The following resources can be sourced for more in-depth information on validating business models and the lean start-up process.
We recommend that you utilize the business model canvas, developed by Alexander Osterwalder and Yves Pigneur, as a tool to track and visualize your business model as it changes throughout the validation process.
A printable version can be downloaded here and a video explanation of the model and how to use it can be viewed below:
There are also a number of digital tools that can help you functionally utilize the canvas, including, but not limited to:
- Business Model Toolbox for iPad
- Business Model Fiddle
- Google Drawing Template of Business Model Canvas
If you think of a business model as a hypothesis, or a good guess, then the validation of a business model is the method through which you determine whether your hypothesis, or guess, is correct. It is not often that an entrepreneur’s first business model will successfully identify and address a customer problem. The business model validation process allows an entrepreneur to change or ‘pivot’ their business model early on, before large investments of time and money have been made.
There are a number of sequential stages throughout the business model validation process that need to be addressed. Pivoting should occur at each stage until the criteria of that stage has been met.
The following is an example outlining the business model validation process, summarized and adapted from Steve Blank’s “Lean Launchpad course” and Nathan Furr’s “Nail It then Scale It”. These exact stages do not need to be followed for your BMCC submission, however, they do provide structure for you to organize the validation of your model.
- Find a problem – Identify a big customer problem and develop key hypotheses to address this problem (using your business model canvas). This step is most crucial to self-validate as it is the first step. Remember, it is more efficient to fail many times at this step until you succeed than at any future step. Stay at this stage until you are satisfied you have “Nailed It”.
- Nail the Pain – Interview customers, partners, etc. face-to-face to validate the problem you have identified and the hypotheses you have developed to address this problem. Pivot, or change your hypotheses in your business model canvas until you have “Nailed It”
- Nail the Solution – Develop a minimum viable product protoype. Interview customers, partners, etc. and pivot your prototype until you have “Nailed It”.
- Nail the Go-to-Market Strategy – Investigate, in-person, the customer buying process and current infrastructure for market communications and distribution. Identify leverage-points you can use to successfully enter the market and pivot your strategy until you have “Nailed It”.
- Nail the Business Model – Use all of your face-to-face research to validate a revenue model for your business.
However you decide to organize your submission, ensure that you: identify and track your changing hypotheses, validate your hypotheses face-to-face with customers and potential partners, pivot your business model based on your face-to-face interactions. The BMCC is more about describing your validation process, including a deep understanding of your customers and pivots, rather than end results and flashy sales pitches.
Remember that the RBC EPIC BMC rewards student entrepreneurs for:
1) Identifying and tracking key business model hypotheses (showcase your canvas)
2) Testing and validating those hypotheses with customers– getting outside the building
3) Pivoting and iterating their business model based on customer interactions and feedback
Submissions for the competition should focus on the process entrepreneurs undertake as they test their most crucial hypotheses with customers and develop validated business models. The goal is to show validated learning about the key business model hypotheses.
Although there is not one format for successful submission videos, we suggest that videos contain the following components:
- Title Slide
The members apart of your team and business information
Your initial hypotheses that address a customer problem, how you developed them, your adapted or pivoted hypotheses
- Hypothesis Testing
How specifically did you test your initial and pivoted hypotheses? What were your results? What new or unexpected information did you uncover? Data compiled here will support or disprove your hypotheses.
What changes did you make to your business model based on your collected data? How did you make these changes?
- Market information
Demonstrate that you know how to use the data you collected from consumers to create a convincing go-to-market strategy, identifying your target markets (total and serviceable).
- Final Message
A concluding message from the development of your business model, including any lessons learned from your pivoting.
There are a number of tools that you can use to create your video submission which will then be uploaded to YouTube or Vimeo. Some examples include, but are not limited to:
- Title Slide
The following resources can be sourced for more in depth information on validating business models and the lean start-up process (show images of books for link):