Business Modelling

A common issue that comes up again and again in mentoring sessions revolves around the business model. Many new companies have a series of ideas that they want to put into practice or a set of skills that they want to use, but that does not necessarily equate to a clearly defined model that will deliver on a commercial level.

The business model canvas is a methodology that is used across the board and taught in many Universities and at startup programs internationally. The core principles are simple to understand and many people will have at least some experience of how it works.

In order to fully reap the benefit however it’s important to dive deeper:

Understand that the model is recursive
Put in simple terms this means that the model can work for multinationals as well as startups, the principles are the same regardless. The supporting book “Business Model Generation” contains examples for Apple and Skype as well as smaller non-profits. Additionally a larger model may contain multiple smaller models that act as a supporting ecosystem, the core principles however remain the same.

Use the model to understand how your organisation relates to the commercial world
Many people just use the canvas to define their own model but it also offers the opportunity to define where your organisation sits within the commercial sector and how you relate to it.

Understand that it’s a dynamic model and not a static one
The most common response to questions around the canvas is that it was done a while back and then put away in a drawer somewhere. In order to be valuable it needs to be revisited and refined regularly. There are now free platforms that enable this to happen online such as real time board [www.realtimeboard.com] but it needs to be planned as a regular activity.

Understand that it’s a difficult process in the early stages
Many people struggle with the process initially as it can be confusing to define exactly what the difference is between the core elements. This is not uncommon and it just takes time so it’s important to persevere. Like many creative activities the fact that it’s difficult means that the potential rewards are greater.

In summary
The model is a powerful methodology that will help clarify thinking and potentially simplify what may initially seem incredibly complex. An often-quoted phrase is that if you cannot explain it in simple terms then you don’t understand it clearly enough. A good understanding of the canvas methodology will help you achieve that.