Home > Business Architecture, Enterprise Architecture > Business Model Canvas and Enterprise Canvas

Business Model Canvas and Enterprise Canvas

There are some discussions on connecting business architecture to enterprise architecture. It looks like everyone somehow agrees that Business Model Canvas from Osterwalder somehow needs to be connected to enterprise architecture models. As I spent some time already for creating business model with Business Model Canvas and enterprise architecture model with Enterprise Canvas from Tom Graves, I want to share my opinion.

First of all, although both models are talking about very similar things like organization, business, customers, partners, value proposition etc., they are telling really different stories. The mapping between them really helps understanding the modeling process when someone is familiar with one diagram but not the other. Other than that the mapping can be a bit misguiding and create impression that it’s two different ways of telling same story. It’s very common that people think they’re a little different version of same thing. So what’s the difference?

Well, first of all Business Model Canvas is about telling a story on how an organization is creating value for its customers, to be blunt how it makes money. Business Model Canvas is very useful for modeling the revenue and costs structures around customer and value proposition. So if you are interested in telling a story about how your company will make money with whatever it’s doing for it’s customers, you have Business Model Canvas. It’s not about how things are done in the organization but what needs to be done to make it work.

Enterprise Canvas on the other side is about telling a story of how organization (in the context of enterprise) is structured to do it’s value creation. The key word is the ‘structure’. If you want to understand what needs to be actually done in your organization to create value in the enterprise for the customers, which capabilities are needed, what are the external influencers, you have the enterprise canvas. Important point is that, enterprise canvas  is not about showing how organization is making money. In the enterprise context, it’s not about making money anymore. It’s about a vision, it’s about creating value in the enterprise.

In the enterprise canvas, we’re telling a story about how capabilities are structures to create value. In practice, when you get a post-it in your hand to put on the enterprise canvas, you write a name of a capability there. One important difference between two canvases is that enterprise canvas is recursive. So when you’re writing a name of a capability in your post-it, you need to make sure that capability belongs to the level you’re working one. Although some capabilities are really very important for the organization (costly, high focus,…), they may not appear in the canvas you’re doing for the first level which shows the relations with other parties in the enterprise. On the other side, Business Model Canvas is not about recursiveness, you need to show what’s important there. You can put any capability as a key activity or a key resource if it’s inherent to the business model, independent of the recursive levels. Here the most important this is to create a story of the business, not creating a model which reflects the structure close to reality. So whatever helps you to describe the business model as a story has a place in the Business Model Canvas.

Another important difference is about the partners. But before going into that I must make myself clear about what a capability is. Capability is the quality of being capable of doing work (or performing actions). It is not what is performed in business processes, it’s not what’s done to create value. Capability is what is needed for doing work/performing action for creating value. For example, I’m capable of creating business model and this is also my function in my organization. I’m also capable of translating documents, but this is not what one of my functions in the organization I’m working in. So in my definition, capabilities are not performed or delivered but simply possessed. The Business Capability definition in the Enterprise Business Motivation Model of Nick Malik is more like a Business Function to me, not Business Capability.

It’s possible and very common that some of the capabilities needed for creating value does not exist in the organization. Organizations rely to their partners for delivering them. In Enterprise Canvas it’s very important to show all capabilities, independent of who has them: an organization unit, a single person, a software, a machine or a partner. In case it’s provided by partner, one also has to think about supplier channels and supplier relations for the particular capability. In the Business Model Canvas the focus is not on the structure of the capabilities for delivering value, but what organization does to deliver value. So the capabilities supplied by the partners will not make it to Value Proposition, Key Activities, Customer Channels etc. If the provided capability is inherent in the business model, supplier should find its place in the Key Partners, otherwise not., that’s it. A side note about suppliers in Enterprise Canvas. I always group them into two: capability suppliers and asset suppliers. The difference appears to be very important.

