business Model Generation A Handbook for Visionaries, Game Changers, and Challengers 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-created by an amazing crowd of 470 practitioners from 45 countries

Co-created by: Ellen Di Resta Michael Anton Dila Remko Vochteloo Victor Lombardi Jeremy Hayes Alf Rehn Jeff De Cagna Andrea Mason Jan Ondrus Simon Evenblij Chris Walters Caspar van Rijnbach benmlih Rodrigo Miranda Saul Kaplan Lars Geisel Simon Scott Dimitri Levita Johan vnrneblad Craig Sadler Praveen Singh Livia Labate Kristian Salvesen Daniel Egger Diogo Carmo Marcel Ott Guilhem Bertholet Thibault Estier Stephane Rey Chris Peasner Jonathan Lin Cesar Picos Florian Armando Maldonado Eduardo Miguez Anouar Hamidouche Francisco Perez Nicky Smyth Bob Dunn Carlo Arioli

Matthew Milan Ralf Beuker Sander Smit Norbert Herman Atanas Zaprianov Linus Malmberg Deborah Mills-Scofield Peter Knol Jess McMullin Marianela Ledezma Ray Guyot Martin Andres Giorgetti Geert van Vlijmen Rasmus Ronholt Tim Clark Richard Bell Erwin Blom Frederic Sidler John LM Kiggundu Robert Elm Ziv Baida Andra Larin-van der Pijl Eirik V Johnsen Boris Fritscher Mike Lachapelle Albert Meige Pablo M. Ramirez Jean-Loup Colin Pons Vacherand Guillermo Jose Aguilar Adriel Haeni Lukas Prochazka Kim Korn Abdullah Nadeem Rory O’Connor Hubert de Cande Frans Wittenberg Jonas Lindelof Gordon Gray

Karen Hembrough Ronald Pilot Yves Claude Aubert Wim Saly Woutergort Fanco Ivan Santos Negrelli Amee Shah Lars Martensson Kevin Donaldson JD Stein Ralf de Graaf Lars Norrman Sergey Trikhachev Thomas Alfred Herman Bert Spangenberg Robert van Kooten Hans Suter Wolf Schumacher Bill Welter Michele Leidi Asim J. Ranjha Peter Troxler Ola Dagberg Wouter van der Burg Artur Schmidt Slabber Peter Jones Sebastian Ullrich Andrew Pope Fredrik Eliasson Bruce MacVarish Goran Hagert Markus Gander Marc Castricum Nicholas K. Niemann Christian Labezin Claudio D’Ipolitto Aurel Hosennen Adrian Zaugg

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Manuel Toscano John Sutherland Remo Knops Juan Marquez Chris Hopf Marc Faeh Urquhart Wood Lise Tormod Curtis L. Sippel Abdul Razak Manaf George B. Steltman Karl Burrow Mark McKeever Linda Bryant Jeroen Hinfelaar Dan Keldsen Damien Roger A. Shepherd Morten Povlsen Lars Zahl Elin Morch Langlo Xuemei Tian Harry Verwayen Riccardo Bonazzi Andre Johansen Colin Bush Alexander Korbee J Bartels Steven Ritchey Clark Golestani Leslie Cohen Amanda Smith Benjamin De Pauw Andre Macieira Wiebe de Jager Raym Crow Mark Evans DM Susan Schaper Are you an entrepreneurial spirit? es _______ 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, welcome to our group! 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. Design Table of Contents

The book is divided into five sections: 1 The Business Model Canvas, a tool for describing, analyzing, and designing business models, 2 Business Model Patterns, based on concepts from leading business thinkers, 3 techniques to help you design business models, 4 re-interpreting strategy through the business model lens, and 5 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 five business model topics for future exploration.

Finally, the afterword provides a peek into “the making of” Business Model Generation. Afterword Patterns Canvas Strategy outlook Process 1 Canvas Definition of a Business Model 9 Building Blocks The Business Model Canvas 2 Patterns Unbundling Business Models The Long Tail 3 Design 4 Strategy Environment 5 Process Design Process 14 56 126 Customer Insights 134 Ideation 200 Business Model 244 Business Model 16 44 66 76 88 212 Evaluating Business 146 Visual Thinking } Models 226 Business Model Outlook Multi-Sided Platforms 160 Prototyping 262 Outlook FREE as a Business Model 70 Storytelling 180 Scenarios Perspective on Blue Ocean Strategy 232 Managing Multiple Afterword 274 Where did this book 108 Open Business Models Business Models come from? 276 References } 14 Def_Business Model A business model describes the rationale of how an organization creates, delivers, and captures value 15 } The starting point for any good discussion, meeting, or workshop on business model innovation should be a shared understanding of what a business model actually is. We need a business model concept that everybody understands: one that facilitates description and discussion.

We need to start from the same point and talk about the same thing. The challenge is that the concept must be simple, relevant, and intuitively understandable, while not oversimplifying the complexities of how enterprises function. In the following pages we o? er a concept that allows you to describe and think through the business model of your organization, your competitors, or any other enterprise. This concept has been applied and tested around the world and is already used in organizations such as IBM, Ericsson, Deloitte, the Public Works and Government Services of Canada, and many more.

