In the previous video, I mentioned that there are many definitions of a business model, and when discussing business models with someone, you should clarify whether this person is thinking of the same definition. In Odyssey 3.14, we define the business model around our three pillars: the value proposition, the value architecture and the profit equation. There is another framework to describe business models that has become very popular over the past years. It is called the business model canvas, and comes from this bestselling book: Business Model Generation, by Alexander Osterwalder, a Swiss business theorist and consultant. In this book, Osterwalder uses nine components for his business model framework. If we take a closer look at them, these components are very similar to the three pillars used in Odyssey 3.14. Customer segments, customer relationships and the value proposition are very close to what we called the "value proposition" in our three pillars. Key partners, key activities, key resources and channels refer to the value architecture in our previous definition. Finally, we can also find the revenue stream and the cost structure. So as you can see, both our framework and Osterwalder’s framework are very close and consistent with one another. Over the years, many of our students or managers we have talked to in companies have been using both, and they have helped us identify two major differences. First, with our three pillars, our framework is easier to understand, since it gives a better first overview of the business model. You can then dig into the detailed components: customers, product and price on the value proposition side, value chain, resources and competencies on the value architecture side, revenue, costs and capital employed on the profit equation side, in order to detail your description. Thus, very often, users of both frameworks tell us that they are perfectly compatible. But it is easier to first describe the three pillars, and then dig into the details. Indeed, one tricky and exciting thing about building a new business model is that to succeed, all the pieces have to work in harmony. So often, at the beginning, you’re testing how those different pieces work together. In this regard, our Odyssey 3.14 framework with its three pillars is actually very close to the "Three Lenses of Innovation”, created by IDEO, a US design company very well known for popularizing the design thinking approach. The three lenses of innovation are summarized by the following figure. Desirability focuses on the following questions. What is the unique value proposition? Do people want this product or service? Does it make sense for them? As far as Feasibility is concerned, the questions are: Does this work? Is it functionally possible in the foreseeable future? And finally, Viability questions whether we can build a sustainable business. What are the costs? What will customers pay for it? Many users of this approach recognize that it is easier to first play around with the three pieces and to figure out how they work together, rather than nine! Our three pillars: value proposition, value architecture and profit equation are very similar to the three designed by IDEO. So this was about the first difference. The second difference between our framework and the business model canvas lies in the profit equation. As you have probably noticed, the business model canvas only focuses on revenue and costs, and doesn't take into account capital employed. Remember that capital employed are the assets that you need to run your company, such as machines, trucks and so on, as well as working capital. The business model canvas was initially designed to create new ventures, in which you mainly focus on the break even, that is, the difference between your revenues and your costs. However, we strongly believe that thinking about the capital employed structure early on should be part of your strategic thinking. For example, outsourcing production means that you don’t own the asset, the factory for example, but this will probably have an impact on your cost structure. Thus, we believe it is important to think about your capital employed structure very early on in your business model invention or reinvention effort. So there are mainly two differences between our Odyssey 3.14 business model framework and the business model canvas, to sum it up. The number of components, three vs. nine, that makes it easier to figure out a holistic view of your innovation, and the fact that we take into account capital employed, and not only costs. In any case, as you will discover along this course, the business model framework is a valuable tool in thinking strategically about innovation.