It was late in my University studies when I started designing structures and machine parts. On this particular occasion, I was asked to create a structure to support an engine for a ship. I went home and did my math; I was very pleased with my design. When I handed it in, however, I found out I should not have been.
I had designed an engine support bigger and heavier than the ship itself; it made no sense at all – not in the real world. Truth be told it was a trick exercise, designed to showcase something straightforward. On paper or excel, as that was what we used back in the day, everything makes sense, but, as my professor explained, it is critical when you are working in the "Idea World” to bring with you the "Rules" of the world you are designing for. He explained how paper allows you to build impossible machines that seem to make sense because the constraints of the real world are not part of your design sandbox.
I would never have thought the learning of that lesson would come in handy 20 years later when I was designing ventures for a venture building fund.
In the same way that the engine support design was not applicable in the real world, we realised that in some cases when using the Business Model Canvas the ventures that would come out were just not floating.
I was not that worried at first. I thought "Ok, so we just need to use some common sense on top of this and voila!". But with time, I realised that the challenge was not so much designing ventures that would float but ventures that would win a motorboat race with two small paddles for props.
See, the major issue we found with the BMC is that there are very few, if any, constraints and relationships between each of the quadrants that define the business in the "idea space." Given that these relationships or "fits" don't exist, it is very difficult to vet the design and iterate your business.
In fact, the relationships and constraints are the key because that is the reason why you design and the reason to iterate and improve. Imagine trying to learn how to play the piano, or even compose music as a person with impaired hearing. It is very hard to get feedback. Beethoven managed it, but he really the exception that proves the rule.
In the same way, the BMC allows you to design a venture, but it does not give you feedback so that you can improve your design.
Let me give you an example; in the BMC there is a Value Proposition segment and a Customer segment, but there are no rules to show how aligned or "fit" my Value Proposition is with my Customer Segment.
Does my value proposition help my customer segment to achieve the outcome they desire?
How does my value proposition address the specific unmet needs of my customer segment when trying to achieve that outcome?
To what extent do the features I have designed make it easier to achieve that outcome?
If you know that you can change your proposition, and can change your segment, you can iterate your venture design. It's that relationship that is the feedback you need to make meaningful changes to your business.
Let's use an example:
Customer Segment: Eskimos
Value Proposition: Our next-generation ice cools down drinks faster than conventional ice.
I know, it's a parody, look pass that. Again, it's not about using common sense. It's about the fact that you are not getting that feedback. I am using this extreme example to showcase that it is left to your common sense even though it is crucial for iterating your business.
In this case it's clear: you need to iterate your customer segment to your value proposition, but the BMC is just not telling you that.
If you would go to market with this design, you would most likely sink. As my professor told me back in the day, it is easy to spot a design that won't float if you can use pure common sense, but what happens when that gap is not so wide and not as obvious...?
That's when you find yourself with a venture that makes sense, could float but will never actually win the motorboat race. See, to win the motorboat race you will probably have to change 100 times. For these 100 changes to be a meaningful improvements and not stabs in the dark, you need productive feedback.
I know what the next argument is: Lean. "We will try this, get feedback from the market, learn and change." I get that, but how about getting feedback before you test? i.e. how about going to market with something you have already iterated to find a good fit that you then validate and prove in the market?
There are other models out there that go past the BMC, and that focus especially on the relationship between these quadrants and others too. If you are interested in exploring ways that go past the BMC and can help you iterate your business fast to win the race, then please do contact me!
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