Emmit Takes On Business Models: The Intro + 5 Questions (Part 1)
Twice last week,Emmit and I scheduled Twitter chats for discussing business models. Twice last week, Twitter totally fell down on the job! It was a major Tweet-chat fail. So I’m taking the planned chat content, expanding it a bit, and plonking it down here. There’s more than one way to skin a clown, dang nabbit!
The Topic? Business Models.
Ok, first things first… Emmit is a business plan, not a business model.
What’s the difference?
A business plan is like a road-map and itinerary; it shows you where you’re going, when you plan to get there, a bit of the surrounding terrain, and gives you milestones by which you can track your progress.
A business model is more akin to the vehicle that carries you on that road-trip – or at least, a blueprint for the vehicle.
Done correctly, a business model reveals how a business intends to make its money – how it turns a profit, or at least pay it’s bills and stay out of bankruptcy court.
In its most basic form, a business model identifies what products or services you sell, and some of the details of how you struture those sales: retail outlets, advertising, subscription models, commissions, etc.
But just like cars are more than just four wheels and a seat, a well-defined business model is more than just “what you’re selling”.
Here’s a (maybe) better definition:
“A business model is how an organization
creates, captures and delivers value.”
Notice that this shifts the focus from “selling something” to “providing value” – which is what actually convinces people to give you their money (or live chickens, or whatever you get paid in). It’s a big change in approach for most of us, but nearly every element of business, from product development to marketing, gets just a little easier to wrangle when you focus on providing value, as opposed to selling *stuff*.
Now, at this point, fancy pants business advisors usually start throwing out terms like “Customer Value Proposition”, “Differentation” “Foothold” and “Distribution Channel Logistics”.
They’d also use a lot of acronyms.
I know this, because Mr. Spouse works for a Fortune 500 company, full of fancy pants business people. He assures me that ARVI (Acronyms-R-Very-Important) holds a treasured place on all conference calls and meetings with upper management. He also assures me that me no one really remembers what the acronyms mean, but everyone pretends that they do, because ARVI is what distinguishes real business people from people like Quirkipreneurs.
But we’re Quirkipreneurs, right?
So we won’t be doing the whole ARVI thing. (No Acronyms For You! NAFU!)
Instead of an obscure and irritating acronym, I’ve come up with five little questions and one really wacky visualization.
The Five Questions (beta version!)
These questions are still dressed up in their business clothes, because they’re in beta. By the time we’re done corrupting them, they’ll be much friendlier, and will likely be wandering around in tie-dyed t-shirts and flip-flops. Ready? Here they are:
- What value does your thing create or enhance?
- How do you capture that value?
- How do you deliver that value?
- Who do you deliver the value to?
- How do you keep that process sustainable?
If you already know the answers to those questions, I’m incredibly impressed. Go write ‘em down, then read the rest of the posts in this series for added insight.
But If you haven’t got single clue how to answer, and those questions make your head want to explode? I’m here for you, and so is Emmit and his promised wacky visualization.
So hang on, that’s coming just as soon as I can get it typed up!
P.S. While you’re waiting, you could check out @bizfinanceforum’s latest BlogTalk episode at http://tobtr.com/s/1464438. It’s all about business plans, and she even answers some of the questions that came up on the #emmit stream.
Comments? Ok, we can do that.
How about this as a conversation starter: Do you have trouble getting out of a “gotta sell stuff” mindset and into a “providing value” way of thinking?
- Emmit Takes On Business Models: The Intro + 5 Questions (Part 1)
- Emmit Takes On Business Models: An Intuitive Approach (Part 2)
- Emmit Takes On Business Models: The Results Show!(Part 3)