This concept can become a shared language that allows you to easily describe and manipulate business models to create new strategic alternatives. Without such a shared language it is di? icult to systematically challenge assumptions about one’s business model and innovate successfully. We believe a business model can best be described through nine basic building blocks that show the logic of how a company intends to make money. The nine blocks cover the four main areas of a business: customers, o? er, infrastructure, and financial viability.

The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems. [ The 9 Building Blocks 1 Customer CS VP 2 CH 3 CR 4 Segments Value Propositions It seeks to solve customer problems and satisfy customer needs with value propositions. Channels Value propositions are delivered to customers through communication, distribution, and sales Channels. Customer Relationships Customer relationships are established and maintained with each Customer Segment. An organization serves one or several Customer Segments. 7 } R$ 5 KR 6 KA 7 KP 8 C$ 9 Revenue Streams Revenue streams result from value propositions successfully o? ered to customers. Key Resources Key resources are the assets required to o? er and deliver the previously described elements… Key Activities …by performing a number of Key Activities. Key Partnerships Some activities are outsourced and some resources are acquired outside the enterprise. Cost Structure The result in the cost structure. } 18 Key Activities KA Key Partners KP Key Resources KR Cost Structure C$ CR 19 Customer Relationships CS Customer Segments VP Value Propositions CH Channels R$ Revenue Streams CS 20 } 1 Customer Segments The Customer Segments Building Block defines the di? erent groups of people or organizations an enterprise aims to reach and serve Customers comprise the heart of any business model. Without (profitable) customers, no company can survive for long. In order to better satisfy customers, a company may group them into distinct segments with common needs, common behaviors, or other attributes. A business model may define one or several large or small Customer Segments.

An organization must make a conscious decision about which segments to serve and which segments to ignore. Once this decision is made, a business model can be carefully designed around a strong understanding of specific customer needs. Customer groups represent separate segments if: • Their needs require and justify a distinct o? er • They are reached through di? erent Distribution Channels • They require di? erent types of relationships • They have substantially di? erent profitabilities • They are willing to pay for di? erent aspects of the o? er

For whom are we creating value? Who are our most important customers? Diversified An organization with a diversified customer business model serves two unrelated Customer Segments with very di? erent needs and problems. For example, There are di? erent types of Customer Segments. Here are some examples: Segmented Mass market Business models focused on mass markets don’t distinguish between di? erent Customer Segments. The Value Propositions, Distribution Channels, and Customer Relationships all focus on one large group of customers with broadly similar needs and problems.

This type of business model is often found in the consumer electronics sector. Niche market Business models targeting niche markets cater to specific, specialized Customer Segments. The Value Propositions, Distribution Channels, and Customer Relationships are all tailored to the specific requirements of a niche market. Such business models are often found in supplier-buyer relationships. For example, many car part manufacturers depend heavily on purchases from major automobile manufacturers. Some business models distinguish between market segments with slightly di? erent needs and problems.

The retail arm of a bank like Credit Suisse, for example, may distinguish between a large group of customers, each possessing assets of up to U. S. $100,000, and a smaller group of a? luent clients, each of whose net worth exceeds U. S. $500,000. Both segments have similar but varying needs and problems. This has implications for the other building blocks of Credit Suisse’s business model, such as the Value Proposition, Distribution Channels, Customer Relationships, and Revenue streams. Consider Micro Precision Systems, which specializes in providing outsourced micromechanical design and manufacturing solutions.

It serves three di? erent Customer Segments — the watch industry, the medical industry, and the industrial automation sector — and o? ers each slightly di? erent Value Propositions. Multi-sided platforms (or multi-sided markets) Some organizations serve two or more interdependent Customer Segments. A credit card company, for example, needs a large base of credit card holders and a large base of merchants who accept those credit cards. Similarly, an enterprise o? ering a free newspaper needs a large reader base to attract advertisers. On the other hand, it also needs advertisers to finance production and distribution.

Both segments are required to make the business model work (read more about multi-sided platforms on p. 76). in 2006 Amazon. com decided to diversify its retail business by selling “cloud computing” services: online storage space and on-demand server usage. Thus it started catering to a totally di? erent Customer Segment — Web companies — with a totally di? erent Value Proposition. The strategic rationale behind this diversification can be found in Amazon. com’s powerful IT infrastructure, which can be shared by its retail sales operations and the new cloud computing service unit. 1 } VP 22 } 2 Value Propositions The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment The Value Proposition is the reason why customers turn to one company over another. It solves a customer problem or satisfies a customer need. Each Value Proposition consists of a selected bundle of products and/or services that caters to the requirements of a specific Customer Segment. In this sense, the Value Proposition is an aggregation, or bundle, of benefits that a company o? ers customers.

Some Value Propositions may be innovative and represent a new or disruptive o? er. Others may be similar to existing market o? ers, but with added features and attributes. What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? Which customer needs are we satisfying? What bundles of products and services are we o? ering to each Customer Segment? 23 } A Value Proposition creates value for a Customer Segment through a distinct mix of elements catering to that segment’s needs. Values may be quantitative (e. g. rice, speed of service) or qualitative (e. g. design, customer experience). Elements from the following non-exhaustive list can contribute to customer value creation. Newness Some Value Propositions satisfy an entirely new set of needs that customers previously didn’t perceive because there was no similar o? ering. This is often, but not always, technology related. Cell phones, for instance, created a whole new industry around mobile telecommunication. On the other hand, products such as ethical investment funds have little to do with new technology.

