Why you should prototype your business?

As most of you know a few years ago I started using Business Model Innovation as a tool to understand, develop and de-risk new business models. This new methodology was emergent mostly with start-ups that took me into larger International Multinationals like Nestle, among others.

What is Business Model Innovation and how can you prototype it?

Business Model Innovation is nothing more than a description of how a company generates value for its customers and itself.

Prototypes come in all shapes and sizes in almost every kind of industry. A prototype is then evaluated by a person or group who either represents the ideal customer or has expertise in the product’s industry.

For all Designers and Engineers out there: If you prototype your products, services or process why wouldn't you prototype your business?

How to prototype your business?

Do you want to prototype your business but don't know how? Testing Business Ideas book from Strategyzer, focuses on how to create value for both the business and the customer. The book offers introductions into the testing framework.

The caveat of this book, however, lies in the experiment section. It’s where the 27 discovery experiments and 15 validation experiments help you find inspiration to find out the truth about your assumptions.

Don’t Fall In Love With Your Prototype -Your prototype should be disposable.

Prototype in 3 days, not in 3 months. Your prototype does not?need to be perfect to show to customers. Perfection will kill your MVP. Don’t focus on details, focus on the core of your business instead. You want to be able to show something that appears real to your users.

You are not building the final product. Develop the experimenters mindset: try, try, and try again. You’re just designing pieces of your solution to test your assumptions.

Business Model Innovation is not Willingness to Pay.

Willingness to pay and price point is like a dark mystery to most top management. Unfortunately 4 out 5 times when I talk with management regarding Business Model Innovation and prototyping we end up in a discussion about Willingness to Pay (WTP). Although it is an important element which focuses on desirability of the solution you are creating, the costs that you are accruing & the viability of your business case, WTP does not make your project successful per say unless you have the proper channels or processes in your organization to deliver the value proposition.

Why Create a Prototype of your business?

Remember, prototypes don’t have to be made by you directly. It’s common to hire a Business Designer or someone with more experience under their belt to help you craft the preliminary version of your product.

As long as your prototype will set you on the right path of where you want your business to go, you are doing the correct thing.

Advantages of creating a prototype:

1. You create a visual representation of your business.
2. A lot of businesses seem well thought out in our imagination, but become difficult to scale in reality.
3. Find your product market fit, get to know your customers.
4. Prototyping is an iterative process, where you work to keep improving on it until you feel it is ready.
5. Investors want to see the efforts, the successes and the failures of your business process.
6. Prototypes spark new ideas and pivot points.

Question Desirability, Viability, and Feasibility??

One exciting thing about building a business is that to succeed, all the pieces have to work in harmony—the value proposition, pricing and financial model.

Desirability - What’s the unique value proposition? Do people want this product or service? Does it make sense for them?

Viability - Can we build a sustainable business? What has to be true for this business to work? What are the costs? How will you pay for it?

Feasibility - Does this work? Is it functionally possible in the foreseeable future?

Are Prototypes Right for Your Business?

Even the most obscure small businesses serving the most niche clientele can benefit from prototyping, whether they involve selling vegan cupcakes, mobile apps, or decorative stickers.

Prototypes benefit business owners who know their product has traction, but aren’t sure marketing language and entrepreneurial enthusiasm alone are enough to gain the customer base they need.

Might you be interested in discussing Business Model Innovation in your organization, or if you are considering becoming a coach or being coached in BMI, please feel free to contact me as I am always willing to share my experiences and in return learn from others.