Thoughts on Reading Business Model Generation and a Note on René Descartes

I recently re-read Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. The book is available on Amazon.com, and you can currently download the first chapter of the book here. The goal of the book is to provide a useful framework and set of techniques for developing new business models. Reading it this past weekend also led me to reflect on the relationship between innovation and systematic approaches to business. As I have reflected on before, large corporations are often torn between two extremes: on the one hand the best way to control risk, to manage a large corporation, and to form incremental improvements is through systematization. On the other hand, such systems tend to reaffirm the status quo, and thereby stifle genuine innovation.

Business Model Generation is an attempt to develop a system that can lead to more innovative business models, and thus bridge these two extremes. The system the book presents is outlined in the first chapter, and it involves separating a corporation or business into 9 key components: a value proposition, key activities, key resources, customer relationships, distribution channels, customer segments, key partners, cost structure, and revenue streams. The different components are arranged on a "canvas" in which the value proposition is front and center, and it is possible to chart flows between components. The "canvas" helps one visualize different business models.

But the real value of the book is that it begins to augment this framework with actual examples of innovative business models and explains the trade-offs of each, and when it outlines design techniques that can be used to create new ones. The examples come from a wide range of industries. One reads about the contrasting approaches of the Maerki Baumann and Pictet banking institutions, how Telco unbundled the components of its infrastructure in order to better align its capabilities, how Lulu changed the publishing model, how Lego experiments with user-generated content, and how Nintendo Wii re-imagined the video game model. Apple and Google both have their requisite due. Metro's publishing model is explored. Red Hat is used to introduce the fremium model and Skype and Amazon are discussed. P&G's R&D gets significant attention, as does the classic Gillette bait and hook. All of these business models are related to the canvas developed in the first chapter, and it produces a type of alignment that allows one to see each innovative model as a general type. The presentation of each  business model is entertaining and insightful.

After this rich list of examples, the book turns its attention to more in-depth discussion of some aspects of the design approach to business including brainstorming techniques, how to gain customer insights, the importance of storytelling, and ways of analyzing markets for strategy. All of these topics are covered in more depth in other books, and serious innovation designers may find them old-hat. However, as with the canvas developed earlier in the book, having all these techniques in one place, with quick efficient overviews can give even an experienced innovation designer a nice bird's eye view of the business model landscape.

When all of this is put together the team responsible for Business Model Generation has created an ideal way to get a quick overview of cutting-edge approaches to business design. I have actually used the book on several occasions now. It has helped me and a group of colleagues understand our own business much better than other techniques we have used. But the understanding is peculiar: I have found that although Business Model Generation is a useful read, the practical utility of the "canvas" presented in the beginning can be somewhat limited. The divisions that the 9 components of business force on a particular case can often be too restricting and feel unnatural. This effect oddly reminds me of David Trood's famous National Geographic photos in which David uses hundreds of photos to produce unified images. In both cases the resulting products end up giving you a general picture from which you can glean some insight, but one is struck by how much is lost in the resulting image. As in life we often learn more from differences than similarities.

The limitations of the framework reminded me of a philosophical work I studied in graduate school. René Descartes once set himself the task of providing a unified system for developing new ideas. He called it his Rules for the Direction of the Mind. At the time Descartes was already an accomplished mathematician and had solved several problems that had baffled mathematicians for centuries. He did this by developing new innovative techniques for solving problems, including imagining the line of a curve to be traced by a complicated mechanical machine. The results of such thought experiments were not immediately accepted by the mathematical community, but in a suitably translated version they became the basis for much of modern mathematics. (The best account of Descartes' mathematics is Henk Bos' Redefining Geometrical Exactness: Descartes' Transformation of the Early Modern Concept of Construction.) Having been extremely successful in mathematics, I assume Descartes thought it would be easy to develop a formal approach to creativity that could be applied in all instances. However, he soon abandoned his work, and left the book incomplete. Many theories have been offered for this, but I think it is very likely that he realized at a certain point that truly innovative solutions could not be codified or mechanized in such a formal manner. One has great difficulty formalizing the process of innovation.

Llull developed a random idea generation machine.

I bring up the case of Descartes, because I think a similar phenomenon occurs any time one discusses innovation. A creative process generally ceases to be innovative the moment it is codified and mechanized. Even a system designed to produce random results, such as that of Ramon Llull,  is rarely as effective as someone thinking creatively outside of the rules, whether it is through analogy, brainstorming, or applying an example from a very different domain. The best that one can do to capture this kind of innovative thinking is to review examples and develop rough techniques for thinking about problems.

To Business Model Generation's credit it is pleasantly situated between the extremes of random creative thinking and a mechanized and codified process that stifles innovation. It provides enough detail to stimulate thought, but does not attempt to develop it to the level of being a formalized and unresponsive framework. This means that the reader has a loose and flexible tool that she or he can use to think about their own businesses, and perhaps stumble on an insight that will lead to new, truly creative developments. But, it is important to understand that having a framework is only the beginning of the road to innovation.

