Business Model Trumps Product


I’ve just finished two days of mentoring eight ventures, most social-mission driven, as part of my work as a facilitator for the LaunchYU Accelerator at York University.  communityBUILD, the social enterprise initiative of ventureLAB and its three partners, has five social ventures as part of the cohort of 18 ventures in LaunchYU.

One consistent observation I’ve made while mentoring is that the business model is more important than the product/service solution for startups.  This is the reverse perspective from most entrepreneurs.  Here’s an example.

An Edtech social entrepreneur and I started to think through Distribution Channels for her product; that is, how to get the venture’s marketing message and then its product to the customer.  It was clear that the venture’s solution was not unique, I have seen similar ideas.  No venture had yet cracked the challenge of selling into the educational system, however – a huge, politicized bureaucracy.

In the mentoring sessions, I spent all my time focused on identifying;

  1. The customer segments, including beneficiaries for social enterprise;
  2. The problem or need distinctive to each segment;
  3. The value proposition that the venture’s solution offers each segment.

I did so because these three issues are at the heart of your business model.  Every other element of your business model falls out of your assumptions in these three business model blocks.  If you don’t understand and validate your assumptions in these three areas early on, you risk erring seriously in your decision-making.

It takes a lot of time and effort to work just these three blocks of the Business Model Canvas  through sufficiently to be able then be able to get “out of the office” to undertake Customer Discovery (Steve Blank – interview your customers directly by Skype or in person).

Bottom line – it is easier to create the technology than to get it to market.  You could spend a fortune on developing the technology and then learn that you can’t sell it because of endemic issues or because your value proposition is not compelling enough.  Think through and validate the business model first!






This entry was posted in Business Model, Innovation, social enterprise, Social Entrepreneur, social entrepreneurs, Social Venture, Startup, Start-Up, ventureLAB. Bookmark the permalink.

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