Introduction to Business Modeling

A business model is a story about how an organization creates, delivers, and captures value.

The traditional approach

A sure recipe for failure is to use the traditional approach of creating a five-year business plan full of desires, expectations, and assumptions, then take it for granted and then give it to the product team for execution. This is the traditional approach and one that does not work.

The lean approach

Using a Lean Startup approach, the business model is the underlying thread that helps you to be focused and keep your efforts aligned. Remember that you are looking for a repeatable and scalable business model. Therefore, you can model a business, but it does not define a business model or business plan.

Some teams start by creating an initial version of the business model using frameworks such as Business Model Canvas or Lean Canvas. Other teams create it later after validating the problem-solution fit and defined the value proposition for a specific segment of customers.