Business Model Canvas models an organization from a particular view, a one which is generally a more familiar view to many. Enterprise Canvas models a different view on a larger scope. This vie w is not very easily understood, not even by most of the directors. When people are talking about vision being making money,  profitability being strategy, etc. it shows lack of understanding enterprise architecture scope and being too much business centric.

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  1. August 3, 2011 at 05:21

    Hi Iyigun,

    With the greatest respect to you as a practitioner, I think it’s presumptuous on your part to contradict the author of the Enterprise Canvas about the intent of the product he developed.

    Other than that[,] the mapping can be a bit misguiding and create [the] impression that it’s two different ways of telling [the] same story.

    I think you have misunderstood the intent of a mapping between the two types of canvases. The Enterprise Canvas is not about creating a competing framework to the Business Model Canvas and representing the same information in the business architecture domain. Rather, it’s about moving from what is fast becoming a defacto standard in the business architecture domain, to a framework that can be used at the enterprise architecture level. There needs to be consistency between the business architecture domain and the enterprise architecture, therefore it follows that a mapping between the two will allow for translations in either direction.

    I’m interested in hearing both Tom’s and Nick’s thoughts on this post.

    Regards,
    Anthony

    • August 3, 2011 at 10:11

      Anthony – many thanks, though I don’t think Iyigun has ‘misunderstood’ the mapping as such.

      He’s helped me a lot with the development of Enterprise Canvas over the past year or so, and in some ways he has more experience of its use in real-world practice than I do. It’s true that I could sort-of claim to have ‘developed’ Enterprise Canvas, but in reality it’s much more like the ‘Business Model Hub’ of co-creators that helped Alex Osterwalder refine his Business Model Canvas into the powerful and valuable tool that it is today. And to be blunt, I need all the help I can get! 🙂 – especially to get Enterprise Canvas out there, and in real-world use, so that we can refine it too to the level of usability and immediacy that Business Model Canvas rightly enjoys today.

      Hence to both of you, many thanks indeed! – and let’s keep this discussion rolling, so that we in enterprise architecture can have the tools that we actually need.

    • August 3, 2011 at 15:06

      @Anthony Thanks for your comment. I agree to you about the intent of the mapping. As Tom underlines over and over, the scope of enterprise architecture vs business architecture and enterprise IT architecture is not very well understood. What I see in practice is that many people take the mapping in a wrong way and mistakenly believe these two frameworks are competing. This is what I wanted to emphasize.

  2. August 3, 2011 at 10:00

    Great post, Iyigun – a really useful comparison, hence many thanks indeed!

    I’ll probably expand on this on my own website, but a few other comparisons may be useful:

    – In a sense, both Canvas types are telling the same overall story. The difference is that BMCanvas describes a specific subset of the enterprise-story, a subset that makes direct sense to ‘business-folk’; whilst EntCanvas must be capable of describing any part of the enterprise-story, or potentially all of that story, often by chaining EntCanvas ‘modules’ together to describe an overall value-network.

    – In effect, BMCanvas is a tool for business-architecture (i.e. the architecture of the ‘business’ domain), whereas EntCanvas is a tool for the much broader scope of whole-enterprise architecture.

    – Both model-types support a ‘start-anywhere’ principle for modelling. However, BMCanvas is organisation-centric (or, to more specific, business-model-centric), whilst EntCanvas is enterprise-centric. BMCanvas constrains the start-point (and, largely, end-point) of modelling to the business-model, whereas EntCanvas may start (and end) anywhere at all within the extended-enterprise-scope. The trade-off is between optimisation (for the one context) vs flexibility. Most people prefer the apparent simplicity of optimisation for a chosen context (e.g. BMCanvas, BMM, BPMN, UML etc); full whole-scope flexibility (e.g. EntCanvas) is only needed by those people who have to link all the optimised spaces together so that the business-model can succeed in practice.

