A “killer”product idea!he’s reallypassionate about it
Mike’s experienced.He knows how to test hisidea using...
The research looks good!Mike moves forward, andwrites a fantastic....
Great!Based on the credentials,research, and plan, Mike hassecured the final piece...
Money in hand,Mike get’s started on
...building his start-up.
He makes the headlinesof every major...
... and is invited to give...
Mike and hisstart-up are on a roll!
How likely is hisbusiness tosucceed?
Despite the experience,research and plan...
Let’s help Mikewith 5 things he didn’t know. 29
1 No business plan survives the first customer contact.
Sticking to a planningdocument works for aknown future, not for astart-up context.Plan’s fail in start-ups.
2 It’s the business model, stupid.
Hey Mike, your plan wasto build a company, butdid your plan include aBusiness Model?
“A business model describesthe rationale of how an organizationcreates, delivers, and captures value”
Here are the 9 building blocks ofa business model:
CUSTOMER SEGMENTSwhich customers and users are you serving?which jobs do they really want to get done? images by JAM
VALUE PROPOSITIONS what are you offering them? what is that getting done for them? do they care? images by JAM
CHANNELShow does each customer segment want to be reached? through which interaction points? images by JAM
CUSTOMER RELATIONSHIPSwhat relationships are you establishing with each segment? personal? automated? acquisitive? retentive? images by JAM
REVENUE STREAMS what are customers really willing to pay for? how?are you generating transactional or recurring revenues? images by JAM
KEY RESOURCESwhich resources underpin your b.model? which assets are essential? images by JAM
KEY ACTIVITIESwhich activities do you need to perform well in your b.model? what is crucial? images by JAM
KEY PARTNERSwhich partners and suppliers leverage your model? who do you need to rely on? images by JAM
COST STRUCTUREwhat is the resulting cost structure?which key elements drive your costs? images by JAM
key value customer activities proposition relationships key customerpartners segments cost revenuestructure key streams resources channels images by JAM
“Hmm, interesting so what do I make of that?”
use it as a tool to...
sketch out your business model
building block building building block blockbuilding block
building block building block building block building buildingbuilding block block block building block building building block block buildin g building block building block block
This tool is called theBusiness Model Canvas(download with instructions atwww.businessmodelgeneration.com/downloads)
3 Take time to think through alternative possibilities.
the same technology, product, or servicecan have numerous business models
try sketching out alternativebusiness models by askingyourself...
transactional vs. product vs. service scale vs. scoperecurring revenues blue ocean vs. redniche market vs. ocean direct sales vs.mass market indirect sales personal vs.capital expenditure vs. automated open vs. closedpartnership disruptive vs. difficult questions human intensive vs. incrementalacquisition vs. retention system intensive tailor-made vs. mass physical vs. virtual productionone customer segmentvs. another copyright vs. copyleft fixed vs. variablepaid vs. free costsdistributed vs. in-sourcing vs. out- advertising vs.centralized sourcing sales
only make a first choice after prototypingand thinking through several models...
OK. You’ve got your model,but you’re not done yet...
4 Your business model idea is just a set of hypotheses.
a business model might look great onpaper... building block building buildin block g block building block block building block ... but be buildin block g building building block block building block build blocing k buildin block g honest that it’s buildin block g
... just a set of hypotheses guess guess guess guess guessguess guess guess guess guess guess guess
...so you need to get out of thebuilding and...
test each hypothesis(e.g. with customers)
this business model testing process iscalled Customer Developmentcustomer customer customer companydiscovery validation creation building pivot
two different phases...
searchcustomer customer customer companydiscovery validation creation building pivot execution
and it starts with...
... verifyingeveryhypothesis customer customer customer company discovery validation creation building pivot
test your hypotheses product market type competition
test your hypotheses problem customer user payer
test your hypotheses channel
test your hypotheses demand creation problem channel product customer(customer) market type user(problem) competition channel payer validate business pricing model model
to accomplish this you will need a specialand agile ...
A team that ...
... gets out of thebuilding!
... to test and adapt your model agile business model demand adaptation creation problem channel product customer(customer) market type user (problem) competition payer customer development channel team validate business pricing model model
you need to adapt thebusiness model untilyou can prove it workscustomer customer customer companydiscovery validation creation building pivot
“How do I provea businessmodel works?”
One example of “proving” isconcluding the ...
... sales of a “minimum viablefeature set”
This adaptation process is called ...
the pivotcustomer customer customer companydiscovery validation creation building pivot (repeat * until proven)
so do you have any “factual” proof?
You finished the searchprocess!
So don’t ever forget ...
5 Don’t build your company, until you’ve verified your Business Model
or you’ll risk ...
Burning your cash whilesearching for a workingbusiness model
execution is not search
execution follows search
Build when you’ve foundyour model
only then execute:
scale your marketingcustomer customer customer companydiscovery validation creation building pivot execution
and build your org structurescustomer customer customer companydiscovery validation creation building pivot execution
1 No business plan survives the first customer contact.2 It’s the business model, stupid.3 Take time to think through alternative possibilities4 Your business model idea is just a set of hypotheses.5 Don’t build your company, until you’ve verified your Business Model
you can read more about business models and thecustomer development process here: +BusinessModelGeneration.com StevenBlank.com/books.html
GoodLuck!BusinessModelGeneration.com StevenBlank.com/books.htmlAlexOsterwalder.com SteveBlank.com@business_design @sgblankContribution by Alan Smith @thinksmith