#53/111: Running Lean

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.

Conclusion

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!

#48/111: Seizing the White Space

What is it about?

What have Amazon, Hilti and Hindustan Unilever in common? Each company revolutionized its business model. Mark W. Johnson studied these and more companies and found a process for business model innovation.

What can I learn?

What’s the job-to-be-done? Don’t ask your customer what he wants your product/service to be. Find out what tasks he have to do. This allows you to use your expertise to build a better solution. This will be your starting point.

How can you satisfy it? Now it’s time to build a company around your product. What are your key resources, your key processes and how can you make money out of it?

Let’s take the first business model of Amazon for example. The job-to-be-done was offering a wide range of books. You can only make profit, if enough books will be sold. Also the warehouse costs have to be reduced. Furthermore, people want to read their books as soon as possible.

To ensure that you are going to sell enough books, you have to build a platform. So the key resources and processes are the technology for warehousing, IT infrastructure for the website (channel) and a partner for shipping.

Change is hard: Often there’s a discrepancy between your company and your new business model. If possible, take the easy way and build a new company. It will save your lots of time, discussions and compromises.

Conclusion

I really like Seizing the White Space. It is more practical than Business Model Generation which focuses more on building a meta solution. There are lots of interesting case studies with uncommon companies. Furthermore, I like Johnson’s approach of Customer Development, i.e. searching a solution for the job-to-be-done and then building the rest of the company around it. Great recommendation for everyone who wants to start a company and solve a job-to-be-done.

#45/111: Business Model Generation

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?

Conclusion

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.

#6/111: Confessions of a Serial Entrepreneur

What is it about?

Stuart Skorman tells about his business and private life. He started several companies in his life, worked as a band manager and played high stakes poker for two years. All in all a pretty adventures life.

Key points?

Choose your business idea/model on logic and profitability. He tried to make an educational business to give something back to the world but forget to make it profitable. Result: The business failed and he and his investors (family, friends) lost a lot of money.

Conclusion

This is one of the few books where people wrote a lot about the failures. This makes is very valuable. He excelled on his first company (video renting) because he loved movies, had enough information about the customer and the retail business. This example shows greatly that you should rather go for boring ideas than for clever, new, exciting ones, which will probably fail.