Recently I saw the video ‘The Death of Business Model’ by Terrence Brown. In this post I would discuss some of the highlights and the things that I learnt from the video.
There are numerous definitions of a what is a business model and a lot of them were discussed in the video. From all of them my view on business model is that it helps one to decide what is the value the business will offer, who will it offer this value to, how it will reach those and finally finances (profit, cost of selling etc). To explain this in more detail we have business model canvas which has 9 components. In my opinion all are important but the one to start with is ‘value proposition’. This is because the most defining aspect of a business is what exactly is the value that we can offer. Whether is to attract customers or investors the most important thing is to know exactly the specifics of the value that is offered.
Lean startup movement consists of three components – business model canvas, customer development and agile engineering. One of the most grave mistake to make is to assume that your potential customer segment is going to live your product and readily pay for your product without actually talking to your potential customers. Hence it is very important to actually talk and discuss with your customer and to design your customer archetype on some solid testing rather than assumptions made. Next agile engineering consists of a lot of action items. I believe here is when you start doing some actual work. An MVP (Minimal Viable product) is designed and deployed, customers can be asked to test the demo/beta and give constructive feedback. Multiple design decisions are actually tested and based on the results they could be destroyed/modified. Also most of the time there would be some or the other changes that will need to happen to your business model, value etc and you will pivot. It is important to understand that all of these are tools and should be just used as a tool. It does not mean that if one can design a good one page business model canvas that their business will be successful (business is not equal to business model canvas).