Performance Improving product or service performance has traditionally been a common way to create value. The PC sector has traditionally relied on this factor by bringing more powerful machines to market. But improved performance has its limits. In recent years, for example, faster PCs, more disk storage space, and better graphics have failed to produce corresponding growth in customer demand. Customization Tailoring products and services to the specific needs of individual customers or Customer Segments creates value. In recent years, the concepts of mass customization and customer co-creation have gained importance.

This approach allows for customized products and services, while still taking advantage of economies of scale. } 2 24 “Getting the job done” Value can be created simply by helping a customer get certain jobs done. Rolls-Royce understands this very well: its airline customers rely entirely on RollsRoyce to manufacture and service their jet engines. This arrangement allows customers to focus on running their airlines. In return, the airlines pay Rolls- Royce a fee for every hour an engine runs. Design Design is an important but di? icult element to measure. A product may stand out because of superior design.

In the fashion and consumer electronics industries, design can be a particularly important part of the Value Proposition. Brand/status Customers may find value in the simple act of using and displaying a specific brand. Wearing a Rolex watch signifies wealth, for example. On the other end of the spectrum, skateboarders may wear the latest “underground” brands to show that they are “in. ” Price O? ering similar value at a lower price is a common way to satisfy the needs of price-sensitive Customer Segments. But low-price Value Propositions have important implications for the rest of a business model.

No frills airlines, such as Southwest, easyJet, and Ryanair have designed entire business models specifically to enable low cost air travel. Another example of a price-based Value Proposition can be seen in the Nano, a new car designed and manufactured by the Indian conglomerate Tata. Its surprisingly low price makes the automobile a? ordable to a whole new segment of the Indian population. Increasingly, free o? ers are starting to permeate various industries. Free o? ers range from free newspapers to free e-mail, free mobile phone services, and more (see p. 88 for more on FREE). 25 }

Cost reduction Helping customers reduce costs is an important way to create value. Salesforce. com, for example, sells a hosted Customer Relationship management (CRM) application. This relieves buyers from the expense and trouble of having to buy, install, and manage CRM software themselves. Risk reduction Customers value reducing the risks they incur when purchasing products or services. For a used car buyer, a one-year service guarantee reduces the risk of post-purchase breakdowns and repairs. A service-level guarantee partially reduces the risk undertaken by a purchaser of outsourced IT services.

Accessibility Making products and services available to customers who previously lacked access to them is another way to create value. This can result from business model innovation, new technologies, or a combination of both. NetJets, for instance, popularized the concept of fractional private jet ownership. Using an innovative business model, NetJets o? ers individuals and corporations access to private jets, a service previously una? ordable to most customers. Mutual funds provide another example of value creation through increased accessibility.

This innovative financial product made it possible even for those with modest wealth to build diversified investment portfolios. Convenience/usability Making things more convenient or easier to use can create substantial value. With iPod and iTunes, Apple o? ered customers unprecedented convenience searching, buying, downloading, and listening to digital music. It now dominates the market. CH 26 } 3 Channels The Channels Building Block describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition Communication, distribution, and sales Channels comprise a company’s interface with customers.

Channels are customer touch points that play an important role in the customer experience. Channels serve several functions, including: • Raising awareness among customers about a company’s products and services • Helping customers evaluate a company’s Value Proposition • Allowing customers to purchase specific products and services • Delivering a Value Proposition to customers • Providing post-purchase customer support Through which Channels do our Customer Segments want to be reached?

How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-e? icient? How are we integrating them with customer routines? Channels have five distinct phases. Each channel can cover some or all of these phases. We can distinguish between direct Channels and indirect ones, as well as between owned Channels and partner Channels. Finding the right mix of Channels to satisfy how customers want to be reached is crucial in bringing a Value Proposition to market.

An organization can choose between reaching its customers through its own Channels, through partner Channels, or through a mix of both. Owned Channels can be direct, such as an in-house sales force or a Web site, or they can be indirect, such as retail stores owned or operated by the organization. Partner Channels are indirect and p a whole range of options, such as wholesale distribution, retail, or partner-owned Web sites. Partner Channels lead to lower margins, but they allow an organization to expand its reach and benefit from partner strengths.

Owned Channels and particularly direct ones have higher margins, but can be costly to put in place and to operate. The trick is to find the right balance between the di? erent types of Channels, to integrate them in a way to create a great customer experience, and to maximize revenues. 27 } Channel Types Sales force Channel Phases Own Direct Web sales Own stores 1. Awareness How do we raise awareness about our company’s products and services? 2. Evaluation How do we help customers evaluate our organization’s Value Proposition? 3.

Purchase How do we allow customers to purchase specific products and services? 4. Delivery How do we deliver a Value Proposition to customers? 5. After sales How do we provide post-purchase customer support? Indirect Partner stores Wholesaler Partner CR 28 } 4 Customer Relationships The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments A company should clarify the type of relationship it wants to establish with each Customer Segment. Relationships can range from personal to automated.

Customer relationships may be driven by the following motivations: • Customer acquisition • Customer retention • Boosting sales (upselling) In the early days, for example, mobile network operator Customer Relationships were driven by aggressive acquisition strategies involving free mobile phones. When the market became saturated, operators switched to focusing on customer retention and increasing average revenue per customer. The Customer Relationships called for by a company’s business model deeply influence the overall customer experience.