P.S. I should add that one of the most fascinating aspects of the book is the innovative way in which it was written. You can find more on the book website here.

Listening to Ancient Philosophy

Often I hear the distinction between "doing philosophy" and "reading philosophy." This contrast is spelled out in a variety of different ways by different people. Many people want to contrast philosophy proper with some more nebulous activity such as the history of ideas: whereas the former is an enterprise for creating new ideas and new modes of thinking, the latter is supposedly the activity of just collecting the outmoded ideas that have led us to the place we stand in history. As the language in the preceding sentence should make clear, there is often a criticism embedded in this classification from practitioners of the philosophy side of the division. However, anyone who holds to this division will probably also recognize that there is not a firm dividing line between the two sides. In order to come up with new ideas we inevitably have to think through the views of our predecessors, and whenever we try to understand a past philosophical conception we inevitably incorporate some aspects of our own views into the interpretation.

Since I work on ancient philosophy, I often find myself at a strange intersection between these two camps. On the one hand, as a classicist I'm supposed to work to understand the views of philosophers who lived 2000 years ago as correctly as possible. In order to do this I end up spending hours reading "outmoded" conceptions of philosophy, trying to use my knowledge of ancient languages and the milieu of that time period in order to provide a reading of a philosopher that minimizes the influence of my own philosophical views. On the other hand, unlike a classicist, I am supposed to engage in a dialectic with these philosophers and challenge and criticize their views in order to come up with novel philosophical observations. It is apparent that this leaves me in a dangerous and difficult situation: the more successful that I am in one side of this endeavor the less successful I am likely to be on the other. For instance, a wonderful piece of insight may come from deliberately misreading a passage in Aristotle in a way that makes it inconsistent with everything else in the corpus. In this case, the classicist points out the discrepancy and argues that my interpretation cannot possibly be right. In another case I may develop a consistent reading of a word's use throughout the Platonic corpus, and consequently write 50 pages of interpretation that is so bland and uninteresting, that the philosopher thinks it is a colossal waste of time.

In this respect doing historical philosophy contains a divide that may be even more significant than the divide between the so-called "analytic" and "continental" philosophies of the Twentieth Century: at least in the case of that latter divide, everyone agreed that the activity being practiced was philosophy, even if each respective camp thought the other camp was doing things badly. In historical philosophy it is the very category of philosophy that is up for grabs. Like the apikoros* in the joke who loses because he was so successful (Ted Cohen, "Jokes," p. 68), the historical philosopher also can lose in the same way. It becomes incumbent on an ancient philosophy student to show that what she's doing is a worthwhile endeavor.

I happen to think ancient philosophy is a worthwhile endeavor, which is why I study the subject. I think a great deal of this worth comes from the very tension I have been describing. For I think that philosophy, at least when it is practiced well, should be both an active and passive endeavor, and just as important as it is to speak coherently about a topic, it is just as important to be able to listen and understand views that you don't necessarily agree with. Ancient philosophy, by forcing its practitioners to do a little of both of these activities, becomes a very good way to achieve this balance.

Already I may be walking into dangerous territory by making these assertions. Although presumably very few philosophers would argue that it isn't important to listen to other people's viewpoints, there is a tendency for philosophers to become strong advocates for their own viewpoints, and to ridicule people whose views differ. Thus a group of Davidsonian scholars at one school might have inside jokes about how wrong Anscombian philosophers are at another, and vice versa, and followers of Nussbaum may be ridiculed in introductory philosophy courses at one school, just as Kripke's possible world semantics might be ridiculed at another. 

Now, there is some benefit from this distribution of philosophical schools and camps: since schools tend to attract and produce philosophers with similar philosophical commitments, it means that the positive consequences of these philosophical commitments can be explored deeper and more effectively at these institutions. If you want to study McDowell's writings, you shouldn't go to a school that thinks his work is hogwash. This compartmentalization of philosophy into schools has the further interesting consequence that when practitioners of different schools meet at conferences, the debate can be carried out in a rich and powerful way. In these respects philosophy tends to be analogous to free-market capitalism, and has similar advantages: a diverse range of philosophical positions are explored, views get developed quickly because of the increased competition, and a wide range of positions and schools are available.

Yet, as I began to discuss above, there is a cost for all of this: different schools often listen to their competition less than they should, and philosophical gains in one school are often overlooked, and consequently fail to be adopted by other schools. Philosophy becomes less of a progressive enterprise like science, and more of a diverse collection of bickering schools, like one might have found in the so-called Pre-Socratic period. There is no reason that philosophy should aspire to become a science with dogmas and canonical modes of thought (as some might characterize Scholastic philosophy), but at the same time, I think it should be a collaborative enterprise in which different schools provide benefits to one another. I guess, my ideal philosophical landscape is more like free-market socialism than laissez-faire capitalism.

