Updated for the Breakthrough Business Model Canvas 4.0
From Business Model Canvas to a Breakthrough
The original Business Model Canvas concept gave us a huge step forward for developing business plans for startups and new divisions in existing businesses and organisations.
Gone is the 20,000 word business plan and half a mile of spreadsheets, replaced with a single (although large) sheet of paper.
Gone are the fixed answers, in come post-it notes and the ability to move ideas and concepts around and integrate the answers into one coherent whole.
I love too how the Business Model Canvas forces us to confront questions that we may be unable or uncomfortable answering.
However, I felt dissatisfied with the previous Business Model Canvas – it didn’t feel finished to me.
The Breakthrough Business Model Canvas
The previous Canvas felt too engineered for me and I found in workshops that people were giving good logical answers rather than emotionally connecting with the issues and drawing both insights and a strengthened desire to act. Or at least, the logical detail obscured the essence of their powerful ideas.
For me, startup businesses (or even new divisions of an existing organisation) are about growth PLUS passion!
If there is no passion, then there will be no growth, because no one will take on the task of breaking through glass or invisible ceilings and walls that surround all new ventures without some internal burning desire.
It is no accident, in my view, that Venture Capitalists look for passionate (sometimes crazy) business leaders. They need to see real desire, based on an emotional connection to their personal purpose.
However, whilst passion is important, this is not to say that we should allow passion to swap our startup / new division.
A key objective of the original Business Model Canvas was to ensure that new businesses/ divisions were built on evidence – and not just gut feeling (or emotion).
That approach is entirely understandable as a response to the hype (emotion) that drove the original dot com boom to make false or unsubstantiated claims or simply used the ‘trust me, I’m an entrepreneur’ type arguments.
However, without (some) emotion in a startup, it won’t get far or last long.
Emotion in its rightful place
So, instead of removing emotion as the original Canvas appears designed to do, let’s segment and identify emotion. Our aim is to neither squeeze out emotion nor be swamped by emotion, but we are seeking to allow it to find its rightful place.
So, I’ve rebuilt the Business Model Canvas – placing emotion in, what I believe, is its correct place and ensuring that we use emotion to create a sustainable model that connects powerfully with customers / users.
Here’s the detail of how that works out in terms of this Breakthrough Business Model Canvas:
1. This new Canvas is designed as a continuous loop – it helps illustrate why this is an iterative process rather than a box completion exercise. Equally, thecanvas isn’t complete until all questions have some kind of answer.
2. I allow startup leaders to start with any question but the arrows help them consider how the answer to one question impacts on the next question, which in turn helps them re-consider the previous question, and so round the Canvas they go! Nevertheless, most people start with Why:
3. This Canvas is designed as 6 questions – beginning with Why? Our ‘Why’ makes us and our startup unique – which means our business model is sustainable. Too many times I have seen models which are easily copied – but no one can copy the passion of an individual or founder. In an environment in which models are quickly and easily copied, a failure to identify the uniqueness early on, puts the business at peril and weakens the founders confidence that this will ever ‘take off’.
The Why? question, right at the most prominent top left position of the Canvas reminds us that it all starts with ‘Why?’. This concept doesn’t have any formal place in the original Canvas.
4. I have found the separation of ‘gains’ from ‘pains’ to be slightly spurious. For instance ‘save money’ is a gain but ‘stop wastage’ is a pain, but they are the same thing (at least in accounting terms)! However, emotionally, Stop Wastage makes people stop what they are doing and think ‘yes, we need to tackle that right now’. Whereas, ‘save money’ is a worthy idea and would make it to the Things to Do List, but it doesn’t create the urgency towards immediate and swift action.
Consider this – “the bath is overflowing…” – makes you (I hope) immediately get up and go and turn the tap off?
Well, Stop Wastage has a similar powerful and emotive call to action – although in pure financial numbers, it is the same as Save Money.
Why does this matter? Because businesses need powerful ‘calls to action’ if they are to succeed – and startups even more so!
That’s why I didn’t use the Customer Development Model which places gains and pains alongside each other as equals. They are not.
In the Breakthrough Business Model Canvas, we access a founder’s power by focusing on pains and then look at the benefit (the ‘gain’ if you like – of resolving the pain).
