For hundreds of years, business model generation and innovation was (still is) based on 70%* planning (writing a business plan), 10% executing, and 20% iterating. Months and years go by and the entrepreneur is still working on finalizing the most appealing and realistic plan for investors, personal assurance and short and long term step by step execution. Up until the last decade, when leaders like Steve Blank and Alex Osterwalder introduced the business plan canvas; a one-page plan in which you propose your hypotheses about the different aspects of a business then validate and/or iterate or pivot based on customer interaction. Today, I propose that some of the time reserved for the canvas can be used for customer development using the following framework.
For customer M, service S leverages X and Y, to achieve Z without relying on W but by relying on this hidden V that is currently used to serve other purposes but can possibly serve Z.
For fee sensitive investors, Robinhood leverages technology (X) and interest income (Y) to offer free stock trading (Z) without relying on investors’ monthly fees or per trade commissions (W) but by accruing interest from investors’ uninvested cash (V).
In Nonscalabily for Validation, I shared a mindset that enables everyone to execute on tested or untested hypotheses in matter of days or hours. Today, I expanded on this mindset with a simple framework for business model generation. My goal, again, is to help you make sense of and connect the dots about venture initiation.
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*Percentage points are approximations based on experience, research and interviews.