Welcome to module Four
Game Changing Business Modelling and Value Proposition Design.
Understanding and designing innovative business models is crucial to a social entrepreneur’s success. We learn how to best deliver value to your customers and stakeholders.
UNDERSTANDING BUSINESS MODELLING
DESIGNING YOUR BUSINESS MODEL
ALIGNING YOUR BUSINESS MODEL
STRONG VALUE PROPOSITIONS
LEAN STARTUPS & MVPs
Understanding business modelling.
It’s easy to hear the words ‘business modelling’ and conjure up images of an outdated 200 page business plan. But the beauty of business modelling is that it can be a fantastic, relatively quick and iterative way to understand the core nuts and bolts of how you can create a sustainable social enterprise.
Take a look at this video and get your hands on a copy of Business Model Generation!
In Module Three, we pointed to the unintended consequences of some business models, with Widmer saying a one-for-one model can “create dependency, sap local initiative, kill demand for local businesses, and make developed world buyers of one-for-one products complacent about taking other action to address social needs.”
Understanding the broader context in which you operate is crucial.
If you’re yet to use the business model canvas, choose a well known social enterprise and map out their model on the canvas.
In this video presented at Harvard, Allen Grossman explains some of the key elements and steps in developing a Business Plan.
Designing your business model.
Using the Business Model Canvas to iterate, refine and tweak how you arrive to delivering a viable social enterprise will be a very useful tool as you continue to grow. Dr Ingrid Burkett wrote a useful free PDF called ‘Using The Business Model For Social Enterprise Design’, which will help you frame how you intend to deliver impact in your business model.
MAP IT OUT
On a whiteboard or piece of butcher’s paper, map out your business model. By using post it notes you can colour code the different customer segments as well as quickly iterate, add and subtract as you progress.
If you’re struggling to map this out, you may like to take a look at the Social Business Model Canvas for a slightly different take...
Are there any key users or stakeholders missing from your canvas?
Which activities do you need to outsource vs keep in-house?
Who is someone you could partner with on a win-win basis?
What is the most costly thing and how can you shave this cost down?
Brainstorm alternative revenue streams...
Aligning your business model.
You can’t survive on air.
“Startups don’t fail because they lack a product; they fail because they lack customers and a profitable business model.” Steve Blank.
Finding paying customers is crucial for survival but don’t lose sight of your mission.
PROF. BARRAKET’S INSIGHTS
We recently spoke to Prof. Jo Barraket who shared insights from working with CERES. “It’s a not-for-profit association that was established about 35 years ago by a group of citizens in inner north Melbourne who wanted to rehabilitate an area next to a creek that had become very polluted and run down. It’s a four hectare park located on what was a tip site and it provides green space, community gardens, and demonstrations of sustainable ways of living on the site. It’s the largest environmental education provider in Victoria and we turn over about $12,000,000 a year. We employ about 150 people and about 95% of our income is generated through our social enterprises. They include a market and grocery retail, a nursery, an online organic grocery, and a café among others including our education programmes.
It’s effectively a constant work-in-progress and our CEO and management team are obviously the heart of that work, so I get the privilege of speaking about it as the Chair but I really acknowledge and nod to them as the engine.
I think the key lessons are; we’re constantly learning about having clarity, about the purpose of each of our social enterprises, and their functions in fulfilling our wider social and environmental missions, because each social enterprise has a different function.
So, for example, one of them might be very much focused on generating revenue to re-invest in managing the park. That’s quite different to a social enterprise that itself is a demonstration project that is providing strong demonstration of effective ways of living sustainably, where we might just want that one to break even.
So, we need to be constantly talking to ourselves and reminding ourselves what the functions are, to make sure that the business engine of the organisation’s running steadily, but that we’re always aligned with mission.”
Strong value propositions.
When building off last week’s work of developing Personas and Journey Mapping, we can continue to use and apply that research to ensure that we’re delivering value to our users and stakeholders.
Osterwalder, talks about aiming to achieve a ‘product-market fit’ which he believes gives you the strongest chance of success.
Download the Value Proposition Canvas here and spend time mapping out three different canvases for your three core users.
Are the ‘pains’ and ‘gains’ based on your research or assumptions?
Have you broken down your ‘customer jobs’ into different categories (functional, emotional, social etc?)
Watch the video below for a quick overview if you’re struggling.
Lean startups and MVPs.
The Lean Startup methodology has become increasingly popular over the last 5 years and with good reason!
We’re big fans of building, measuring and learning in ‘rapid learning loops’, but would highly recommend that this be used in combination with a human centred design approach, in order to set a solid foundation and clearly understand the needs of your target user/s first.
BOXING OURSELVES IN
Enough talk. If you’re yet to actually start to build a Minimum Viable Product (read more!) which tests how you plan to deliver value to your users (based on your research), now is the time!
Actually getting out there and receiving feedback will help you quickly validate whether your idea actually is of interest to your target audience... or not. It’ll help you refine and iterate until you have something which works!
Coss Marte went from earning $2m a year dealing cocaine in New York, to serving time in prison, to creating a highly successful social enterprise. Listen to Coss’ advice and pay attention to how he took action to start small and validate his idea and build a community.
“For anybody that's trying to start their own business, just prove the concept really small.
If you want to start a major retail fashion store, you've only got to open up a shop, make a T-shirt, buy a screen print, print it out and try to sell it to your brothers and sisters, you know what I mean? Put it out there. Don't be scared of hiding your idea too 'cause a lot of people say, "Oh, I can't tell anybody about this until I get funding".
Put it out there. Don't be scared.
Whoever's going to steal it, they're going to steal it, and then you're probably going to be better than them.”
If you spend time commuting, audiobooks are a great way to continue learning and challenging your perspectives. Have you read any of these yet?
Good luck Elevators!
This week’s Module is short yet punchy. The important thing is that you create time to apply and clearly map out a variety of business model and value proposition iterations. Tweaking just one or two key ingredients can drastically change the success of your model... now’s your time to experiment!
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Thank you for the fantastic energy you bring to the Elevate+ cohort.