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How relevant is a business plan this day and age? If you think about it, most business plans don’t even survive the contact with customers. Therefore, plans are worthless, planning is everything.
Alexander Osterwalder starts his presentation ordering us to burn our business plan. According to him, building your business will not work with a static document. He suggest working with a flexible model: one you change according to situations or factors, whenever needed. Osterwalder asked us to discuss our own business plan with our neighbor for a minute. After this, he asked us how it was. He was right in assuming that most of our one minute talks were a lot of blah blah. Thats why he advocates for a more visual approach, less about words, more about drawings. His method is called the business model canvas, in which three steps can be defined.
Step 1: Describe by visualization
To describe your idea, try combining the flexible and visual aspects in his business model canvas method, as if you are more like an architect visualizing your ideas. Architects are trained to do this. They make a rough sketch of their idea- the rougher the better! Because if you freeze your idea (set it in stone) too soon, it will be harder to keep it agile and flexible when you’re growing it.
Step 2: Discuss and challenge your idea
In creating your business model by Osterwalders method, you’re going to want to explore different outcomes and possibilities. His easy to use method allows you to move blocks around at your convenience, so to make various models for various scenarios. In your search for your ideal business models (note that you are on a hunt for a model, not for a plan!) you’re constantly encouraged to discuss your findings with colleagues and those around you.
Also, as said before, your concept will only get it’s ultimate test when exposed to customers. Even with all elaborate internal discussion, your models are only guesses. It’s the customer who validates it. So start running experiments with customers as soon as you can.
Step 3: Pivot
By entering the market early you have a chance to learn from your customers. And learn wether there is truly a market for what you want to sell (and wether that market is how you expected it to be. In other words: you need to create the opportunity to cheaply learn from failure. Because there will be flaws in your model. But this failure is the basis of success. As Thomas J. Watson, founder of IBM put it: The way to succeed is to double your failure rate.
Business Model Canvas Explained
I definitely like his approach of a more agile, flexible and (dare I say) more playful business models. If you want to know more about Osterwalders method, check out his website and blog.
