We all have ideas, we all think our ideas are the best out there. For example, an idea for a film cannot be copyrighted, because in the end, it’s just an idea. What would make that idea unique is the execution of it. A script, a film, a storyboard, those things can be copyrighted, because they are the execution of an idea, something beyond just a thought. It has a process to get to that.
According to Osterwalder (2017), creator of the Business Model Canvas, the reason why startups fail is because of a lack of a viable business model. In order to see if your idea is good or not, you need to create a business model. Then, you need to test it and change your business model if it’s necessary.
The Business Model Canvas helps you take a deep look at your product or service and identify the benefits of it. We looked at three main elements of a good business:
Value proposition: is the way your business creates value to the customers. A value proposition can meet an existing need better, solve a new problem or serve an unserved customer.
Revenue > costs: of course a business needs to make money, so the revenue should be larger than the costs.
Resources and activities: these are the key components you need in order to deliver the customer value proposition and make money.
Strategyzer has some great videos explaining how to create your Business Model Canvas.
Let’s take a look at a Business Model Canvas for Starbucks.
Both the video and the canvas differ a bit, but I would like to take a look at what the value proposition had in common. The uniqueness of the coffee, since the start, Starbucks separated itself from the competition by delivering different combinations of coffee drinks, and even letting the customers create their own. It is fast, before Starbucks, going to get coffee was something that would take time and not something on the go. And what they both agree is the experience of going there. It is a place to meet, to do homework, to work, for as long as you like, or as long as your coffee lasts.
The canvas is like a map of your business. If you can’t recognise one of these parts maybe you are not having a strong enough problem to solve in the market and you would have to change something. But this is just the beginning. After, you would have to test it, when you have results your business model might change. Or, in the worst case scenario, you would have to “kill your baby”.
We recently participated in class on a Business Strategy Game. The first thing we did with my teammate was create a business model canvas to help us navigate the market and focus on how we wanted our company to be. We did had to change things along the way after the first years of running the company, because your business not only depends on the market and customers, but also on the competitors. But it was a good way to look at it from the start, so that we could create a strategy based on it. And we always went back to the business model canvas when making decisions about our company.
I think the business model canvas is a great way to start looking at your idea and turning it into a business. It gives your a clear view of what you need to accomplish your goals and how to put it into action. It easily lets you see, before you start anything, if you have a good base to create your company, if you are solving a problem and creating value. After creating your map you will have more confidence to go ahead with it, or if it doesn’t work, you will definitely have an easier time with this tool to try and put another idea into action.
How many ideas can you put into action? Just try it!
Topic: Business Models
Osterwalder, A., Pigneur, Yves, & Clark, Tim. (2010). Business model generation : A handbook for visionaries, game changers, and challengers.
Osterwalder, A. Strategyzer. (2017). Ideas Don’t Matter In Innovation & Entrepreneurship. Available at: http://blog.strategyzer.com/posts/2017/11/13/ideas-dont-matter-in-innovation-entrepreneurship (Accessed 22 Dec. 2017).