    – The BMCanvas version of the story can be problematic in that it tends to incite Simon Sinek’s (non-recommendation of) ‘Start With What’: “what customers do we have? what can we sell them? what do we need in order to sell to them? how do we do this?”. In other words, moving from ‘what’ to ‘how’ to a predefined, implicit ‘why’ of “how we make money”. The Value Proposition in BMCanvas is often viewed as “what we need to do to make our offer of products/services attractive enough for people to buy”, a kind of surface-layer value as a thin gloss over ‘making money’, rather than the kind of deep-value that drives an extended-enterprise. EntCanvas is specifically designed to ‘Start With Why’ (as per Simon Sinek).

    – The themes here are not just story and structure, but also relationships, flow and change. As you’ve said, BMCanvas focusses mostly on a subset of story, plus a few extra items to support calculation of revenue/cost/profit, and a few aspects of relationship (e.g. the Customer Relations cell, also implicit in Key Partners). Modelling of flows is implicit at best, and not supported at all in the BMTBox iPad app. There is no real support for modelling of structure, nor of changes to structure or elsewhere to implement a revised business-model. EntCanvas explicitly supports modelling of the structure of networked relationships, the flows (and sequencing of flows) across those relationships, and internal structure of services (i.e. expansion of the BMCanvas ‘Key Activities’ and ‘Key Resources’ cells); it also has some implicit support for modelling of change (i.e. project-management etc).

    – In short, EntCanvas covers a much broader scope than BMCanvas, and provides much broader modelling-capability. That has its advantages, but also real disadvantages in practice: e.g. unfamiliarity, requirement for conceptual ‘translation’, potential for overwhelm etc. It _can_ be used as a direct substitute for BMCanvas, but for a general business audience I would usually recommend starting with BMCanvas first.

    On capability, I strongly agree with you: it needs to be modelled as a resource, ‘the quality of being capable of doing work’ of a particular type, rather than an activity, ‘the execution of the work’. We could argue about the term ‘possession’, but it’s a close enough description for now. 🙂

    • August 3, 2011 at 15:23

      @Tom Thank you for clarification. I think we’re very much aligned. I know some of your presentations showing how enterprise IT architecture frameworks cannot be used in enterprise architecture context as-is without any modifications – such as zachman, togaf, etc. This creates awareness about the difference between enterprise IT architecture and enterprise architecture. I guess such presentations are needed for clarifying business architecture and enterprise architecture scopes as well 🙂
      When I types the word “possession” I paused for a while and thought about it. A capability is something we have and we offer to others, therefore it looks like a possession, on the other side machines and software also have capabilities that doesn’t really fit to possession concept. So I’m not sure about it neither. I just wanted to be a little provocative 😉

  3. August 3, 2011 at 14:07

    Tom – Thank you for jumping in and providing that clarification, it’s very useful. With a little more background I’m able to re-read the post and understand its intent better.

  4. August 3, 2011 at 14:27

    Iyigun – My apologies, I appear to have spoken without realising that you had so much input and intellectual capital in the development of the Enterprise Canvas. As I said in the above comment directed at Tom, I can now go back and re-read your post with a new understanding.

    Re-reading about the capabilities, I agree with you on that point. Capabilities are something that is common in the project, programme and portfolio (P3) literature, where it is the role of a project to deliver the capability to an organisation that they haven’t had before. However, it is up to the business to realise that capability. That is, as you’ve so rightly put it, you have to assign resources to use the capability or “peform work” to realise value for the organisation. Till that time, value was only a potentiality. This would line up with the thinking of John Thorpe who is known for his book The Information Paradox.

    I created this diagram based on John Thorpe’s work showing how P3 relates to enterprise value.

    • August 3, 2011 at 15:51

      The Information Paradox looks interesting I’ll look at it in more detail. Your diagram is very useful. I also use similar categorization for risk management (project risks vs tactical risks vs strategical risks) and business motivation areas (policy vs tactics vs strategy). Thank you for valuable input.

  1. August 27, 2011 at 01:30
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