A decade after we started to explore business model innovation, there is no more need to promote the concept. The Business Model Navigator has been sold worldwide, translated into dozens of languages and – most importantly – successfully applied in hundreds of companies. The big success of our method and business model patterns motivated us to update and further develop the concept to revolutionise businesses.

Almost all revolutionary business model innovations of the last 50 years have come from the United States, and this does credit to the spirited and enterprising American nature. Inspired by our own research, we began to dream of developing a method for business model innovation. Every engineer’s studies include established design methodologies, and while they cannot guarantee a flawless outcome, they certainly increase the likelihood of success. But in the world of business management, we searched in vain for some such toolkit to aid in that most difficult of tasks – business model innovation. This led us to spend several years researching our own design method and testing it with leading industrial companies that recognised the powerful value of such a tool.

Based at the University of St Gallen, one of Europe’s leading business schools, we are committed to being at the forefront of business model innovation research. Our long-term experience with regards to innovation processes, from an academic as well as practical perspective, supported us in creating this method. Many concepts and tools used in top consultancies have emerged from similar academic efforts (such as the concept of Five Forces developed by Michael E. Porter, or the Stage-Gate process for developing new products by Robert G. Cooper). We are convinced that the Business Model Navigator extends this series of successful tools, which are well-grounded in research and build on a solid conceptual base.

The practical business model innovation design method we present here is based on extensive empirical research. We have analysed the most revolutionary business model innovations over the past 50 years to determine which predictable and systematic patterns were at their core. To our surprise, we discovered that over 90 per cent of all business model innovations simply recombine existing ideas and concepts from other industries. This knowledge can be used to our advantage, much like engineers use design methodologies that follow certain physical and technical rules and heuristics. Our method, the Business Model Navigator, consists of 55+ successful business model patterns, which can serve as blueprints for your own business model innovation efforts.

We subsequently applied the results to further research and consulting projects for many internationally leading companies in a wide variety of industries such as chemical, pharmaceutical, biotech, mechanical engineering, electronic, electric, energy, service, trade, IT, telecommunication, automotive, construction and financial services. The close working relationships between industry and the academic members of our research consortium and the bilateral projects conducted with these companies were especially helpful in improving the future implementation of our methodology. Our approach was also inspired by our close collaboration with Stanford University’s Center for Design Research, where two of the authors each spent several months. The founders of Design Thinking inspired us to incorporate iterative, user-oriented and haptic design into our approach. We also received valuable feedback concerning our methodology from executives at the University of St Gallen’s Executive MBA programme, where we have been teaching the Business Model Navigator for several years.

This feedback from executives and our projects with the BMI Lab had a strong influence on the new, radically revised and updated second edition of the Business Model Navigator. Besides five newly identified business model patterns, we found dozens of new business model innovators that are on the way to revolutionising their industries. We also put a special emphasis on the testing methods where we developed a testing pattern kit for supporting the implementation process of business model innovation. We worked for nearly two years with the testing patterns together with companies in order to learn about the sweet spot of each method. The results have been summarised in a new testing chapter. The text is structured into three consecutive parts. The first part aims at introducing the core elements and principles of the Business Model Navigator. In this regard, we present a framework to understand the concept of business model design and prepare the reader for thinking in business models. Along with the magic triangle describing the logic and dimensions of a business model, our four-step process to develop innovative business models in a structured manner is presented. A set of key success factors that we regard as highly relevant for business model change projects round off the first part of the text.

Building on the first part, the second part provides deep insight into the core element of the Business Model Navigator – the 55+ business model patterns. These are a powerful tool for creating new ideas for innovative business models and form the common ground for creative imitation and recombination of concepts.

For the impatient reader, the third part offers the opportunity to apply the Business Model Navigator and the 55+ patterns on one’s business model immediately. Using an abbreviated version of the Business Model Navigator – ten steps to innovate your business model – your own business model idea can be briefly sketched straight after reading the text.

The present work specifically addresses practitioners, and we have consciously avoided complicated theoretical arguments and the citation of references in the body of the text. Interested academics and practitioners will find a classified bibliography at the end of the text and regularly updated research and additional tools on our homepage: www.bmilab.com.

The methods we present in this text work surprisingly well and have made their mark in many companies and organisations worldwide. Practitioners are hooked on the Business Model Navigator, and so are we! The recent economic crisis as a consequence of COVID-19 has demonstrated again the importance of renewal and sustainable business models. It is our hope that our efforts will have helped in some small way to ensure that future business model innovations are increasingly developed. Our method does not guarantee success, but it will definitely improve your chances. Always remember: nothing ventured, nothing gained!

We wish you all the best.

St Gallen, Switzerland, Spring 2020

Oliver Gassmann
Karolin Frankenberger
Michaela Choudury