It is worth noting too that most founders are comfortable talking about gains but less comfortable expressing those same ideas in emotional terms (ie ‘pains’) because it requires them to become emotive. This is why it often helps to coach founders through the Breakthrough Business Model Canvas.
Hence, I have designed this Business Model Canvas to focus on pains first and foremost whilst recognising we need to articulate the benefits of being free from that pain.
5. I have combined “delivery of product / service AND delivery of (sales) message” to make one question.
This combination recognises the fact that more and more sales messages are delivered alongside or inside the product /service delivery. In fact, increasingly the community around a product is becoming more and more important to build trust before a sale can take place. This is especially true of service businesses, but increasingly the product / service distinction is breaking down as community moves to centre stage.
For example, consider your Amazon delivery, does that come with leaflets, special offers, invitations of various sorts? Mine does.
Equally, increasingly, the delivery of a service (say a legal service) is also an opportunity to identify further needs and sell additional services (a good example of ‘growing customers‘).
Hence, the choice of how to deliver a product / service will be impacted by the question of how to talk to and grow our customers or build our communities. And, conversely, how we talk to our customers, changes the nature of our product and service too.
Hence, these two questions can’t be separated. They are two sides of the same coin.
6. Then there’s the Price!
What we charge and how we charge is a crucial question. However, it doesn’t have a fixed answer!
In the early stage of a startup the product is often sub-optimal – meaning, it does kinda work, but it requires extra time on the users side to get value. As the service expands and develops, it is easier to deploy, delivers more consistent results etc and therefore, one would image it has a ‘higher value’ and hence can attract a higher price.
That makes sense, but things don’t work like that!
The price you choose for your product or service sends a social signal into the market about the value of what you are doing. Price it too low and people won’t value it as highly as something that is more expensive. This may result in higher acquisition costs and lower revenues – not a good place!
Hence, the price needs to send the right quality messages – but equally, there will need to be price / payment rewards for early adopters who ‘take on’ your MVP when you are still resolving issues and integrations.
Setting the right price or pricing structure is a combination of how your customers feel / respond, the perception of quality you seek to create and the viability of your price points through the startup / scaleup life cycle.
7. Lastly, let’s consider the execution. Execution is often thought of as the hardest part of a startup – and rightly so, however, the way to ‘land’ great execution isn’t actually about focusing exclusively on ‘doing stuff’. As the Breakthrough Business Model Canvas shows, if everything else is clear and sorted, the execution becomes so much easier, it is far more likely to succeed.
Therefore, whilst recognising that without execution we have nothing, we are well advised to spend our time getting everything else clear and sharp and consistent. That is because resources to execute will always be limited. Yes, even if you raise £1m ot £10m – your resources are limited and you ability to raise further rounds or generate future sales depends on your ability to use the resources you have to maximum effect.
A key part of execution will be focused on the team – or more likely, the founder team (with equity splits) – that you bring together.
A few years back I ran some research work with Manchester Business School on the ideal start up team. We identified 6 key factors that investors believe are necessary for success and I use that to help leaders begin to think about their startup / new division teams.
Something we noted during this research is that if a ‘solo’ entrepreneur, is asked or required (by an accelerator, say) to form a team, he or she will invariably find someone ‘like themselves’. Hence, they are literally a ‘team’ but they replicate themselves and hence, fail to fill the skill, knowledge or wisdom gaps. For startups, I take ‘ability to execute’ to often mean the ability to see that and select someone else needs to help fill some attribute and skill gaps.
The other aspect of execution that often trips up startup founders is misunderstanding or misconstruing customer motivations and / or the startup team motivations.
These issues will normally require a rapid pivot in the business and / or a reorganisation of the start up team and hence, a re-evaluation of the entire Business Model Canvas.
That’s why this question feeds right back into the ‘Why? Am I / we doing this?’ question.
You can join my Media Modo Facebook Group and ask questions about the Breakthrough Business Model Canvas. It is free to join and I manage to reply to the vast majority of questions. I’m always keen to get feedback too.
Lastly, if you are a trainer, you are welcome to use my Breakthrough Business Model Canvas but please acknowledge me as the author of this version and again, let me have feedback!