If you’re into the founding business and you’re following best practices threads you will have stumbled upon the concept of Business Model Canvasses as supposed by Alexander Osterwalder. The idea of business model canvasses is to focus on the cornerstones of your business: what is the value that you want to deliver (aka your “product”)? What is the customer focus (B2B/B2C)? Where’s the money coming from? What are you doing everyday? What do you essentially need to keep the whole thing running (resources, partners)? A Business Model Canvas aligns all of your answers on a unique table and acts as a discussion tool for your co-founders, partners and investors. Instead of pitching the idea (which basically leads you to explain your product, not your revenue opportunities) you can pitch the canvas – people who know the concept will understand in 3 minutes what you’re talking about as long as you found the right descriptions for each item.
The bad thing about business modelling is: not everything that sounds good or valid is working in the real world. And in most cases you won’t be able to see that on the canvas. If you are coworking with experienced people from your business area they might tell you: “that never worked for me, so don’t do it” or “I’ve tried that in the past, it worked great for me”. But what you still don’t know is if the market is still ready to pay for your value or if it’s going to fail because the idea you have is going to fail because it always had failed in the past. Business Modelling is only working if you can validate your model – that means greatly simplified: call your customer or partner, ask them if they want to pay, charge them, adjust the price, see if it scales. In reality you’re still depending on experience. But where to get the experience?
Since Osterwald’s canvasses are structuring the concept of a business model very well they should be comparable. Most canvasses that I have seen also contain somewhat similar words like “end customer”, “traveller”, “media budget”, “AdSense”, “Affiliates”, “Local Heroes”, “mass market” etc. I think those words could at least be categorized if not completely reused. For many business this is even true for the value proposition perspective: A company that sells personalized cereals is quite similar to a company that sells personalized T-Shirts – except their Key Activities which in the first case means you have to operate machines or employ people to mix the ingredients and in the latter case to have a machine print T-Shirts. In the end both companies are profiling, attracting and keeping customers and ship a physical product, one on a weekly, the other on a rather spontaneous schedule.
I’d like to state that a main purpose of business model canvasses is to make business models comparable. So if you share your model with standardized captions with others you might discover patterns in what’s working well and what might be a rather bad idea instead. If 10 companies that assemble a shippable personalizable physical product have failed putting sponsor brands in the Key Partnership or Revenue Stream columns it could be rather obvious that you’re business model is also unhealthy if you do the same thing. Of course this example highly depends on the business area you’re working with: Adidas might be highly interested in putting their name on an individual sport drink package than Kellog’s on your personal cereal.
Fact is that some patterns are proven to work better than others, depending on industry, market environment, company size etc. So lets imagine you want to start your next idea’s business model canvas by putting phrases (using a certain category / taxonomy) in the right columns. As soon as VP contains [physical, personalizable] and R$ contains [branding] an alert bulb goes yellow to warn you that this combination has failed in ten other cases and only worked for two. You then can switch your view to those cases and see if you have really good reasons to prove the warning incorrect. Furthermore the system could learn from good practices and suggest ideas to new ones: if you have drawn most of the product / value parts but still don’t have an idea what to write into the R$ column (other than “advertising” which most people do first) the system makes suggestions (“branding”, “one time fee”) that it gets from similar models that have worked.