What is it about?
Ash Maurya takes Customer Development & the Business Model Canvas and applies them onto web development. He shows step for step how to find a viable market.
What can I learn?
Test hypotheses: Building your business model is about iteration, i.e. you test something, if it doesn’t work, you are going to try something different. To actually reject assumptions, you have to write these as hypotheses. For example, instead of “my blog will be a useful marketing device”, you should write: “my blog will lead to 20 conversions by the end of the month”. This allows you to actually reject your hypotheses and move to the next ones.
Talk to your customers: Do they think that you solve an important problem? Are they ready to pay for it? It’s better to know these things as soon as possible because you can easily change things at this level.
The Lean Canvas®: Above you see the Lean Canvas which will probably remind you of the Business Model Canvas. Each of these panels should be tested. You begin with the Problem and Customer Segment. Which problem of whom could be solved? And then slowly focus on the other panels. If you tested each panel successfully, you have build a sustainable business model.
After reading The Entrepreneur’s Guide to Customer Development, I was pretty impressed by Running Lean because it achieved presenting a similar topic much better. Ash Maurya took the time to show you how to go from one step to another and he supports each steps with tips. If you are interested in building a market-driven company this is definitely a book you should read. Recommendation!
What is it about?
In the last twenty years business model innovation became an important term. Some examples are Amazon, which decided to sell a larger variety of books than usual or Google, which improved PPC advertising. Alexander Osterwalder and Yves Pigneur wrote about these and more companies in Business Model Generation and explain how to come up with a new business model.
What can I learn?
The Business Model Canvas: Here you can see the Business Model Canvas which is quite self-explanatory. You can download a larger version (with explanations) directly from their site. This is the basis for the whole book and method. You can see that the right side focuses on the customer (Customer Relationship, Channels, Revenue Stream, Customer Segment, Value Proposition) and the left side focuses on your internal work (Key Partners, Key Activities, Key Resources, Cost Structure, Value Proposition).
Let your mind wander: One great thing of the Canvas is that you can start collecting individual ideas for every panel. Try different combinations and be crazy. That is a great way to explore business models you never thought of. After your brainstorming session it’s time to reduce the model to a few realistic ones.
Use your waste: If you look on the left side, you got your internal background for offering the right side. Amazon, e.g. needs a sophisticated IT infrastructure for lots of items online. They used their waste to build Amazon Web Services which offers cloud computing and storage for everybody. What’s the waste in your industry and how can you use it?
Actually, I wasn’t really overwhelmed after reading this book. I thought that It’s a nice canvas but not overwhelming. Then I used the Business Model Canvas and it was pretty good. I saw people modifying it for their industry and this was impressive. In conclusion, I think it is sufficient if you download the Business Model Canvas, study on some existing Canvases of Facebook, Zynga or Kiva and then go straight creating your own.