Business Model Canvas, Iteration, and Marshmallows

Business Model Canvas by Alexander Osterwalder

I have a love hate relationship with Alexander Osterwalder’s Business Model CanvasSteve Blank uses it brilliantly in his Lean Launchpad class, I’ve had less success using it in my own curriculum.

Part of this is the format of the canvas itself. There are some small things about the canvas that irk me from a user experience perspective, like the fact the canvas starts (left to right) with Key Partners, but I’ll get into that in another post.

tl;dr Skip to the end and start iterating!

Teaching the Business Model Canvas

The other part of my general annoyance has more to do with the structure of courses where it’s taught.

The one month program I designed for TechBA was condensed we could only spend a couple days devoted to the Business Model Canvas. We could have put more time on it, but teams wouldn’t have had enough time between sessions to do a reasonable job of customer development. (Especially since many of their customers were not local to the venue.)

So despite the excellent job Victor Reyes did teaching it, there was insufficient time to really dig into the nitty gritty of the canvas and iterate on it. The same thing is the case for those who simply read a blog post, fill out the canvas, then bury it in the drawer.

So unless you have someone like Steve Blank handy to badger you every week, I’m skeptical this is the universal, off-the-shelf tool it’s cracked up to be.

The moment a Business Model Canvas becomes a static document is the moment it becomes useless. Click To Tweet

If it’s just another dead piece of paper, you may as well write a business plan. It’s just as valid to take six months to write a business plan and then ignore it, as to take one day to make a Business Model Canvas and then ignore that.

Don’t waste your time.

Make Habits, Not Plans

Steve Blank is likely more successful using the canvas for a couple reasons:

  1. Lots of experience (duh)
  2. 10 week format

With a 10 week format, entrepreneur teams determine their riskiest hypothesis (with the advice from mentors), get out of the building to gather data, then adjust their business model canvas for the next round of feedback. In this way,

Business planning must be a habit, not a one time occurrence Click To Tweet

The same is true of any User Experience (UX) design artifact or lean startup tactic. Do people change over time? Do we expect more features? A better experience?

Yep.

If your user persona isn't changing over time, you're no longer innovating. Click To Tweet

Iteration is a Habit

Stay Puft Marshmallow Anti-Lean StartupLots of people get by just fine without the Business Model Canvas. At the end of the day, it’s one of many paradigms to view your business through that may help you.

If you don’t use it, that’s ok. You can still be a lean startup, Stay Puft Marshmallow Man fat, or whatever you want to be.

But

If you're going to use the Business Model Canvas, do it right! Click To Tweetif you’re going to use the Business Model Canvas, do it right!|]

Every week, block time with your Business Model Canvas. It should be a regular time boxed slot of no more than 30 minutes so you’re not spending endless hours in a terminally dysfunctional meeting filled with ego and false assumptions.

  1. Throw away the assumptions you disproved last week
  2. Dump and sort your new assumptions
  3. Prioritize the hypothesis you will test this week
  4. Get out of the building

Discussion (12 comments)

  1. Ray says:
    12.06.2012.

    Awesome honing in “the only constant is change;” especially love the “business planning must be a habit, not a one time occurrence!”

    1. Tristan says:
      12.06.2012.

      Yep! Went pretty well up to the right arm I think. A bit too skinny and asymmetrical.

  2. Scott Whaley says:
    12.06.2012.

    Right on Tristan. What I have discussed with you and truly the chicken and the egg. The constraining factor is not simply the system. I believe that the participants internal system (thoughts, feelings, actions, habits) and the teams interaction system also play huge roles. Any breakdown in one of those three legs leads to sub-optimal results. The catch 22 with all explanations of human performance. There is no, one size fits all or is superior all the time system. Also, while the time frame can be a hindrance (excuse) it can be powerful focuser and accelerant. For instance, fix this or we all die in 60 minutes!…Extreme I know…but it does work.

    Bottom line I get a lot out of your evaluation. Very valuable to me.
    Thanks!
    Scott Whaley

    1. Tristan says:
      12.06.2012.

      Glad it was helpful in any way!

  3. Morten Lundsby says:
    12.06.2012.

    Like any plan it only adds value when used over time to evaluate and adjust. The adjustment can be to the plan/canvas or to your actions.

    The trick is to build triggers into the work that forces you to (or makes it most convenient to) review your plan regularly or at key decision points. If I had good examples of how to find those triggers I would write the book 🙂

    1. Tristan says:
      12.06.2012.

      Screw the book, write a blog!

  4. Salim Virani says:
    15.06.2012.

    Hey Tristan, I’ve been teaching both BMGen and Lean Startup here in Europe as well. Would be good to connect and trade notes.

    When people get stuck on “static” canvases, I find a few other techniques help, which I picked up from Alex Osterwalder:
    1) Using post-its. They move around and feel temporary.
    2) Using a 3-minute timer per model. Forces you to get to the point, and not get caught up on polishing an idea.
    3) Creating multiple, simpler business model hypotheses, rather than one massive, convoluted model. When each 3-minute canvas contains one simple dynamic or hypothesis, it’s quicker to spot how to test it so you can get out of the building.

    1. Tristan says:
      16.06.2012.

      I always find working in time-boxed charettes advisable, but it doesn’t fix the underlying problem: Without sufficient follow up, few entrepreneurs will actually develop a diligent practice and iterate.

      The BMC seems particularly susceptible to this as it is inherently intellectual in nature. Where a sports player might immediately grasp the necessity of practice to develop their dribbling skills in basketball, the more cerebrally oriented may immediately grasp the concept without realizing the practice required to master the subtleties. A strange misconception considering the vast level of practice it takes us at a young age to master something as purely academic as math.

      1. Salim Virani says:
        18.06.2012.

        We can look deeper!

        Since working with Alex Osterwalder and his clients, I’ve noticed the people who’ve found the canvas valuable in the long-term have taken particular principles on board. The idea that they come back to the canvas on a regular basis then comes a bit more naturally.

        The timer and iteration are techniques – with business models, I also teach these principles:
        * Step back to spot gaps in your business idea,
        * Prototype models widely to understand your options,
        * Seek to identify the core, make-or-break relationships in each model rather than testing each post-it as a stand-alone hypothesis.

        I’ve found explaining the “why” helps stop people from treating the canvas as a business plan replacement, so they don’t bring their plan-then-execute assumptions along the ride.

        This emphasis helps cuts to the root of the problem more effectively than teaching the techniques alone, but there’s still a lot I want to improve in ways of teaching this… How do you approach this? What do you teach along with the techniques to help people get it?

        1. Tristan says:
          19.06.2012.

          I’m finding that by keeping advisory meetings shorter, and having a clear “you need to do _____ before I can help you with this” forces iteration. I plan to start time boxing the meetings in and of themselves.

          For example, if the startup has a problem with segmentations and I spend an hour going through it, then they feel it is “done” and don’t need to work on it more.

          On the other hand, if we cut the conversation off at half an hour and they understand the general idea, but not the specifics, they are forced to go away and come back later to receive more feedback. Then they are iterating by default week after week.

          That’s another advantage of Steve’s 10 week structure.

          But yes…after any specific technique I try to teach the “why” of the technique. (e.g. “We use thick sharpies so you can’t write as much on a post-it.”)

          However when I do workshops I preface this with a Roman vote. “I propose that I explain the rational behind the techniques as we go along so you can better teach them to the colleagues in your company who are not here.”

          Everyone always votes thumbs up for this at gets them more committed.

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