What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How costly are they? How are they integrated with the rest of our business model? We can distinguish between several categories of Customer Relationships, which may co-exist in a company’s relationship with a particular Customer Segment: Personal assistance This relationship is based on human interaction. The customer can communicate with a real customer representative to get help during the sales process or after the purchase is complete.

This may happen onsite at the point of sale, through call centers, by e-mail, or through other means. Dedicated personal assistance This relationship involves dedicating a customer representative specifically to an individual client. It represents the deepest and most intimate type of relationship and normally develops over a long period of time. In private banking services, for example, dedicated bankers serve high net worth individuals. Similar relationships can be found in other businesses in the form of key account managers who maintain personal relationships with important customers.

Communities Increasingly, companies are utilizing user communities to become more involved with customers/prospects and to facilitate connections between community members. Many companies maintain online communities that allow users to exchange knowledge and Self-service In this type of relationship, a company maintains no direct relationship with customers. It provides all the necessary means for customers to help themselves. Automated services This type of relationship mixes a more sophisticated form of customer self-service with automated processes.

For example, personal online profiles give customers access to customized services. Automated services can recognize individual customers and their characteristics, and o? er information related to orders or transactions. At their best, automated services can stimulate a personal relationship (e. g. o? ering book or movie recommendations). Co-creation More companies are going beyond the traditional customer-vendor relationship to co-create value with customers. Amazon. com invites customers to write reviews and thus create value for other book lovers.

Some companies engage customers to assist with the design of new and innovative products. Others, such as YouTube. com, solicit customers to create content for public consumption. solve each other’s problems. Communities can also help companies better understand their customers. Pharmaceutical giant GlaxoSmithKline launched a private online community when it introduced alli, a new prescription-free weight-loss product. GlaxoSmithKline wanted to increase its understanding of the challenges faced by overweight adults, and thereby learn to better manage customer expectations. 9 } R$ 30 } 5 Revenue Streams The Revenue Streams Building Block represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings) If customers comprise the heart of a business model, Revenue Streams are its arteries. A company must ask itself, For what value is each Customer Segment truly willing to pay? Successfully answering that question allows the firm to generate one or more Revenue Streams from each Customer Segment. Each Revenue Stream may have di? rent pricing mechanisms, such as fixed list prices, bargaining, auctioning, market dependent, volume dependent, or yield management. A business model can involve two di? erent types of Revenue Streams: • Transaction revenues resulting from one-time customer payments • Recurring revenues resulting from ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues?

There are several ways to generate Revenue Streams: Asset sale The most widely understood Revenue Stream derives from selling ownership rights to a physical product. Amazon. com sells books, music, consumer electronics, and more online. Fiat sells automobiles, which buyers are free to drive, resell, or even destroy. Usage fee This Revenue Stream is generated by the use of a particular service. The more a service is used, the more the customer pays. A telecom operator may charge customers for the number of minutes spent on the phone. A hotel charges customers for the number of nights rooms are used.

A package delivery service charges customers for the delivery of a parcel from one location to another. Lending/Renting/Leasing This Revenue Stream is created by temporarily granting someone the exclusive right to use a particular asset for a fixed period in return for a fee. For the lender this provides the advantage of recurring revenues. Renters or lessees, on the other hand, enjoy the benefits of incurring expenses for only a limited time rather than bearing the full costs Subscription fees This Revenue Stream is generated by selling continuous access to a service.

A gym sells its members monthly or yearly subscriptions in exchange for access to its exercise facilities. World of Warcraft Online, a Web-based computer game, allows users to play its online game in exchange for a monthly subscription fee. Nokia’s Comes with Music service gives users access to a music library for a subscription fee. Licensing This Revenue Stream is generated by giving customers permission to use protected intellectual property in exchange for licensing fees. Licensing allows rightsholders to generate revenues from their property without having to manufacture a product or commercialize a service.

Licensing is common in the media industry, where content owners retain copyright while selling usage licenses to third parties. Similarly, in technology sectors patentholders grant other companies the right to use a patented technology in return for a license fee. of ownership. Zipcar. com provides a good illustration. The company allows customers to rent cars by the hour in North American cities. Zipcar. com’s service has led many people to decide to rent rather than purchase automobiles. 31 } } 5 32 Brokerage fees This Revenue Stream derives from intermediation services performed on behalf of two or more parties.

Credit card providers, for example, earn revenues by taking a percentage of the value of each sales transaction executed between credit card merchants and customers. Brokers and real estate agents earn a commission each time they successfully match a buyer and seller. Advertising This Revenue Stream results from fees for advertising a particular product, service, or brand. Traditionally, the media industry and event organizers relied heavily on revenues from advertising. In recent years other sectors, including software and services, have started relying more heavily on advertising revenues.

