The Business Model Canvas and Social Impact
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This document discusses the Business Model Canvas (BMC) and how it can be used to test assumptions about a business model. It provides an overview of each section of the BMC, including Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partners, Cost Structure, and explains what common problems occur in each area. It recommends using the BMC to track assumptions, test hypotheses frequently, and be willing to change the business model based on validated learning from customers.
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The Business Model Canvas and Social Impact
- 1. Paul Orlando @porlando paul@StartupsUnplugged.com The Business Model Canvas (And Social Impact) At The Hub LA
- 2. 3-month accelerator for Mobile Startups Lean Startup Advisory StartupsUnplugged.com/advisory AcceleratorHK.com Other projects: Startup Sacrilege for the Underdog Entrepreneur WeAreHKtech list MVP Cards Startup Hug Persuade the parents project early success success so-so fail
- 3. What causes the most difficulty for early-stage businesses? …How can we solve this?
- 4. A way forward. The MVP. Business Model Canvas. Case Studies. A way backward. Reading tech news. Loving your ideas. Being a know-it-all.
- 5. Concept/ Business Plan Product Development Alpha/Beta Test Launch/1st Ship Product Introduction Model Customer Development Model Company Building Customer Discovery Customer Validation Customer Creation Pivot
- 6. Concept/ Business Plan Product Development Alpha/Beta Test Launch/1st Ship Product Introduction Model Customer Development Model Company Building Customer Discovery Customer Validation Customer Creation Pivot
- 7. Stop selling, start listening Test your hypotheses Continuous discovery Done by founders Customer Development Model Customer Discovery Customer Validation Company Building Customer Creation Pivot
- 9. Ideal Customers 1. They have a problem 2. Are aware of having a problem 3. Have been actively searching for a solution 4. Have hacked together a solution 5. Have or can acquire a budget
- 10. ...describes how an organization creates, delivers, and captures value... ...describes how your company makes money... ...describes how you have impact... (Use the Minimum Viable Product to test your business model assumptions.) The Business Model...
- 11. customer segments key partners cost structure revenue streams channels customer relationships key activities key resources value proposition
- 12. Reintroducing The MVP "The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.“ -- Eric Ries What They Say…
- 13. Reintroducing The MVP “Our MVP is the crappy version of what we’re going to build later.“ -- most startups talking about MVPs What We Hear…
- 14. Reintroducing The MVP “blah blah blah get validated learning blah blah blah use least effort and test your hypotheses.” -- me New Translation…
- 15. MVP technique What it is In-person Interviews Talk to people to learn about them and their problems Landing Page / Adwords Use a description to test actions from lots of people Mockup / Wireframe Paper or digital non-functioning iterations to test reactions “Parasite” Ride on top of an existing network to speed up data collection Concierge People do work of not yet built system Video Show what it’s like to use it Prototype Actually build a basic version
- 16. customer segments key partners cost structure revenue streams channels customer relationships key activities key resources value proposition
- 17. CUSTOMER SEGMENTS For whom do we create value? Who are our most important customers? Which jobs do they really want to get done? (Do we like this customer segment?)
- 18. VALUE PROPOSITIONS What value do we deliver to the customer? Which one of our customer’s problems do we help solve? What bundles of products and services do we offer to each Customer Segment? Which customer needs do we satisfy? Do they care? (Prepare to be surprised by what you learn.)
- 19. CHANNELS Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? (This is often a problem section.)
- 20. CUSTOMER RELATIONSHIPS What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Personal? Automated? Acquisitive? Retentive? Which ones have we established? How are they integrated with the rest of our business model? How costly are they?
- 21. REVENUE STREAMS For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? Are you generating transactional or recurring revenues?
- 22. KEY RESOURCES What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams?
- 23. KEY ACTIVITIES What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams?
- 24. KEY PARTNERS Who are our Key Partners? Who are our Key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? Who do you need to rely on?
- 25. COST STRUCTURE What is the resulting cost structure? Which key elements drive your costs? What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive?
- 26. Channels Customer Relationships Key Resources Key Activities RevenueCosts Customer Segments Key Partners Value Proposition Business Model Canvas Test: • Problem • Customer • User • Payer Test: • Demand Creation Test: • Channel Test: • Product • Market Type • Competition Test: • Pricing Model / Pricing
- 27. Business Model Canvas (BMC) section What goes wrong Customer Segments Sticking with the same segment, unwillingness to test with the segment, not liking the segment, Value Proposition People don’t care about what you’re doing, not understanding what people value, Channels Underestimate how difficult it is to reach people, or the costs, Customer Relationships Inability to serve these relationships, Revenue Inability to make enough to be self- sustaining, Overall Unwillingness to test hypotheses, not returning to the BMC at least weekly,
- 28. Describe business models for... E-commerce service, Freemium service, Media site, User Generated Content, Two-sided market, SaaS / PaaS Barbershop, restaurant, co-work space, art gallery, tourist service, tutoring, [fair trade coffee, Tom’s Shoes]
- 29. A way forward. Track assumptions, test and use the BMC regularly. Use the BMC to help you innovate. Learn from others (case studies). Figure out which metrics matter for you. Start with Customer Segment, Value Proposition sections. The inability to reach your customer (Channels) is a hidden problem for many. Be willing to kill your ideas. You know nothing.
- 30. Next Steps for You Write out your business model on the BMC Form hypotheses for each part of your business model - What is the test for whether your business is worth pursuing? - What are the tests for each of your hypotheses? - What is your pass/fail for the test? Go out and test, change assumptions and repeat!