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Business model design I: Proposition design

Watch Alex Cowan discuss how to develop your business model, starting with proposition design.
A successful product is at the intersection of this happy place we’ve talked about. Now most of the techniques you learned about are a way to drive to this desirability, and as we’ve discussed, this is the independent variable. Without this, you don’t need to worry about this, and you don’t need to worry about this. But, when you have validated propositions and you’re ready to start scaling something up into, let’s say from an H32 to an H2, then you do need start thinking about these things.
Before that, I would recommend you not to spend too much time on this, writing business plans, even really detailing out a Business Model Canvas, which is the tool we’re about to use, because I think it’s a waste of time. But, once you get to the point of bringing your business to scaling, and thinking about profitability and optimization, it is important. And I really like this tool, the Business Model Canvas, if you’re not familiar with it. The independent variable is the product market fit, the relationship between these customer segments and these value propositions. And that’s what you’ve been learning how to achieve, without that, the rest of this really doesn’t matter at all.
So we’re going to talk about how to encapsulate that understanding in your Business Model Canvas. So you’re anchoring to desirability, and you’re driving the viability, and feasibility dimensions from that anchor of product market fit, from that anchor of desirability. We’re going to look at customer experience and how we test and optimise that. And we’re going to think about how we deliver all this stuff. So, that as we scale up the organization, and think about what kind of teams we need to bring this thing from a little H2 to a big H2 to maybe H1, we know how to do that. Before you engage with the Business Model Canvas, I highly recommend creating a positioning statement in this simple format.
For target customer who needs this thing, your product is a, what is it? What type of thing, that does this amazing thing, this validated proposition that, or unvalidated proposition as the case may be. And what’s the primary alternative? And what is that do that is so much better than that? This is very similar to our product hypothesis if you remember that. What we are really asking is, what is this thing? Who is it for? What is it’s do that’s compelling, and why is that better than the next best alternative? It’s nice to have a tight encapsulation of that, as you begin to work on the Business Model Canvas, particularly if you’re doing it with collaborators.
Now, our question is who are the buyers, and why do they buy stuff? So want to fill out these two things, let’s step through an example with Enable Quiz. Now, if you do not have a strong understanding of the personas and problem scenarios, you will really struggle here. So this is why I say in the beginning, I just recommend really focusing here, doing discovery, not worrying too much about this. But once you get to this point, and you’ve tested some of this stuff, and you’re looking to optimize, this is a good tool. So, here is those two elements, I just sort of blew them up here.
And, when we look at the customer segments, what I would like to do is look at both the segments, which are on the outer bracket here, and then within the segments of interest, then I like to look at individual actors within them. And in an innovation intensive design focused organization, you really are looking at those individual actors, not whole companies. Because it is the individuals who buy stuff, and use stuff, and realize the value that you’re going to provide. We’ll say Enable Quiz has decided to focus initially on this segment out of all three of these. Very important to focus on a fledgling and an early business, in H3, an innovation project.
And let’s say they have these different actors here. And when we want to look at, and we want to showcase for our desirability is how do these individual actors personas within the segment, relate to these different value propositions? Way we usually lay that out is like this, we’re saying here the HR Manager primarily cares about making better hires, enabling themselves to do more and improving employee retention. Our functional manager primarily cares about also making better hires, decreasing the amount of time that they have to spend on recruiting, and improving the upscaling of their existing staff. The job candidate cares about better job descriptions that they can understand, and the existing employee cares about upscaling.
This is where they might use an Enable Quiz, to kind of diagnose where everybody is on certain skills. And how they might put training in place that’s relevant, that the employees actually care about, to get to where they want to be professionally. This is a view of what desirability looks like in the context of a business model at least with this particular tool, the Business Model Canvas. Here’s that same thing, I’ll lay it out on a Canvas, I have encouraged you to be very very thoughtful about this first step.
If you choose to use the Canvas there is a resource, and in the resource section, there is a PDF version of this, and Google Docs version of it if you want to have something you can share digitally. So I think this is a good tool, and good first step to bring that linkage between desirability, feasibility and viability into that happy intersection and discuss that with your team.

In this video, Alex talks about taking a moving forward with a business model with a validated proposition. Before engaging with the business model canvas, Alex recommends creating a positioning statement. If you have a product idea, how would you fill out this positioning statement?:

“For [target customer] who [statement of the need of opportunity], the [product name] is a [product category] that [statement of key benefit/ compelling reason to buy]. Unlike [primary competitive alternative], our product [statement of primary differentiation].”

Business Model Canvas

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