Each Revenue Stream might have di? erent pricing mechanisms. The type of pricing mechanism chosen can make a big di? erence in terms of revenues generated. There are two main types of pricing mechanism: fixed and dynamic pricing. 33 } Pricing Mechanisms Fixed “Menu” Pricing Predefined prices are based on static variables List price Dynamic Pricing Prices change based on market conditions Negotiation (bargaining) Fixed prices for individual products, services, or other Value Propositions Price negotiated between two or more partners depending on negotiation power and/or negotiation skills

Product feature dependent Price depends on the number or quality of Value Proposition features Yield management Price depends on inventory and time of purchase (normally used for perishable resources such as hotel rooms or airline seats) Customer segment dependent Price depends on the type and characteristic of a Customer Segment Real-time-market Price is established dynamically based on supply and demand Volume dependent Price as a function of the quantity purchased Auctions Price determined by outcome of competitive bidding KR 34 } 6 Key Resources

The Key Resources Building Block describes the most important assets required to make a business model work Every business model requires Key Resources. These resources allow an enterprise to create and o? er a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues. Di? erent Key Resources are needed depending on the type of business model. A microchip manufacturer requires capital-intensive production facilities, whereas a microchip designer focuses more on human resources. Key resources can be physical, financial, intellectual, or human.

Key resources can be owned or leased by the company or acquired from key partners. What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? 35 } Key Resources can be categorized as follows: Physical This category includes physical assets such as manufacturing facilities, buildings, vehicles, machines, systems, point-of-sales systems, and distribution networks. Retailers like Wal-Mart and Amazon. com rely heavily on physical resources, which are often capital-intensive. The former has an enormous global network of stores and related logistics infrastructure.

The latter has an extensive IT, warehouse, and logistics infrastructure. Intellectual Intellectual resources such as brands, proprietary knowledge, patents and copyrights, partnerships, and customer databases are increasingly important components of a strong business model. Intellectual resources are di? icult to develop but when success- fully created may o? er substantial value. Consumer goods companies such as Nike and Sony rely heavily on brand as a Key Resource. Microsoft and SAP depend on software and related intellectual property developed over many years.

Qualcomm, a designer and supplier of chipsets for broadband mobile devices, built its business model around patented microchip designs that earn the company substantial licensing fees. Human Every enterprise requires human resources, but people are particularly prominent in certain business models. For example, human resources are crucial in knowledge-intensive and creative industries. A pharmaceutical company such as Novartis, for example, relies heavily on human resources: its business model is predicated on an army of experienced scientists and a large and skilled sales force.

Financial Some business models call for financial resources and/or financial guarantees, such as cash, lines of credit, or a stock option pool for hiring key employees. Ericsson, the telecom manufacturer, provides an example of financial resource leverage within a business model. Ericsson may opt to borrow funds from banks and capital markets, then use a portion of the proceeds to provide vendor financing to equipment customers, thus ensuring that orders are placed with Ericsson rather than competitors. KA 36 } 7 Key Activities

The Key Activities Building Block describes the most important things a company must do to make its business model work Every business model calls for a number of Key Activities. These are the most important actions a company must take to operate successfully. Like Key Resources, they are required to create and o? er a Value Proposition, reach markets, maintain Customer Relationships, and earn revenues. And like Key Resources, Key Activities di? er depending on business model type. For software maker Microsoft, Key Activities include software development.

For PC manufacturer Dell, Key Activities include supply chain management. For consultancy McKinsey, Key Activities include problem solving. What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? 37 } Key Activities can be categorized as follows: Platform/network Production These activities relate to designing, making, and delivering a product in substantial quantities and/or of superior quality. Production activity dominates the business models of manufacturing firms.

Problem solving Key Activities of this type relate to coming up with new solutions to individual customer problems. The operations of consultancies, hospitals, and other service organizations are typically dominated by problem solving activities. Their business models call for activities such as knowledge management and continuous training. Business models designed with a platform as a Key Resource are dominated by platform or networkrelated Key Activities. Networks, matchmaking platforms, software, and even brands can function as a platform. Bay’s business model requires that the company continually develop and maintain its platform: the Web site at eBay. com. Visa’s business model requires activities related to its Visa® credit card transaction platform for merchants, customers, and banks. Microsoft’s business model requires managing the interface between other vendors’ software and its Windows® operating system platform. Key Activities in this category relate to platform management, service provisioning, and platform promotion. KP 38 } 8 Key Partnerships

The Key Partnerships Building Block describes the network of suppliers and partners that make the business model work Companies forge partnerships for many reasons, and partnerships are becoming a cornerstone of many business models. Companies create alliances to optimize their business models, reduce risk, or acquire resources. We can distinguish between four di? erent types of partnerships: • Strategic alliances between non-competitors • Coopetition: strategic partnerships between competitors • Joint ventures to develop new businesses • Buyer-supplier relationships to assure reliable supplies Who are our Key Partners?

Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? 39 } It can be useful to distinguish between three motivations for creating partnerships: Optimization and economy of scale The most basic form of partnership or buyer-supplier relationship is designed to optimize the allocation of resources and activities. It is illogical for a company to own all resources or perform every activity by itself. Optimization and economy of scale partnerships are usually formed to reduce costs, and often involve outsourcing or sharing infrastructure.

Reduction of risk and uncertainty Partnerships can help reduce risk in a competitive environment characterized by uncertainty. It is not unusual for competitors to form a strategic alliance in one area while competing in another. Blu-ray, for example, is an optical disc format jointly developed by a group of the world’s leading consumer electronics, personal computer, and media manufacturers. The group cooperated to bring Blu-ray technology to market, yet individual members compete in selling their own Blu-ray products.

Acquisition of particular resources and activities Few companies own all the resources or perform all the activities described by their business models. Rather, they extend their own capabilities by relying on other firms to furnish particular resources or perform certain activities. Such partnerships can be motivated by needs to acquire knowledge, licenses, or access to customers. A mobile phone manufacturer, for example, may license an operating system for its handsets rather than developing one in-house. An insurer may choose to rely on independent brokers to sell its policies rather than develop its own sales force.

