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Bootstrap Your Business Model

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An Intro to the Business Model Canvas

Published in: Business, Technology

Bootstrap Your Business Model

  1. 1. BOOTSTRAP YOUR BUSINESS MODEL Business Agility on the Back of a Napkin 1@berniemaloney
  2. 2. 2 Let’s start here… SO, WHAT IS A BUSINESS MODEL? @berniemaloney
  3. 3. SO, WHAT IS A BUSINESS MODEL? Better yet… 3@berniemaloney
  4. 4. EXPLAIN YOUR BUSINESS (MODEL) TO A NEIGHBOR Exercise 2 min each in pairs 4@berniemaloney
  5. 5. HOW MANY COULD ACCURATELY DESCRIBE THEIR NEIGHBOR’S BUSINESS? 5@berniemaloney
  6. 6. OR, WAS YOUR EXPERIENCE LIKE THIS? 6@berniemaloney
  7. 7. NO BUSINESS PLAN SURVIVES FIRST CONTACT WITH A CUSTOMER Steve Blank 7@berniemaloney
  8. 8. PLANS ARE WORTHLESS, BUT PLANNING IS EVERYTHING Dwight D. Eisenhower 8@berniemaloney
  9. 9. HOW COULD WE DRINK OUR OWN CHAMPAGNE? Build Measure Learn 9@berniemaloney
  10. 10. ANY PROBLEM CAN BE MADE CLEARER WITH A PICTURE Dan Roam 10@berniemaloney
  11. 11. Dan also wrote an earlier, worthwhile book: The Back of the Napkin 11@berniemaloney
  12. 12. HOW CAN A BUSINESS BE PICTURED? http://youtu.be/QoAOzMTLP5s 12@berniemaloney
  13. 13. BUSINESS MODEL CANVAS 13 Partners Offer Key Customers What you ‘get’What it ‘costs’ Relationship ChannelResources Activities Source: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf @berniemaloney
  14. 14. WHY IS A MODEL SIGNIFICANT? 14@berniemaloney
  15. 15. WHY IS A MODEL SIGNIFICANT? DESIGN THINKING 15@berniemaloney
  16. 16. DESIGN THINKING • Freezing an idea early risks falling in love with it • Refining an idea quickly risks become attached (sunk cost) • Objective: Defer judgment & emphasize crude prototypes to help avoid these pitfalls • Example: IDEO - an illustration of Design AND Agile http://youtu.be/M66ZU2PCIcM 16@berniemaloney
  17. 17. WHY IS A MODEL SIGNIFICANT? 17@berniemaloney
  18. 18. Build Measure Learn 18@berniemaloney Lean Startup / Eric Ries: Build-Measure-Learn
  19. 19. A MODEL MIGHT LOOK GREAT ON PAPER… 19@berniemaloney
  20. 20. … REMEMBER IT’S A SET OF HYPOTHESES guess 20@berniemaloney
  21. 21. Build Measure Learn 21@berniemaloney
  22. 22. COST PER TEST / LESSONS = ? 22 http://www.automobilesreview.com/uploads/2012/09/Mercedes-Benz-SLS-AMG-Coupe-Electric-Drive-651.jpg @berniemaloney
  23. 23. COST PER TEST / LESSONS = ? 23 http://image.internetautoguide.com/f/auto-news/2010-mercedes-amg-sls-crash-test-videos/31178790/mercedes-sls-amg-crash-test-video-germany-tuv.jpg @berniemaloney
  24. 24. HOW ABOUT AN EXAMPLE? 24@berniemaloney
  25. 25. HOW ABOUT AN EXAMPLE? 25 Better yet… @berniemaloney
  26. 26. BUS 15 @ STANFORD 26 Experience in Product Management & Agile Silicon Valley Prepare outline; develop materials; coordinate efforts; time to teach… Stanford Partners Offer Key Customers What we ‘get’What it ‘costs’ Feedback; fresh perspective; resume enhancer; honorarium; contacts… Guest Speakers Curious about Prod Mgt &/or Agile Very Early Entrepreneurs Live Class Relationship Channel Experienced & want increased results Live Class direct Personal (vs automated) Resources Activities Brand Rooms Equipment Marketing Experience @berniemaloney
