Enterprise Business Model Canvas for non-product teams
After coaching hundreds of startup teams and over 300 Intuit Enterprise Lean Startup teams I have come to really appreciate the simplicity and power of Alexander Osterwalder’s Business Model Canvas. I find that many internal product teams (IT, HR, Finance, etc.) tend to have difficulty translating the business model canvas for their internal products and services. Historically these teams tend to think in terms of projects and not products and customers.
Fortunately, Alexander’s work is very solid and translates really well with a few simple tweaks to how you view the 9 boxes on the canvas. Simply asking yourself a handful of different questions can quickly help you increase your ability to communicate the importance of your new product or service to senior leadership in your enterprise.
In my experience, this tends to be one of the harder boxes for teams to get their heads wrapped around. I would suggest that you start by applying Brant Cooper & Patrick Vlaskovits’ persona work from Lean Entrepreneur to create a persona of your most likely early adopter. Who is the one person that will tear the solution out of your hand fastest?
Unfortunately, many internal teams tend to think that “every employee” will be their customer. While in some situations it may be true, you should really push yourself to identify who will benefit from it most. Once you begin hitting a wall with narrowing in on your customer, I would suggest that you swap to using anti-segments. Who looks like your perfect customer, but will actually be a terrible customer? Maybe they will require tons of additional support or hand-holding. Applying this anti-segment lens should also help you focus and find a starting point for your product.
In some situations teams have a product or service where their customer base is quite small. Maybe it only serves a department or two in their company. In this case it becomes fairly straightforward to create the initial customer persona, but it will be important to make sure there aren’t other customers in corners of the enterprise that are not on your radar. This tends to happen with teams that are setup in a highly distributed and cross-functional organization.
For example, an enterprise where there is a central IT organization and each business unit also has IT teams. Frequently, similar solutions are being implemented across business units with the left hand not talking to the right.
Another area to focus on during this exercise is to think about influencers, approvers, and corporate anti-bodies that you will need to work with to make this product or service successful. Steve Blank has documented this really well in The Startup Owner’s Manual. He goes into detail about how to think through all of these different customer types and how they apply in this context. You’ll need to work with all of them so you might as well spend some time making sure you understand how deep the pool is before you jump in head first.
You’ve probably heard this a million times, but you need to think about your Minimum Viable Product. Not cheap, not fast, not crappy. Minimum! Which are the minimum features you’ll need to be able to satisfy the problems that your customers have?
Be sure to document in very specific terms what the solution will be. Will it be a web site, a mobile application, a new IVR application? This is important as you’ll need to be sure your entire team is aligned on what the solution looks like from a very early stage.
This is another area where you can leverage The Lean Entrepreneur. The value stream exercise Patrick & Brant outline in the book works wonders for helping to identify the MVP for this product or solution. For those of us that utilize the Net Promoter paradigm, the exercise will also help you think through what your customer actually expects so you can then go above their expectations and possibly have them promote your product to their colleagues. This is just as valuable for internal teams as it is for regular product teams. Don’t underestimate the power of having colleagues talk positively about the product / service you delivered.
This box is one that is frequently overlooked by internal teams as they don’t tend to have marketing backgrounds or focus. Regardless, it is of paramount importance as overlooking this can put you in the position of trying to justify the existence of this product or service later on down the road!
Many large organizations tend to default to the use of positional power to roll out new products and services. The “Use this because we told you to” syndrome is all too often prevalent and the default marketing tactic. How can you implement this solution without the use of positional power? Have you interacted with your customers enough to know if this new product or service will confuse them? Will they simply stop using the old one? What does the change management journey look like?
How does your customer expect you to deliver / distribute the value proposition to them? Think about alternative ways that you can deliver your value proposition (aside from what’s typical). I’ve seen teams that have taken pages from Apple and begun offering computer help desk services in the cafeteria and the employees LOVED it. This is a great example of exploring alternative distribution channels. Instead of waiting for the help desk tickets to come to them, the employees went out to their customers.
All too often employees default to skipping this extremely important box on the canvas. They say things like “We’re not going to be charging other employees to use this software”. By simply asking yourself: What is the positive business impact of this project? You can set yourself up for success with upper management. When you come to them with a clear understanding of the positive impacts you’ll create for the business it makes the conversation so much easier. If this new solution creates more efficiency, saves time or increases customer satisfaction, how do those benefits translate to the bottom line?
Remember, everything you place on the canvas is nothing more than an educated guess. You’ll need to test each of these hypotheses and identifying key business metrics you’re trying to move with this product / service will keep you and your team honest. Killing a product / service that’s not up to snuff can be just as valuable as implementing one that’s successful.
The key activities tend to be projects you’ll need to execute as well as ongoing activities after implementation. What additional work will your team be taking on as a result of this new solution?
Which resources do you need (people, systems, platforms, etc) from inside or outside your enterprise? Will these be temporary resources or permanent? How can you prove the Revenue Streams box and use that to convince these other teams that they should move your project up in their queue?
What will you need from other teams? If they are also delivering for the same customer then they will be partners, otherwise they will probably be key resources.
This final box on the business model canvas will help you to think through how to begin answering questions from your management teams like “What is the ROI on this new product or service?” Once you answer how much this will cost, how many man hours might be invested, etc. you’ll contrast that with the values you’ve identified in the Revenue Streams to identify a rough ROI. Again, you’re taking an educated guess and need to prove these out.
Once you have the initial costs documented, you should start to think about the ongoing costs and resources needed to support this product / service. For example, a gas station could offer to clean windows, check oil, fill tires, etc while a customer fills up. The cost in providing these services could make the business unprofitable. As an internal team you should think through the total time it takes to perform a task or the total number of hours as good metrics to use to measure the cost structure and support the offering.
As you can see, utilizing the business model canvas inside the enterprise is actually fairly straightforward and can give intrapreneurs some very powerful ways to communicate with your management team as well as track your progress toward a new product or service that is delightful to your customers.
I’d love to hear how you’re able to apply this in your organization in the comments below!