CS 9 Cost Structure The Cost Structure describes all costs incurred to operate a business model This building block describes the most important costs incurred while operating under a particular business model. Creating and delivering value, maintaining Customer Relationships, and generating revenue all incur costs. Such costs can be calculated relatively easily after defining Key Resources, Key Activities, and Key Partnerships. Some business models, though, are more cost-driven than others. So-called “no frills” airlines, for instance, have built business models entirely around low Cost Structures.

What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? 41 } Naturally enough, costs should be minimized in every business model. But low Cost Structures are more important to some business models than to others. Therefore it can be useful to distinguish between two broad classes of business model Cost Structures: cost-driven and value-driven (many business models fall in between these two extremes): Cost-driven Cost-driven business models focus on minimizing costs wherever possible.

This approach aims at creating and maintaining the leanest possible Cost Structure, using low price Value Propositions, maximum automation, and extensive outsourcing. No frills airlines, such as Southwest, easyJet, and Ryanair typify cost-driven business models. Value-driven Some companies are less concerned with the cost implications of a particular business model design, and instead focus on value creation. Premium Value Propositions and a high degree of personalized service usually characterize value-driven business models.

Luxury hotels, with their lavish facilities and exclusive services, fall into this category. Cost Structures can have the following characteristics: Fixed costs Costs that remain the same despite the volume of goods or services produced. Examples include salaries, rents, and physical manufacturing facilities. Some businesses, such as manufacturing companies, are characterized by a high proportion of fixed costs. Variable costs Costs that vary proportionally with the volume of goods or services produced. Some businesses, such as music festivals, are characterized by a high proportion of variable costs.

Economies of scale Cost advantages that a business enjoys as its output expands. Larger companies, for instance, benefit from lower bulk purchase rates. This and other factors cause average cost per unit to fall as output rises. Economies of scope Cost advantages that a business enjoys due to a larger scope of operations. In a large enterprise, for example, the same marketing activities or Distribution Channels may support multiple products. } The nine business model Building Blocks form the basis for a handy tool, which we call the Business Model Canvas. The Business Model Canvas

KP KA VP CR CS KR CH C$ R$ This tool resembles a painter’s canvas — preformatted with the nine blocks — which allows you to paint pictures of new or existing business models. The Business Model Canvas works best when printed out on a large surface so groups of people can jointly start sketching and discussing business model elements with Post-it® notes or board markers. It is a hands-on tool that fosters understanding, discussion, creativity, and analysis. } 44 The Business Model Canvas Key Partners Key Activities Value Proposition Customer Relationships Customer Segments Key Resources

Channels Cost Structure Revenue Streams 50 HOW DO YOU USE THE CAnVAS? The public sector is often challenged to implement private sector principles. I have used the Canvas to help a department view itself as a serviceoriented business, establishing externalized as-is and to-be business models. It has created a whole new conversation around describing and innovating the business. Mike Lachapelle, Canada I’m using the Business Model Canvas in Brazil to help artists, cultural producers, and game designers to envision innovative business models for the Cultural and Creative Industries.

I apply it in the Cultural Production MBA at FGV and in the Innovation Games Lab at COPPE/ UFRJ Business Incubator. Claudio D’Ipolitto, Brazil I wish I had known the Canvas years ago! With a particular tough and complicated print-to-digital project within the publishing industry it would have been so helpful to When you typically think of a business model, the conclusion is that it is a ‘for profit’ business. However, I found that the Canvas is also very effective in the non-profit sector. We used it to I consult with small companies on using the freemium business model.

This model involves giving core products away for free, which is very counterintuitive to most businesspeople. Thanks to the Business Model Canvas, I can DESIGN + ALIGN show all project members in this visual way both the big picture, their (important) own roles in it and the interdependencies. Hours of explaining, arguing, and misunderstanding could have been saved. Jille Sol, Netherlands easily illustrate how it makes financial sense. Peter Froberg, Denmark members of the leadership team during the formation of a new non-profit program.

The Canvas was flexible enough to take into account the goals of this social entrepreneurial venture, and bring clarity to the true Value Proposition of the business and how to make it sustainable. Kevin Donaldson, U. S. I help business owners plan their transition and exit from their companies. Success depends on sustaining longterm company viability and growth. Key to this is a business model innovation program. The Canvas helps us identify and innovate their business models. Nicholas K. Niemann, U. S. A close friend was looking for a new job. I used the Business Model Canvas in order to assess her personal business model.

Her core competences and Value Proposition were outstanding but she failed to leverage her strategic partners and develop appropriate Customer Relationships. This adjusted focus opened new opportunities. Daniel Pandza, Mexico Imagine 60 1st year students, knowing nothing about entrepreneurship. In less than five days, thanks to the Business Model Canvas, they were able to pitch a viable idea with conviction and clarity. They used it as a tool to cover all the startup-building dimensions. Guilhem Bertholet, France We were asked to redesign the language service of an international nGO.

The Business Model Canvas was especially helpful to show the links between the needs of people’s day-to-day work and a service that was felt too specialized, considered only as an afterthought, and far away from their priorities. Paola Valeri, Spain The Business Model Canvas has allowed me to establish a common language and framework with colleagues. I’ve used the Canvas to explore new growth opportunities, assess uses of new business models by competitors, and to communicate across the organization how we could accelerate technology, market, and business model innovations.

