by Bob Zaruta, President/CEO, NWIRC
I knew a person that anytime someone wished him good luck his response was, “luck is when skill and opportunity meet”. I knew this full-blooded Irishman very well and he believed that luck played a role in life. But he also believed it was wiser to count on skills, seeking potential opportunities, thinking them through, and acting. Most entrepreneurs and business owners, regardless of if starting up, scaling their business, or sustaining profitable growth, create many of their own opportunities, and some of their own challenges. They’re often taking on significant risks, sometimes well informed and prepared and sometimes not. Seemingly always keeping their eye on the prize, the pot of gold at the end of the rainbow.
While the storied rainbow myth is very familiar, what might not be so well known is that at the end of the rainbow in the myth is a tricky leprechaun who is there to protect the pot of gold. That means more unknowns, surprises, potential obstacles, and even dangers that can cause setbacks, create discouragement, and even prevent ever getting to the pot of gold. I can’t help but think of the ever-popular movie The Wizard of Oz. At the end of Dorothy’s rainbow was the land of Oz and her pot of gold was transportation back home. There was the jolly fellow dressed in green guarding the entrance door to Emerald City and the tricky Wizard himself behind the curtain adding more challenges and changing the rules. Dorothy and her team had a lot to face and overcome along the way. Like many entrepreneurs and business owners do, the famous foursome and Toto demonstrated perseverance and resiliency. But they also had the yellow brick road and although there were a couple of forks and disruptions in the path, the road itself was a critical factor for success.
Like the yellow brick road, the Business Model Canvas (BMC) is a helpful way for an organization to establish a solid path forward, assess changing conditions, stimulate innovation, explore new or better ways to deliver value, reduce risk, and make money. A visual way for a team to create a shared understanding, test ideas, and make decisions with increased probability of success. In other words, less reliant on luck and more reliant on skills and opportunity coming together at the most optimum time. The BMC describes the rational of how an organization creates, delivers, and captures value, and the logic of how the business intends to make money. It examines four main areas of the business: Customer, Offer, Infrastructure, and Financial through 9 essential components.
My first experience with the BMC was a 2-1/2-day training course provided by Strategyzer on Treasure Island – no, I am not embellishing the story – Treasure Island is a mile long artificial island in the San Francisco Bay. My first opportunity to apply my new learning was a start-up business with a couple entrepreneurs that had a propriety product design with patents pending for strength building equipment. We began with the most important component – the value proposition – to determine the true value of the offering. Not the features and benefits, but the problems or gains the offering addressed or provided. Through facilitated discussions, we continued through the other 8 components of the BMC. The start-up team identified home enthusiasts, fitness centers, hotels, and sports programs as customer segments. The next focus was to identify appropriate channels for each segment. More specifically, we determined what type of person would be most inclined to seek the benefits of their value proposition, how they are best reached, followed by the type of relationship each customer segment preferred. Next, we determined the key activities to serve each customer segment, the key resources required to perform those activities, and what partners could help provide those resources. In addition to facilitating the BMC, as an Industrial Resource Center we were able to increase our value as a partner by identifying potential manufacturers. The team completed the BMC with a focus on evaluating potential revenue streams and examining various cost structures to determine how best to make money.
I have found the BMC an effective tool for our own organization. As a not-for-profit, NWIRC’s pot of gold is not making money but rather driving impact to those we serve. When we were evaluating a new service to do just that, we turned to the BMC. Last month I facilitated BMC workshops with three of the five high school student-run manufacturing enterprises we have helped to launch, with the other two taking place this spring. Wow, high school students learning the BMC, applying it to their enterprise, and creating a visual tool that will be used to grow the business and help future students as they join. That is in our pot of gold.