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You can regard business model zen as a brand new Lean Startup methodology. Business Model Zen is based on Lean Startup Philosophy and innovation management theory of circular innovation. With loop of action and market feedback, we can build what customers want.

CONCEPT begins and ends with customers

Let’s take an example of an owner of a pizza restaurant who’s thinking of ways to increase sales. Provided the solution has been set to improve the return rate of VIP customers, let us try to define the beginning and the end of a customer-centric view. We simply place a customer and a company (including its product) on a canvas first then develop their relationship into more complex ones.

 

flow

 

 

PLAN builds upon a strategic view

By connecting the vertices of ‘customer-problem-solution-sympathy’ in a customer-centric view, we get a face. Then by placing another face of ‘strategic thought’ underneath and connect its vertices with the existing ones on top, respectively, we get a cube.

strategy

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MISSION is promise that a company makes to customers. A public statement that “we will deliver this value”. It’s been stated earlier that MARKET a total sum of problems of customers. From a strategic point of view, market’s characteristics need to be evaluated, as well as its size (i.e. a total sum of problems).

 

Regarding the solution, it becomes of importance to evaluate COMPETITIVE ADVANTAGE. It is the advantage among competing products that target to solve the same problem of customers. Hence a broader relation needs to be researched, not just that of products in the same category.

 

Lastly, HIGH CONCEPT needs to be in proactive consideration to evaluate if a problem that matters is being addressed by a solution that is appropriate, eventually to obtain sympathy from customers. It can be coined into the example of a pizza restaurant introduced earlier:

  strategy2

 

DO is loop execution and learning

One of the common characteristics of successful business models is that their business structure resembles a virtuous circle. To build such a structure, components in business model shall be well defined then work in harmony in an organic way. Therefore constant pivoting to feedbacks from the market is required. A business model shall be designed to accommodate such feedbacks and learning process.

 

loop

 

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Before executing the BM, for the first time, it’s mostly plan information that are put into the domains of opportunity search, ideation, execution & test, learning & pivot. After execution, the results shall be updated into each domain respectively.

 

*Before the BM execution

 

Domain

Goal

1) Opportunity search

To observe extensive trends, market changes and customer needs

2) Ideation

To afford a creative ideation with a core problem of customers and its market opportunity taken into account

3) Execution & Test

To define:

a. components to be required at the time of execution

b. a mechanism to build the relationship with customers

c. a process to collect data from the market and detailed indexes

4) Learning & Pivot

To check the hypothesis on which a business model is based thus to identify potential problems in the business model from analyzing market data.

 

* After the BM execution

Domain

Goal

1) Opportunity search

To identify the root cause of the gap between the hypothesis and market data collected before and after the execution. Then to tackle the root cause as an opportunity to improve the business model.

2) Ideation

To develop ideas for modifying and improving the BM. To compare them with the existing concept thus to identify components to add/remove/replace into or from it.

3) Execution & Test

To list up points of improvement that the execution implied. To add new indexes and develop a new process to collect data from the market. To decide whether to run a modified BM in parallel with the existing one or to replace it completely.

4) Learning & Pivot

To identify the root cause of the gap between the hypothesis and market data collected after pivoting the BM. To sort out positive and negative outcomes due to new changes brought into the BM

 

 

 

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