Bruce MacVarish, U. S. We used 15,000 post-its and more than 100 meters of broWn paper to design a future organizational structure in a global manufacturing company. The key of all activities was, however, the Business Model Canvas. It convinced us by its practical applicability, simplicity, and logical cause-and-effect relationships. Daniel Egger, Brazil The Business Model Canvas has proven to be a very useful tool for capturing ideas and solutions for e-commerce projects. Most of my clients are SMEs and the Canvas helps them to 51 clarify their current business models and

Marc Castricum, Netherlands understand and focus on the impact of e-commerce on their organizations. translate THEIR BUSInESS remind the teams to think InTO THE BUSInESS holistically about PROCESSES their business that they (will) need to operate their businesses and to insure that they are and prevents focused properly on being customercentric in a way that makes the business them from as highly profitable as can be. getting stuck on details. This helps to I use the Business Model Canvas to teach early stage entrepreneurs across a wide range of industries as a much better way to

As a startup coach I support teams to create new products and design their businesses. The Business Model Canvas does a great job assisting me to PLANS I used the Canvas to do a The Business Model Canvas has helped several health care organizations in the netherlands to make the move from a budget driven governmental institution to an entrepreneurial value-adding organization. Huub Raemakers, Netherlands reality check Erwin Blom, Netherlands I applied the Canvas to help a company align key staff in order to determine shared goals and strategic priorities, which were used during the planning process and incorporated with the BSC.

It also ensured that the chosen initiatives were clearly driven by the new strategic priorities. Martin Fanghanel, Bolivia Bob Dunn, U. S. I have used the Canvas with a co-founder to design a business plan for a national level contest held by The Economic Times, India. The Canvas enabled me to think through all the aspects of the startup and put together a plan that VCs might find well thought out and attractive to fund. Praveen Singh, India make their new venture a success. Christian Schuller, Germany I used the Canvas with senior managers of a public company to help them restructure their value chain due to changes in sector regulation.

The key success factor was to understand which new Value Propositions could be offered to their clients and then translated into internal operations. Leandro Jesus, Brazil for my new startup Mupps, a platform where artists can make their own music apps for iPhone and Android phones in minutes. You know what? The Canvas made me even surer of the possible success! So I gotta go, work to do! This section describes business models with similar characteristics, similar arrangements of business model Building Blocks, or similar behaviors.

We call these similarities business model patterns. The patterns described in the following pages should help you understand business model dynamics and serve as a source of inspiration for your own work with business models. We’ve sketched out five business model patterns built on important concepts in the business literature. We’ve “translated” these into the language of the Business Model Canvas to make the concepts comparable, easy to understand, and applicable. A single business model can incorporate several of these patterns. Patterns 56

Unbundling Business Models The Long Tail Multi-Sided Platforms FREE as a Business Model 66 76 88 108 Open Business Models Concepts upon which our patterns are based include Unbundling, the Long Tail, Multi-Sided Platforms, FREE, and Open Business Models. New patterns based on other business concepts will certainly emerge over time. Our goal in defining and describing these business model patterns is to recast well-known business concepts in a standardized format — the Business Model Canvas — so that they are immediately useful in your own work around business model design or invention. Businesspeople don’t just need to understand designers better; they need to become designers. ” Roger Martin, Dean, Rotman School of Management This section describes a number of techniques and tools from the world of design that can help you design better and more innovative business models. A designer’s business involves relentless inquiry into the best possible way to create the new, discover the unexplored, or achieve the functional. A designer’s job is to extend the boundaries of thought, to generate new options, and, ultimately, to create value for users.

This requires the ability to imagine “that which does not exist. ” We are convinced that the tools and attitude of the design profession are prerequisites for success in the business model generation. Businesspeople unknowingly practice design every day. We design organizations, strategies, business models, processes, and projects. To do this, we must take into account a complex web of factors, such as competitors, technology, the legal environment, and more. Increasingly, we must do so in unfamiliar, uncharted territory. This is precisely what design is about.

What businesspeople lack are design tools that complement their business skills. The following pages explore six business model design techniques: Customer Insights, Ideation, Visual Thinking, Prototyping, Storytelling, and Scenarios. We introduce each technique with a story, then demonstrate how the technique applies to business model design. Here and there we’ve added exercises and suggestions for workshop activities that show you specifically how the design technique can be applied. Book references are provided at the end for those interested in exploring each technique in more depth. Design 26 Customer Insights 134 Ideation 146 Visual Thinking 160 Prototyping 170 Storytelling 180 Scenarios “There’s not a single business model… There are really a lot of opportunities and a lot of options and we just have to discover all of them. ” Tim O’Reilly, CEO, O’Reilly In previous sections we taught you a language for describing, discussing, and designing business models, described business model patterns, and explained techniques that facilitate the design and invention of new business models. This next section is about re-interpreting strategy through the lens of the Business Model Canvas.

