Start with the Business Model Canvas – Not Yet

We at the Oregon State University Advantage Accelerator are big believers in the Business Model Canvas methodology. We use the Canvas, we also use software for the Canvas, and we make our clients read the books by Steve Blank and Alex Ostervalder. However, the fact is that Canvas may put a technology entrepreneur at a disadvantage before he or she gets out of the lab.

Our clients at the University tend to be in the early stages of their development. Most of our researchers are doing cutting edge research. The entire set of potential opportunities for these clients have not yet been examined. Under normal circumstances, using the Canvas, clients would start with one or two potential target markets then try to validate the opportunity.

I suggest that this may not be the best way to begin. One of the tools, we use at our Accelerator is the opportunity matrix. The founder or Principal Investigator (PI), my co-director, mentor(s), intern(s), and I brainstorm on the possibilities of applications and industries in which this innovation can be productized. We also look at the numerous variables that could affect market entry. This tool was originated by the strategist Igor Ansoff and there are many versions found online.

The matrix provides focus and guides decision making prior to a long course of validating tests as required by Canvas methodology. Along the y-axis, we list the potential products and/or industries in that the innovation may be successful. Along the x-axis, we list variables such as size of market, ease of entry, competitive response and so on. The list of variables can be quite large and is on my version. The purpose is to determine through online research, phone calls with industry experts, which industry or market should be the top areas of concentration, which then becomes the business focus. This leads to a much clearer start on the Canvas.

The technology also needs to be checked for the opportunity as well. We have a great spreadsheet that checks on the viability of commercialization for the technology. It is similar to the opportunity matrix in that the various markets or projects are listed on the y-axis and a number of strategic questions about commercialization of technology are listed with weighting scores along the x-axis. This is another easy way to envision the technology side of the opportunity. Send me a note and I will send you either matrix.

These pre-cursors to the validating steps in Canvas will shorten the steps from hypothesis to validation testing.

It is highly likely that an entrepreneur will save time and money by doing the secondary research up front. This also creates a more focused entrepreneur who can easily begin the primary research work on Canvas.

There are a number of other activities that we take our clients through before beginning to work on Canvas. But overall, in the early assessment stages, we are seeking feasibility. Is the technology feasible within the means of customer wants? Does the business proposition make sense both in terms of its ability to succeed and financial viability?

Overall the big questions in this stage are:

  • Do I have a technology that has potential applications in the commercial market?
  • Are there customers and a market of sufficient size to make the concept for this technology viable?
  • Based on estimates of sales and expenses, do the capital and other resource requirements to start make sense? And;
  • Can you create an appropriate start-up or management team to execute the concept?

Just like in the Canvas, the answer to all the above questions is not that you believe the response, but rather, I know my response is true and here is why.

This early work provides sufficient data to understand the industry, examine an early value chain and process flow, understand your potential first and/or second market, organize yourself for validation of market(s) and get an early justification of pricing.

As I stated above, the secondary research requirements will enhance the primary research efforts required by Canvas. Go in smarter and ask better questions in order to obtain better results.

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