Anyway, if you can understand my perspective, and see the value in listening to the beliefs of people with very different philosophical views, then ancient philosophy, and in particular, ancient Greek and Roman philosophy and its heirs becomes a very interesting case to study. By reading these works you encounter views that were held 2000 years ago, before the advent of modern science, before the development of market theories, and before we learned many important facts about the world around us. For these reasons, the practitioners of ancient philosophy necessarily had very different views from those we hold today. However, the rigor with which ancient Greek and Roman philosophical beliefs were argued, and the fact that contemporary philosophy can find its roots in these styles of argument, make them particularly amenable to the styles of philosophical engagement that we use today. All of these features mean that if one wants to develop really good abilities at understanding how other philosophers think, studying ancient Greek and Roman philosophy becomes a wonderful way of doing this.

Of course, these listening skills are not necessarily inherent in ancient philosophical texts, and it is really easy to read an ancient philosopher's writings without developing this kind of understanding. One can encounter this kind of superficial understanding in any philosophical writer that merely seeks to apply ancient beliefs to modern contexts or to apply modern approaches to ancient contexts. Some really great philosophers participate from time to time in this sort of "applied philosophy," sometimes with rich philosophical benefit. Although what he writes is interesting, I think we find these sorts of distortions when Heidegger reads ancient philosophy, or when Hegel attempts to write the history of philosophy. Of course, such distortions are not confined merely to the "continental" camps, and Quine appears to do the same thing when he reads Aristotle's syllogistic, or Van der Waerden when he reads Archimedes (Unlike some, I think creative mathematicians deserve the title of "philosophers"), and there are many more contemporary examples that I will pass over for the moment.

My problem with many of these interpretations of ancient texts is not with the usefulness of the theories that they develop, but with the further claim that these extensions and applications of ancient philosophy somehow track the meaning of ancient texts, and show a genuine understanding of the views of those ancient authors. It is in this claim that I see an inability to really listen to the ancient philosophers in question. Perhaps, I'm guilty of some degree of lack of comprehension of the more modern authors I cite in the last paragraph, but I think that in each of these cases an ancient philosopher is in a unique position to track these distortions. Unlike more contemporary philosophers, a good ancient philosophy student is always aware that there is an ineliminable historical-linguistic element at play whenever we comment on an ancient text. We are aware of this because we all had to spend years studying ancient Greek and Latin, and whenever we go astray from ordinary Greek, there are classicists waiting in the wings of the theater to call us back to task. Further, the existence of the classicist side of the division means that textual proficiency is prized, and if someone brings forward an interpretation of Aristotle, there is often someone in the audience who can cite the Greek text from memory that contradicts it, often by page and line number. This means that a good practitioner of ancient philosophy does not have the luxury of ignoring the nuances of language, or the details of a text. We have to listen.

Do you need to study ancient philosophy to develop this ability to listen? Of course not. Anyone who works very closely with a philosophical text or author can develop this ability. Anyone who reads the works of any other philosopher, or finds herself in a debate with another philosopher, or even in a debate with herself, should realize that she has to hone her ability to balance listening to the views of others with actively developing her own. What ancient philosophy does more than other enterprises is bring the contrast between listening and talking to the very forefront of the philosophical enterprise. 

And this is a point that is worth underscoring: learning to do ancient philosophy well is no different from learning to do philosophy well. And it is for this reason that ancient philosophy should never be blindly relegated to some historical fringe of the discipline of philosophy that merely collects the outmoded ideas of the past. Philosophy, just as Aristotle himself described the task on several occasions, is an active dialogue with the philosophers of the past. And as in any dialogue with another, there is an ethical imperative to try to understand the views of one's opponents as correctly, and in as philosophically rich a way, as you possibly can.

* * *

*OK, here's the joke from Ted Cohen's book:

Once a perverse young Jewish man in a small village in Poland enjoyed his role as apikoros. But after some time annoying his fellow villagers, he decided he needed to expand his talents, and so he took himself off to study with the man he had heard of as "the great apikoros of Warsaw." After arriving in Warsaw he found the man in question and followed him around for many days, observing what he did. Then he approached the man, saying, "I don't see that you are such a great apikoros. You observe the holidays, you attend shul, you keep a kosher house. I am already a better apikoros than you."

"Oh?" inquired the older man, "what do you do?"

The young man replied proudly, "I sneak treif into the butcher shop, I rearrange the pages of the siddur, I re-roll the Torah scrolls so that the wrong portions are read. Things like that."

"I see," said the older man. "Let me tell you: I'm an apikoros; you're a goy."