Is it Time for a New “Business Model Canvas?” An Introduction to the “Impact Business Model.”

“This world is but a canvas to our imagination.”
– Henry David Thoreau

In a recent interview with HBR Ideacast from Harvard Business Review, Steve Blank — a founding father of lean startup methodology — enumerated the three primary contributions to lean:

• Alexander Osterwalder’s business model canvas
• Steve Blank’s customer development process (also see here)
• Eric Reis’ minimum viable product (MVP) development approach

In a way, the customer development process and MVP development approach are implementations of specific aspects of the overall business model canvas. In some ways, they are two sides of the same coin. Without trying to understate the value of these tools, Blank’s customer development process is useful as an initial process to identify underlying customer segments that might be a suitable target for a new value proposition, and Reis’ MVP approach emphasizes the need to be efficient through hyperfocused development of the new value proposition.

So what contribution will push the lean movement to the next level? It just might be a tool that combines business modeling with strategic alignment in a single, simple, visual format called the “Impact Business Model.”

The Impact Business Model might look like an incremental variant of Osterwalder’s Business Model Canvas, in part because it offers a canvas approach to hypothesizing and testing individual business model components. However, two key benefits achieved with the Impact Business Model are not readily apparent with the Business Model Canvas.

First, the Impact Business Model visually segments components into three basic categories that relate to expenses, revenue, and external contributors. By visually grouping business model components into these categories, an entrepreneur can think not only about the individual components, but also about their interrelationship with each other in the context of the overall business activities.

Second, and more importantly, the Impact Business Model presents a holistic perspective on the importance of creating customer impact through alignment of behaviors with customer response. Figure 3 illustrates a specific flow of components that ultimately lead to revenue. The central component of this flow is labeled as “IMPACT” in reference to how well the product or service offering appeals to the customers’ vision. This, of course, is based on the assumption that greater alignment between what the business offers and what the customer values creates a larger customer impact and, consequently, higher revenue.

The adage that “a picture is worth a thousand words” presumes that those words follow a meaningful flow. Certainly, a thousand jumbled words would have little worth compared with a thousand words arranged in poetic prose. The Impact Business Model helps to ensure that the visual flow of the diagram can more easily translate to meaningful analysis, hypotheses and execution of the codependent business model segments. Moreover, centralizing the most important business model segments — behaviors, Impact and Customers/Pipeline (because these are where business model variances occur) — helps focus a specific “alignment strategy” on the most influential revenue-generating segments.

Whether you choose to view the Impact Business Model as merely a reorganization of the Business Model Canvas or a new, fresh visualization tool for strategic alignment is up to you. Either way, hopefully this introduction to the Impact Business Model will give you another tool to consider whether you are strategically aligning your business behaviors with your customers’ values to create an impact that ultimately leads to revenue..

About Jeff Holman – I’m an IP and corporate attorney with more than 15 years of experience counseling startups and growth-stage companies. I view my degrees in electrical engineering (BS), law (JD) and business administration (MBA) as a foundation for thinking about problems and opportunities from several distinct perspectives. Obviously, some of my free time is spent thinking and writing about interesting business issues. Contact or connect with me if you would like a copy of the Impact Business Model, including more detailed guidance for each business model segment.

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[This post was originally published August 25, 2017, on LinkedIn by Jeff Holman.

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