This will help you constructively question established business models and strategically examine the environment in which your own business model functions. The following pages explore four strategic areas: the Business Model Environment, Evaluating Business Models, a Business Model Perspective on Blue Ocean Strategies, and how to Manage Multiple Business Models within an enterprise. Strategy 200 Business Model Environment 212 Evaluating Business Models 226 Business model Perspective on Blue Ocean Strategy 232 Managing Multiple Business Models outlook 274

WHERE DID THIS BOOK COME FROM? Context: InnOVATInG key audience visionary and 2004: Alexander Osterwalder comof business model innovation with Professor Yves Pigneur at HEC Lausanne, Switzerland. Fast forward. 2006: The approach outlined in the dissertation starts being applied around the world based on Alexander’s business model blog, notably in companies such as 3M, Ericsson, Deloitte, and Telenor. During a workshop in the netherlands Patrick van der Pijl asks “why is there no book accompanying the method? ” Alexander and Yves take up the challenge.

But how does one stand out in a market where countless strategy and management books are published every year? pletes a Ph. D. dissertation on the topic the model Alexander and Yves decide they can’t credibly write a book about business model innovation without an innovative business model. They ditch publishers and launch the Hub, an online platform to share their writings from day one. Anybody with an interest in the topic can join the platform for a fee (initially U. S. $24, which is gradually raised to U. S. $243 to keep the platform exclusive).

This and other innovative Revenue Streams finance the book production in advance itself is an innovation as well. It breaks the format of conventional strategy and management books in order to create more value for readers: it is co-created highly visual, and complemented by exercises and workshop tips. game changing… entrepreneurs / consultants / executives MADE In… Written: lausanne, CH Designed: london, UK Edited: Portland, USa Photographed: toronto, Ca Produced: amsterdam, Nl Events: amsterdam & toronto process TOOLS uSED trategy: •EnvironmentalScanning •BusinessModelCanvas •CustomerEmpathyMap content and r: •CustomerInsights •CaseStudies open process: •OnlinePlatform •Co-Creation •AccesstoUnfinishedWork •Commenting design: •OpenDesignProcess •Moodboards •PaperMockups •Visualization •Illustration •Photography the numbers The core team, consisting of Alexander, Yves, and Patrick start the project with a number of meetings to sketch out the business model of the book. The Hub is launched to co-create the book with business model innovation practitioners throughout the world.

Creative Director Alan Smith of The Movement hears about the project and put his company behind it. Finally, Hub member Tim Clark joins the core team after recognizing the need for an editor. The group is completed by JAM, a company that uses visual thinking to solve business problems. An engagement cycle is started to pump fresh “chunks” of content out to the Hub community for feedback and contributions. The writing of the book becomes completely transparent. Content, design, illustrations, and structure are constantly shared and thoroughly commented upon by Hub members worldwide.

The core team responds to every comment and integrates the feedback back into the book and design. A “soft launch” of the book is organized in Amsterdam, Netherlands, so members of the Hub can meet in person and share their experiences with business model innovation. Sketching out participant business models with JAM becomes the core exercise of the day. Two hundred special limited edition prototypes of the (unfinished) book go to print and a video of the writing process is produced by Fisheye Media. After several more iterations the first print run is produced. 9 years of research and practice ,360 comments 470 co-authors 45 countries 19 book chunks 137,757 views of method online before book publishing 8 prototypes copies of a messed up test print 13. 18 GB of content Post-it™ notes used 200 28,456 77 4,000+ hours of work 275 forum discussions 521 photos 287 Skype Calls Production and Logistics Anything beyond content creation is outsourced to readily available service providers. Differentiation An entirely different format, business model, and story for the book makes it stand out in a crowded market. Community The book is co-created with practitioners from around the world who eel ownership thanks to attribution as contributing co-authors. Buyers Paying customers are not only readers, but co-creators and companies that want customized books for their employees and clients. KP the movement (design) ning platform amazon. com 3rd party logistics company publishers KA content production VP visual, practical, and beautiful handbook for business model innovators co-creation of a potential bestseller personalized books for companies and their customers CR businessmodelhub . com business model event, amsterdam CS visionaries, game changers, and challengers entrepreneurs, executives, consultants, academics companies ub management guerilla marketing and word-of-mouth logistics and shipping KR blog and visibility on the web business model hub powerful methodology CH hub members word-of-mouth 1) businessmodelgeneration. com 2) amazon. com 3) book stores intermediation through publishers 280 C$ design content production printing distribution R$ hub membership fees advance & post-publication sales FRee give away canvas section fees for customized versions royalties from publishers thE cANvAS of business model generation Reach A mix of direct and indirect Channels and a phased approach optimizes reach and margins.

The story of the book lends itself well to viral marketing and word-ofmouth promotion. Revenues The book was financed through advanced sales and fees paid by co-creators. Additional revenues come from customized versions for companies and their clients. Alex Osterwalder, Author Dr. Osterwalder is an author, speaker, and adviser on the topic of business model innovation. His practical approach to designing innovative business models, developed together with Dr. Yves Pigneur, is practiced in multiple industries throughout the world by companies including 3M, Ericsson, Capgemini, Deloitte, Telenor, and many others.

Previously he helped build and sell a strategic consulting firm, participated in the development of a Thailand-based global nonprofit organization combating HIV/ AIDS and malaria, and did research at the University of Lausanne, Switzerland. yves Pigneur, Co-Author Dr. Pigneur has been a Professor of Management Information Systems at the University of Lausanne since 1984, and has held visiting professorships at Georgia State University in Atlanta and at the University of British Columbia in Vancouver. He has served as the principal investigator for many esearch projects involving information system design, requirements en