Initial Business Model Canvas

Last week I wrote about “Eating Your Own Dog Food” as a mentor at an incubator. We have taken the next step and created an initial business model.

There are different options for creating and representing business models. At the eCentre we use business model canvases. This idea originates from an initiative that resulted in a book titled “Business Model Generation”. Alexander Osterwalder and Yves Pigneur wrote it with hundreds of contributors. Online tools are available from several places but a good source is the site for the book.

In the meantime some variations exist. As with other topics there are defenders of the “only truth” who believe that changing the original idea destroys it. To me that type discussion reminds me a little bit of the discussion which programming language is the best. I think it is important that a tool works for you. And if it doesn’t try something else.

In our case we decided to try out a variation called Lean Canvas. Some of the elements are changed over the one created by Osterwalder et al. I want to mention only the differences that are most interesting for our case: Problem, Existing Alternatives and Solution.

As recommended we created the initial canvas in just about 20 minutes. In the past week we then had a more detailed discussion about the canvas and refined a few items.

The basic idea is that everything that you put into the canvas is basically a hypothesis about some aspect of your business model. You then validate each of the hypothesis. The outcome can be either that a hypothesis is upheld or it is wrong. How do we find out?

Steve Blank suggests as part of the customer discovery activity: None of the facts you need exist within the building (see “Four Steps to the Epiphany”). You have to get out of the office and talk to people. Who would you talk to? Your canvas helps you as you will have identified target “Customer Segments”. That’s who you talk to.

So, in our case we have an initial business model canvas. Now we need to validate each hypothesis in it. We are prepared to revisit the canvas as often as needed based on the feedback we get. We have started to generate a list of people who we want to speak with. This will take a few weeks.

Books mentioned in this post:

Eating Your Own Dog Food

I’m a mentor at the eCentre in Auckland, New Zealand. The eCentre is an incubator that follows the concepts of the “Lean Startup” as described by Eric Ries who in turn was a student of Steve Blank, author of “The Four Steps to the Epiphany”.

For this blog I am going to describe the journey of one of the startups. The intention is to demonstrate agile principles are at work.

The startup’s name is AgileCore. As of writing it doesn’t even have a proper web site, just the domain has been reserved. AgileCore’s idea is to provide technologies for cloud-based, scalable web applications that can be developed very quickly and then release many times each day.

Where does the idea come from? There were two independent events that coincided a couple of months ago.

One event was that while mentoring startups I discovered that their minimum viable product (MVP) – some call it a prototype – had certainly functionality that wasn’t core to their idea. Instead quite a few of those startups had similar requirements. Examples include sign-up, profile management, social network integration, support for mobile devices and similar more. At some point I started to assemble the same off-the-shelf technologies for some of them and I felt as if I was doing duplicating work instead of having something that they could share.

At around the same time a group of entrepreneurs had a discussion between themselves about how they would be building their first prototype (MVP). They found that they had certain requirements in common and came up with a list similar to the above.

So there was a problem and there was a solution, two important ingredients for a new business idea. As a consequence we started an initiative which we called AgileCore.

Of course we are at the very beginning of our journey and the path forward will be long and tough. It is possible that AgileCore joins all the other failed startups. That would be a success, too, as a failure is nothing else than the discovery of a path that didn’t work (see also Thomas A. Edison and is over thousand attempts to create a working light bulb).

On the other hand for AgileCore we intend to follow the principles we teach in our Sprint program. So we will be eating out own dog food if you like. And that is what I want to blog about once in a while.

Books that I mentioned in this post: