Business plans, for quite some time have driven our processes, our people and our actions. They clearly articulated who our customers were, how much money we would spend to acquire them, how much money we would make from them, who our key partners were, what our key channels were an so on.
Business plans are written in the context that all of the components of our business model are well known. In some cases this is quite true, and many business have proven successful.
But what about the cases where we know very little about a business model? What about the cases where all we have is an idea, or, a really pressing problem that we want to find a solution to?
In these cases we cannot simply execute a business model and make decisions based on the assumptions that we start with. We first need to find a business model. And, in order to find a business model that can eventually be executed, we need to incubate our ideas and explore potential business models that surround those ideas.
That being the case, the traditional business plan can’t guide our next steps.
Let’s welcome the business model canvas.
The business model canvas provides a means to capture key components of your business model on one page, and this has various uses, whether for testing and validation, or merely effective communication to stakeholders or investors.
In the context of incubation and exploration, the canvas is particularly useful as you can capture business model assumptions, go out and test those business model assumptions and then write down new assumptions or validated components of your business model on a new canvas.
This process is continuous and will eventually guide you towards a business model that can be executed, or scrapped.
The really interesting part here is actually tracking your business model progression over 10, 50 or 100 business model canvases. This provides clear indicators into what you did, what you learned and even delivers insight into your path forward.
Having said all that, I want to relate this to the context of corporate innovation.
So, rather than the traditional model of developing a business case and rationale to achieve the buy-in you require from senior stakeholders for budget approval, why not take a leaf out of a startups book and test the validity of your proposal, and present senior stakeholders with facts?
This limits risk, ensures the process of making the decision is accelerated and puts the entire organisation in a stronger position.
In order to achieve this you have to move away from the traditional business plan (when trying something new) to the business model canvas. You need to test potential business models around your proposal and only requesting execution capital when there is actually a viable business model to execute.
An organisation that believes in continuous innovation, and validating business models before trying to execute them has a lower risk profile, and a higher chance of new initiatives being successful.
In many ways, this isn’t new to some large corporations, as many have already adopted the business model canvas for various reasons.
However, purely in the context of trying something new, taking a page out of the ‘startup best practice’ book and using the business model canvas to track the progression of a new venture will give senior stakeholders within large corporations the insight to make solid “go” or “no go” funding decisions.
Images: Background – www.shutterstock.com. Google Business Model – www.businessmodelgeneration.com.