  27. 27. BUS 15 @ STANFORD 27 Experience in Product Management & Agile Silicon Valley Prepare outline; develop materials; coordinate efforts; time to teach… Stanford Partners Offer Key Customers What we ‘get’What it ‘costs’ Feedback; fresh perspective; resume enhancer; honorarium; contacts… Guest Speakers Curious about Prod Mgt &/or Agile Very Early Entrepreneurs Live Class Relationship Channel Experienced & want > resultsLive Class direct Personal (vs automated) Resources Activities Brand Rooms Equipment Marketing How could inspect/adapt be applied? Experience @berniemaloney
  28. 28. HOW ABOUT…? 28 Experience in Product Management & Agile East Bay Area Prepare outline; develop materials; coordinate efforts; time to teach… Berkeley Partners Offer Key Customers What we ‘get’What it ‘costs’ Feedback; fresh perspective; resume enhancer; honorarium; contacts… Guest Speakers Curious about Prod Mgt &/or Agile Very Early Entrepreneurs Live Class Relationship Channel Experienced & want > resultsLive Class direct Personal (vs automated) Resources Activities Brand Rooms Equipment Marketing Experience Experience at Stanford @berniemaloney
  29. 29. OTHER VALUES OF THE BM CANVAS • Ecosystems Win – Microsoft Office – iTunes – Search + Ads • Canvas Maps an Ecosystem Fits a single visual field = shifts brain processes • Looks at Market & Opportunity over chasing a competitor’s ‘tail lights’ 29@berniemaloney
  30. 30. Ready for a Group Exercise? 30 Partners Offer Key Customers What we ‘get’What it ‘costs’ Relationship ChannelResources Activities @berniemaloney
  31. 31. EXERCISE: BUSINESS MODEL CREATION • Form Teams • Product: Biodegradable Bag (ok for fertilizer) • 5 minutes: Create (at least 1) business model 31 http://www.naparecycling.com/uploads/plastic%20bag.png @berniemaloney
  32. 32. BUSINESS MODEL CANVAS 32 Partners Offer Key Customers What you ‘get’What it ‘costs’ Relationship ChannelResources Activities Source: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf @berniemaloney
  33. 33. INSIGHTS: CREATING A BUSINESS MODEL @berniemaloney 33 http://www.garabatosydibujos.com/wp-content/uploads/2015/01/conocer.jpg
  34. 34. This is a crude prototype 34 Partners Offer Key Customers What we ‘get’What it ‘costs’ Relationship ChannelResources Activities @berniemaloney
  35. 35. EXERCISE: BUSINESS MODEL CREATION • Form Teams • Product: Biodegradable Bag (ok for fertilizer) • 5 minutes: Create (at least 1) business model 35 How could you “unit test” the product? @berniemaloney
  36. 36. THERE ARE NO FACTS IN THE BUILDING …SO GET OUT AND TALK TO CUSTOMERS Steve Blank 36@berniemaloney
  37. 37. CUSTOMER DEVELOPMENT Customer Discovery Customer Validation Customer Creation Company Building pivot 37 Source: Steve Blank The Four Steps to the Epiphany @berniemaloney
  38. 38. TWO PHASES Customer Discovery Customer Validation Customer Creation Company Building pivot Search Execution 38@berniemaloney
  39. 39. ENLIGHTENED TRIAL & ERROR SUCCEEDS OVER THE PLANNING OF LONE GENIUS Peter Skillman 39@berniemaloney
  40. 40. APPLY THE SCIENTIFIC METHOD: RUN EXPERIMENTS test 40@berniemaloney
  41. 41. WITH VALIDATION, ITERATE (PIVOT) MODEL AND RUN FURTHER EXPERIMENTS valid 41@berniemaloney
  42. 42. PIVOTING: LEARNING CHEAPLY FROM FAILURE 42@berniemaloney
  43. 43. Build Measure Learn 43@berniemaloney
  44. 44. THE WAY TO SUCCEED IS TO DOUBLE YOUR FAILURE RATE Thomas Watson Founder of IBM 44@berniemaloney
