Discovery Based
Business Modelling

What is this?

Having an idea does not mean having a business. A business model is a sustainable way to create value from a business idea. It describes how an organization creates, delivers, and captures (economic, social, or other forms of) value. Discovery based business modelling means that you will build your business model based on information you discover in reality doing all kinds of research. You need to know the market and the industry inside out. It's unlikely that you will be able to do this from behind your desk. So go out and talk to people who might help you along the way.

Use the business model canvas developed by Alexander Osterwalder to sketch a first draft of your business proposal. In this short movie the business model canvas is explained. For information on the canvas: go to businessmodelgeneration.com, and download the free preview to get started! We highly recommend reading Osterwalder's book on Business Model Generation. The business model hub is Osterwalder's forum with lots of exiting discussion on business models.

Using the business model canvas, prototype as many business model canvas' as you can with the information you collect from the industry and market analysis. Make your assumptions explicit and make sure you submit each business model to a feasibility check. This phase is where you may feel you are hitting walls all the time and it can be quite hard. Be persistent, ask help, talk to people and make your idea evolve into a real business opportunity. The key message here is: analyse, iterate, refine and optimise.

One useful technique to use when prototyping business models is using analogs-antilogs. The idea is simple: for each building block of your business model, what can you learn from other firms. Remember Picasso's famous quote: "Good artists borrow, great artists steal!".  Analogs are companies you you can learn from in a good way. Antilogs, on the other hand, are companies whose process you don't want to associate with, you can learn from their failure. Make a list of both and keep them in mind while prototyping your business model canvas. What can a mobile phone operator learn from google? What can a car sharing service learn from a mobile phone operator? What can a new restaurant learn from Starbucks? The concept of analogs-antilogs is explained by Randy Komisar in this movie. We also recommend his book Getting to Plan B which explains the concept more in detail.

 

Concrete actions in this phase are:

  • Industry analysis: what about the other sellers and the power game they play in the industry?

  • Market analysis: what about the buyers, their preference, attitudes, buying behaviour and the likeliness you will be able to do business with them?

  • Feasibility analysis: to what extent is it feasible to implement the business model canvas we have developed from a financial, operation, human resource, etc. point of view?