Lesson: Business Model Canvas with Alexander Osterwalder

Step #3 Practice: We should be training on business tools, testing and prototyping to become better

Customer development, business model testing and business model design with a business model canvas go hand-in-hand and it's a messy process. It's a back and forth all the time. That's why a lot of people have a hard time dealing with it, it's not a linear process.

You're going to design a business model and then you're going to go test it. You're going to learn it doesn't work, you throw it away, you're back to square one. Back and forth, back and forth.

Eventually, you'll get to an answer that's going to work. You need to master these tools and apply them at the right time in the right way. That's why we need to train people to use these tools. They go hand-in-hand but it's not a linear process.

That's the hard thing to understand, it's very iterative. You may go down the road and think this look promising but at what point you'll see this is not profitable. You throw it away, you start over.

In particular, large companies have a hard time living with a non-linear process. It's not a business plan. Business plans don't work. There is no such thing in reality, making up an idea and implementing it one-one it's going to turn out that way.

It doesn't work that way when you are really doing something new. It's a messy process. Yet, we figured out that process. We know the tools. We know how they work. While it's a messy process, we have the tools and we can use them to bring some order into that iterative and messy process. It's becoming much more systematic than it used to be.

When you start, the only thing you need to realize is that you're going to throw away your business model. Don't waste your time on doing what I call, intellectual masturbation, thinking too hard about the right canvas at the beginning because it's going to turn out differently anyways.

All you need to do when you start is be aware that you're going to throw it away and you're going to start over a hundred times. You don't know the answers at the beginning. The only people who know the answer are your customers. It's going to be hard to get them to tell you what they want because they don't know.

You need to practice these things before doing them really well. I like using this analogy of surgeons, they practice for 14 years before they're allowed to snip around on real people. It's the same thing with business tools. You need to practice a lot to become really good at it.

Business model prototyping, you're testing business models. That's not an easy thing to do. We should be training that much more so we get better at it. I think we're just at the beginning and we're starting to understand how sophisticated this stuff really is.