BMC vs. Lean and Seven Domain Model Flashcards
Steve Blank’s definition of a startup
An organisation formed to search for a repeatable and scalable business model.
9 building blocks of the BMC
Customer Segments Value Propositions Channels Customer Relationships Revenue Streams Key Resources Key Activities Key Partnerships Cost Structure
BMC Customer segments
Groups of people with common needs or behaviours. A business must make a conscious decision which segments to serve and which to ignore.
what are the ‘jobs to be done’?
emotions, needs, functions
BMC Value propositions
The reason why customers turn to one company over another.
It creates value for the customer segment - can be done in different ways;
gain creators
- time, happiness
- customisation
pain relievers
- time/money savings
- frustrations, fix under-performing solutions
closely linked to segments. Value proposition canvas can be used to zoom in on the value proposition and segments boxes
BMC Channels
How a company communicates with and reaches its customer segments to deliver a value proposition.
Can be via partners, or own channels (e.g. sales force, web sales)
BMC Customer relationships
Describes the types of relationship a company establishes with specific segments.
self service, personal selling, communities, co-creation
BMC Revenue streams
Cash generated from each segment
- transaction (one-off)
- recurring
fixed vs. dynamic pricing
BMC Key resources
what resources do the value propositions require?
physical
human
intellectual - brands, IP, copyrights
financial
BMC Key activities
Things a company must do to make its business model work.
production
problem solving
platform/network
BMC Key partnerships
partnerships to enable the business to operate.
- optimisation and economies of scale
- partnerships that reduce risk
BMC Cost structure
Most important costs incurred while operating under a particular business model. Is it cost or value-driven?
cost-driven; business models that focus on minimising costs at all levels.
value-driven; focus on value creation
Think about; fixed costs, variable costs, economies of scale
Explain the principle differences between Osterwalder’s BMC and Mauyra’s Lean Canvas.
What are the relative strengths and weaknesses of the two approaches in the context of identifying a scalable business model for an early stage venture?
- Lean Canvas was built around the needs of the entrepreneur and their learning process. Ash wanted the Lean Canvas to be as actionable as possible and guide the entrepreneur through their ideation to creation.
- Built on lean principle that startups operate under ‘extreme uncertainty’ and that there is a lot of risk. Ash identified where greatest level of risk lies and adapted the boxes;
- Added in the problem because entrepreneurs need a strong problem understanding to avoid building the wrong product.
- Added in solution - can be changed, MVP
- Key metrics - avoid waste
- Unfair advantage - think about what you uniquely have
- Outside-in boxes such as key partners and customer relationships are omitted from the Lean Canvas. The BMC has a much wider stakeholder reach and may be also beneficial tools for consultants, investors, advisors etc.
BMC \+ more emphasis on outside environment \+ more widely known - less practical, actionable - perhaps more assumptions - focuses on partnerships, that will be big assumptions
Lean Canvas
+ built around the needs of entrepreneurs
+ focuses on areas with most risk, e.g. problem and solution
- simplisitic
- disregards relationships/partners
What are the advantages and limitations of Ash Mauyra’s Lean Canvas compared to the Business Model Canvas proposed by Osterwalder?
Lean Canvas
+ built around the needs of entrepreneurs
+ focuses on areas with most risk, for example problem and solution.
+ consistent with lean principles - small product box for MVP, key metrics (measure)
- simplistic
- disregards relationships/partners
BMC \+ more emphasis on outside environment \+ more widely known - less practical, actionable - perhaps more assumptions
BMC might be more appropriate for more established businesses, that already have relationships, partners and infrastructure.
What does Mullins’ 7 domain model take into consideration?
The attractiveness of both macro and micro domains of the market and industry, in relation to the team capabilities.
MICRO; Market
- is there a target segment where we can offer clear and compelling benefits?
- are these benefits superior to other current solutions?
- how large, growing?
MACRO; Market
- is it large enough to allow competitors to serve different niches?
- ST growth rate and LT growth potential
MICRO; Industry
- sustainable advantage
- is the business economically viable?
- what protects you from imitation?
MACRO; Industry
- is it easy or difficult to enter?
- who has power to set terms?
- is it easy for substitutes to steal market share?
- how competitive is it?
TEAM
- ability to execute on critical success factors
- connectedness up, down, across supply chain
- mission, aspirations, propensity for risk
Market definition
Market = a group of current and/or potential customers having the willingness and ability to buy a product to satisfy a need.
