4 Business Model Canvas Tips

4 Business Model Canvas Tips

Jarosław Pilarczyk
September 11, 2019  | 4 min read

In May 2019, I had the pleasure of attending the Strategyzer Masterclass workshop in London, hosted by Alex Osterwalder, the creator of Business Model Canvas methodology.

Business Model Canvas is a visual tool that helps understand how you run your business.  You operate on charts with elements describing a firm's or product's value proposition, infrastructure, customers, and finances. As a result, you get well-illustrated models of your business.

I first learned about the Business Model Canvas method several years ago, so it was great to attend Alex’s 2-day workshop, along with about 100 other participants, and gain new insights into the latest developments in Business Model Canvas strategy, Value Proposition, and several other ideas soon to be published in Alex’s upcoming book.

I have to say, the entire Masterclass was handled with Swiss precision! I left the workshop with hands-on strategies to work with that I’m personally incorporating into my own business.

The 4 tips I’m about to share with you below are simple, game-changing principles that I hope you can benefit from, too.

1. Embrace Failure

Of all the business concepts Alex Osterwalder has proven with his extensive research, there is one that stands out most to me—there is no success without failures.

This concept is often repeated by the founder of Amazon, Jeff Bezos, in his letters to Amazon Shareholders. Jeff affirms that failure is the inevitable brother of success, and that had his company not experienced failure after failure, there would be no Amazon, AWS, or Amazon Prime today. How different would our world be?!

Business Model Canvas Tips Embrace Failure

As a society, we try to hide the realness of failures, and commonly refer to failures in a less negative light as “experiences” and “learnings.” Of course, it is true that experiences and learnings are outcomes of failures, but I think it’s important to recognize that the failures themselves did happen. What's more, we will continue to experience failures—that’s the reality of life, and business.

I thought the example used to illustrate this important point was excellent: the latest Strategyzer research found that out of every 255 projects, 167 will fail outright, 87 will achieve some success, and only one is likely to see the success that Nespresso has achieved for Nestlé, and the iPhone has achieved for Apple.

Our businesses will be no exception, so the sooner we can embrace failure, the more resilient our businesses will become.

2. Test, Test, and Test Some More

As business executives, we tend to spend a large part of our time thinking about our business model, our strategies, our business plans, and our execution tactics.

We often spend so much time involved in our business projects that we fall in love with them, and sometimes we lose sight of what our customers actually want. Projects can become assumption-led and thesis-driven, and the theories we have formulated in our minds may not in fact be true when put to the test.

Business Model Canvas Tips Test

So, rather than spending so much time in thought, strategy, and planning, we should really begin testing our assumptions in the marketplace early on in the process.

Alex shared the story of Owlet Baby as an example of the benefit of testing your ideas early on.

Instead of the founders of Owlet Baby spending too much time developing their first prototype of a wireless pulsometer, they took their concept to the marketplace and asked potential users and buyers to verify whether they would be interested and willing to purchase such a product.

They spent 12 weeks and $2500 in total validating their business idea, which is now well on its way to becoming a multimillion-dollar company. That certainly seems like a worthwhile step in the process to me!

I also really liked how the Owlet Baby story was an example of how ideas evolve in three different stages—desirability, feasibility, and viability—the three elements of a successful business model.

I am greatly looking forward to reading more about this in Alex’s new book. He’s going to be diving deeper into the specifics of running tests in the three different stages of business in order to reduce risk.

This tip on testing early on in a project phase is another good example of why the Business Model Canvas method is a sensible and practical tool to implement into your business.


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3. The Lower the Risk, the Higher the Investment

The third concept that I found really interesting is closely related to the point above.

One of the biggest problems with Research and Development (R&D) projects (especially in the tech space), is that we tend to dive into expensive technology development before actually verifying if:

  1. there is a market for the idea and,
  2. if the business model will be profitable enough to finance our R&D activities.

I’ve seen many examples in the business world of products that were introduced to the market after millions of dollars had already been invested in R&D and, unfortunately, the products didn’t survive. Two notable examples are Newton by Apple, and WebTV by Qualcomm.

Business Model Canvas Tips Risk

As discussed in my first takeaway—failures are inevitable. So, to avoid losing too much money upfront, we should adjust the level of investment to the level of risk associated with the project.

I believe this concept of taking into account risk should really extend to all aspects of a project, not merely technological feasibility.

The Business Model Canvas theory is that the more tests you perform upfront, the less risk there will be. The less risk involved in a project, the more you should be able to safely invest in the project.

That’s what I mean by “the lower the risk, the higher the investment.”

4. Company Culture is either a “Blocker”, or an “Enabler”

While the concepts of embracing failure, testing early in the process, and reducing risk seem simple enough to put in place, I think the biggest blocker to adopting these methods is company culture.

Society has taught us that failure is shameful; and there aren’t many companies that embrace failure, let alone encourage the celebration of failures.

Business Model Canvas Tips Company Culture

Most of us fear losing our jobs if we fail at anything, so instead, we plan long term projects with huge allocated budgets that extend for years at a time (creating no guarantees other than our own job security!)

Unfortunately, this approach not only ends up costing our businesses money, but we end up spending years working on a project that doesn’t pan out in the marketplace, and the fear of losing our jobs could materialize after all. In the end, the path you choose to take is a personal choice.

I think it would be beneficial to encourage leaders to be “enablers” instead of “blockers,” and create a culture where failing is expected, and where testing is a standard process in every project.

These 4 Business Model Canvas tips, along with other ideas inspired by Alex’s Strategyzer Masterclass, are concepts I’m already implementing into my own business.

One thing is for sure though. I will be putting the new concepts to the test before investing too much money into them!