Category Archives: Pivots

What is a Business Model Canvas?

The Business Model Canvas is a work sheet
The Business Model Canvas is a work sheet

The canvas is a central tool for capturing what you learn during your customer discovery process. You start by making a best guess at filling out each section, knowing you’re almost certainly mistaken. Then you go out and talk to people, focusing initially on defining your problem, solution and audience (Value Proposition, center box). Getting this right is the ultimate goal of the HTRLaunchPad process because accurately defining a value proposition means you’ve found your scalable, profitable business model.

But there are nine boxes on the canvas and each contributes to your knowledge base. You may, for example, be discussing pricing and find that the market wants the service bundled with other services by a third party (channel). Even if this was not the focus of your conversation it is valuable and what you learn should be added to the Channels box on the Canvas.

As you proceed there is going to be a lot of erasing and rewriting of your work sheet. Things you assume are correct early on get revised or completely changed. And during the process the Canvas serves as a snapshot of the knowledge you’re accumulating and the progress you’re making. It may even tell you that you’re not making progress and have to consider a change in plans (pivot).

When you’ve had your 120-150 conversations your Canvas will represent your business model. You should have a much clearer idea of how you market, operate, generate revenues, your financial requirements and more. It all fits into the Business Model Canvas which becomes, at that point, a model for your operational business plan.

It’s a deceptively powerful tool that forces entrepreneurs to succinctly define all the important pieces of their business on one page.

Discovery: It’s a numbers game

Keep piling up those numbers! *
Keep piling up those numbers! *

During weeks 4 and 5 of the HTRLaunchPad program we saw confusion reigning with several of our software teams. Two completely changed course and others executed pivots to more defined markets and more focused solutions. During the last two sessions, weeks 7 and 8, things began to noticeably tighten up, in a good way. Minimum Viable Products become much more focused, the value propositions had much clearer value and we started to see the business model canvas worksheets become less complex and more understandable. Progress!

But we also noticed a direct correlation between the number of customer contacts being made and the amount of progress. Simply put, more contacts means faster progress and a much higher likelihood of success. You can understand all the principles of the launchpad methodology, make lots of educated guesses and fill out a canvas but it is all a meaningless exercise if you don’t get out and talk to people, lots of people. It is, to a high degree, a numbers game.

I have contended since my first introduction to this methodology that if any business or organization spoke with 120-180 customers over a three month period (10-15 contacts per week) and made sure at least two people were in on each conversation, they would experience a huge change in their understanding of their business. When you add in the methodology for getting the most out of these conversations, they become even more valuable.

Market research and surveys are great tools but live conversation reveals much more, including what you don’t know, how decisions are made and what people will pay for viable solutions. They will also tell you when your assumptions are wrong, before you invest time and money into them. This is why launchpad stresses that failures are a form of success: They keep you from exhausting resources on dead-end projects.

The message is clear: talk to more people every day.

*Image courtesy of free images.co.uk

The Fifth Week, and we start to see Pivots looming

A Pivot is a significant change in direction
A Pivot is a significant change in direction

When Mike began to introduce Todd and I to the launchpad methodology, based on his iCorps experience at Stanford, he predicted that around week Four or Five things would start changing. Basically, he said, this is the point where many of the startups began learning how little they knew about their market or found that their initial hypothesis was wrong. Last Friday was week Five and there it was- a lot of teams making major changes or contemplating them. Some learned important things that more clearly defined a better market opportunity, others found themselves in dead-ends. Both are valuable learnings.

The customer discovery process was created to generate exactly these kinds of results, before you commit time and resources to an idea. With ‘normal’ startup methodology, all of our teams would have made extensive progress writing business plans. Several already had done them. And virtually all of them would have been wrong in significant ways.

So, while there was some real pain out there last week, things will look better as a result. We see teams tightening up their focus as their discovery process forces them to accept reality. Some teams are wrestling with being wrong and having to admit it. Others have had their ideas validated but only after they got better at expressing them. And others are still working on it.

So, we expect some pivots before our next class on April 5th. Just a reminder: Pivots are major changes in direction. This should be interesting. This stuff works!