  45. 45. HP MEDIASMART (RETAIL) TVS 45 American Brand CircuitCity Cost-plus Mat’l; Design; Supply Chain; Placements Asian TV Brand You know Partners Offer Key Customers RevenuesCosts Just enough to break even at intro, Not enough to sustain price drops CinemaNow Best Buy Relationship Channel Direct Direct B2C Indirect B2B2C Resources Activities Glass TV KnowHow Microsoft Internet Content Asian TV Brand New to USA Netflix Retail Electronics Leading Edge Internet TV Known Brand IPTV Visionary Adopters Manufacturing Set Devel’mnt Licensing Volume Retail future proofing @berniemaloney
  46. 46. HP COMMERCIAL TVS 46 American Brand HP Sales Cost-plus Mat’l; Design; Supply Chain; Asian TV Brand You know Partners Offer Key Customers RevenuesCosts Sustainable Margin CDW Relationship Channel Direct B2B Indirect B2B2B Resources Activities Glass TV KnowHow Asian TV Brand New to USA Commercial Suppiers Known Brand Manufacturing Set Devel’mnt Competive Price Direct HP Accounts @berniemaloney
  47. 47. VIZIO TVS (2006) 47 American Brand Costco Competitive Mat’l; Design; Supply Chain; Asian TV Brand You know Partners Offer Key Customers RevenuesCosts Sustainable Margin Sustainable Volume Relationship Channel Direct Direct B2C Indirect B2B2C Resources Activities Glass TV KnowHow Asian TV Brand New to USA Warehouse Clubs Value PricingManufacturing Set Devel’mnt Value Buyers @berniemaloney
  48. 48. LAYERING IN MARKET RESEARCH 48 Partners Offer Key Customers RevenuesCosts Relationship ChannelResources Activities Retail Electronics Leading Edge Internet TV IPTV Visionary Adopters Value BuyersCommercial Suppiers Value Pricing 1Ks 100s @1Ks 10s @1Ks 1M+ @berniemaloney
  49. 49. PIVOTS ARE BUSINESS MODEL CHANGES WITHOUT CRISIS Steve Blank 49@berniemaloney
  50. 50. Customer Discovery Customer Validation Customer Creation Company Building pivot 50 Test & Adapt the model until you can prove it works @berniemaloney
  51. 51. HOW TO PROVE IT WORKS? • MVP – Minimum Viable Product – Sale of a Product (it’s viable!) • PMF – Product Market Fit – Is it the right customer segment? – Is the segment sustainable? – Is the product / model sustainable? 51@berniemaloney
  52. 52. Build Measure Learn Release Measure Earn $ Noted by Jeff Patton (Aug ‘12 DFWScrum) 52@berniemaloney
  53. 53. Customer Discovery Customer Validation Customer Creation Company Building pivot Search Execution 53 MVP PMF @berniemaloney
  54. 54. EXERCISE: BUSINESS MODEL CREATION • Form Teams • Product: Biodegradable Bag (ok for fertilizer) • 5 minutes: Create (at least 1) business model 54 Want a model comparison? @berniemaloney
  55. 55. BASIC SANITATION 55 Image Source: http://www.whale.to/a/bangladesh.html @berniemaloney
  56. 56. ACCESS TO SANTIATION • 4 out of 10 people lack even simple latrines (2.6 billion people) • A solution? 56@berniemaloney http://greenupgrader.com/files/2009/04/peepoo6.jpg
  57. 57. PEEPOO BAG • Single use toilet bag • Self sanitizing • Low production cost • Biodegradable – turns into fertilizer • (initially) targeted at poor people • People already pay for sanitation 57@berniemaloney
  58. 58. WHO / WHERE ELSE COULD USE THIS? 58 Partners Offer Key Customers What you ‘get’What it ‘costs’ Relationship ChannelResources Activities @berniemaloney
  59. 59. MULTIPLE MODELS FOR 1 PRODUCT 59@berniemaloney
  60. 60. This is a crude prototype of a business 60 Partners Offer Key Customers What we ‘get’What it ‘costs’ Relationship ChannelResources Activities @berniemaloney
  61. 61. MULTIPLE MODELS FOR 1 PRODUCT 61@berniemaloney Want another Group Exercise?
