Introduction to Business Modeling
Explore how to build adaptive business models that align efforts and reduce uncertainty using Lean Startup approaches. Understand the difference between traditional plans and scalable, repeatable business models, and learn how to use tools like Business Model Canvas and Value Proposition Canvas to validate and evolve your business ideas.
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A business model is a story about how an organization creates, delivers, and captures value.
The traditional approach
A sure recipe for failure is to use the traditional approach of creating a five-year business plan full of desires, expectations, and assumptions, then take it for granted and then give it to the product team for execution. This is the traditional approach and one that does not work.
The lean approach
Using a Lean Startup approach, the business model is the underlying thread that helps you to be focused and keep your efforts aligned. Remember that you are looking for a repeatable and scalable business model. Therefore, you can model a business, but it does not define a business model or business plan.
Some teams start by creating an initial version of the business model using frameworks such as Business Model Canvas or Lean Canvas. Other teams create it later after validating the problem-solution fit and defined the value proposition for a specific segment of customers.
We recommend that while you are in the exploration and validation stages of the business model, you use Business Model Canvas or Lean Canvas as a constant reference and continue to update it as you reduce uncertainty.
Sometimes, you may have to work with several versions of the canvas in parallel because you have several target customer segments and/or different value propositions to validate.
A good practice with this is to begin the discovery process by working on the design of the value proposition by using Alex Osterwalder’s Value Proposition Canvas.