  62. 62. EXERCISE: BUSINESS MODEL CREATION • Form Teams • Product: Coffee • 7 minutes: Create a business model AND 3 “systems” Tests of PMF 62 http://www.thecoffeebeanshop.com/images/CoffeeBeanCloseup6beansR.jpg @berniemaloney
  63. 63. BUSINESS MODEL CANVAS 63 Partners Offer Key Customers What you ‘get’What it ‘costs’ Relationship ChannelResources Activities Source: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf @berniemaloney
  64. 64. INSIGHTS: CREATE + TEST A BUSINESS MODEL @berniemaloney 64 http://www.garabatosydibujos.com/wp-content/uploads/2015/01/conocer.jpg
  65. 65. EXERCISE: BUSINESS MODEL CREATION • Form Teams • Product: Coffee • 5 minutes: Create (at least 1) business model 65 http://www.thecoffeebeanshop.com/images/CoffeeBeanCloseup6beansR.jpg @berniemaloney Want a model comparison?
  66. 66. 66 http://upload.wikimedia.org/wikipedia/commons/4/4f/Pike_Place_Market_-_Starbucks_circa_1977A.jpg @berniemaloney
  67. 67. 67 http://www.alfredhoesliag.ch/typo3temp/pics/20bc77213a.jpg @berniemaloney
  68. 68. ALTERNATIVE: LEAN CANVAS 68 http://practicetrumpstheory.com/the-10x-product-launch/
  69. 69. 69 http://practicetrumpstheory.com/the-10x-product-launch/
  70. 70. BUSINESS VALUE CANVAS 70 Partners Offer Key Customers What you ‘get’What it ‘costs’ Relationship ChannelResources Activities @berniemaloney gains pains customer jobs gain creators pain relievers products & services
  71. 71. EXTENDING THE BUSINESS MODEL CANVAS 71@berniemaloney
  72. 72. BUSINESS TO CONSUMER B2C 72@berniemaloney
  73. 73. BUSINESS TO BUSINESS TO CONSUMER B2B2C 73@berniemaloney
  74. 74. OR AN ENTIRE VALUE CHAIN 74@berniemaloney
  75. 75. OR MULTIPLE MODELS FOR 1 PRODUCT 75@berniemaloney
  76. 76. ARE PRODUCTS THIS EASY TO ITERATE? 76@berniemaloney
  77. 77. WHICH ONE(S) BEST FIT MARKET? 77@berniemaloney
  78. 78. Customer Discovery Customer Validation Customer Creation Company Building pivot 78 Each Experiment amounts to an (Agile) Iteration of the Business the Ecosystem @berniemaloney
  79. 79. IF YOU DON’T WORK UNDER TIME CONSTRAINTS, YOU COULD NEVER GET ANYTHING DONE. IT’S A MESSY PROCESS, IT COULD GO ON FOREVER. Dave Kelley 79@berniemaloney
  80. 80. FAIL OFTEN, IN ORDER TO SUCCEED SOONER IDEO 80@berniemaloney
  81. 81. FIN Ut Prosim. Namaste. @berniemaloney 81
  82. 82. @berniemaloney 82 Bernie Maloney, CSP PE, CSM, CSPO bit.ly/speedmygenius Agile Coach Accelerating Genius Turning Strategies into Results From Startup to Beyond $100M

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