The no BS business model canvas: track, test and tell your story

The business model canvas is a commonly used construct to determine whether your business is feasible, desirable,viable, and adaptable. It should be constantly updated and based on customer derived evidence, not opinion.

Take, for example, the subscription business model. But paying for the subscriptions you use is not the only reason your bill is much higher than you realize. 

It’s also because you’re overpaying for the ones you don’t use. 

That, as it turns out, is one of the hidden forces behind the subscription economy: Americans spend billions of dollars on stuff they have forgotten about. A dirty little secret behind many of the world’s most popular subscription services is that they owe part of their success to our lack of attention.

Netflix. Hulu. And now... HP? The company's latest offering is a monthly subscription for printers. For $6.99 a month, customers will get a printer sent to them, complete with auto-shipped ink and tech support; the cost covers 20 printed pages. Printer sales have been declining for years, including nearly 8% in just the third quarter of 2023, per industry tracker IDC. With the subscription option, HP is hoping to address customer complaints about sustainability and the cost and nuisance of replacing ink cartridges. Should you offer Sick care as a Service and give patients the razor so you can bill for the blades? Hospitals are already billing patients to send emails via patient portals.

Another model is to sell the bullets, don't fight the war. Think Nvidia selling chips to AI companies who are doing the heavy lifting.

Considering artificial intelligence’s benefits, many organizations are exploring AI-driven business models—strategies that integrate AI into core operations to drive value and maintain a competitive edge. Before getting into how to make your business strategy more AI-driven, here’s what an AI business model is.

There are four steps to failing, nailing, scaling and "sale-ing" your business model: 1) translating the sick sick care system of systems into language you can understand 2) tracking whether your business model hypotheses are valid or invalid, 3) testing your model in the market, and 3) telling your story to stakeholders

So what's your story?

Tell me about yourself

How to build your personal brand and business model canvas

The SoPE creation story

Lessons from a SoPE salesman

However, lots of things that get in the way of finding facts and how you interpret them. For example, herthe are some sources of bias. For entrepreneurs, perhaps the most common is confirmation bias i.e. only listening to what confirms things you already think or believe.

Here are some tools suggested by Carl Sagan and implications and tips on how to avoid bias or misinterpretation during customer discovery interviews.

1. Wherever possible there must be independent confirmation of the “facts.”.When one person in a customer segment tells you something, interview others in the same segment to confirm it. It is just good detective work.
2. Encourage substantive debate on the evidence by knowledgeable proponents of all points of view. There are multiple people in the value chain, supply chain or workflow that will be impacted by a problem and your proposed solution. Take a systems approach and get perspective from disparate people in the systems.
3. Arguments from authority carry little weight — “authorities” have made mistakes in the past. They will do so again in the future. Perhaps a better way to say it is that in science there are no authorities; at most, there are experts. Interviewing people with fancy titles does not guarantee that you will get the "right" answer.Use techniques that minimize power imbalances when getting ideas or feedback.
4. Spin more than one hypothesis. If there’s something to be explained, think of all the different ways in which it could be explained. Then think of tests by which you might systematically disprove each of the alternatives. What survives, the hypothesis that resists disproof in this Darwinian selection among “multiple working hypotheses,” has a much better chance of being the right answer than if you had simply run with the first idea that caught your fancy. You should have multiple business hypotheses in multiple business model canvases and decide which one is the most valid.
5. Try not to get overly attached to a hypothesis just because it’s yours. It’s only a way station in the pursuit of knowledge. Ask yourself why you like the idea. Compare it fairly with the alternatives. See if you can find reasons for rejecting it. If you don’t, others will. What you think about the value of your solution is irrelevant. The only thing that matters is user defined value and that is reflected , in a commercial business, by whether or not they open their wallet.
6. Quantify. If whatever it is you’re explaining has some measure, some numerical quantity attached to it, you’ll be much better able to discriminate among competing hypotheses. What is vague and qualitative is open to many explanation. Of course there are truths to be sought in the many qualitative issues we are obliged to confront but finding them is more challenging. Customer pain, like patient pain, has a qualitative and quantitative component. Asking where it hurts in one thing. Defining how badly it hurts and how much a customer would be willing to pay to get rid of it is another.
7. If there’s a chain of arguments, every link in the chain must work (including the premise) — not just most of them. In multisided markets, like sick care, your solution needs to have value proposition that does the jobs, relieves the pains, and meets the expected gains of multiple stakeholders.
8. Occam’s Razor. This convenient rule-of-thumb urges us when faced with two hypotheses that explain the data equally well to choose the simpler. Follow the rule of parsimony. Don't boil the ocean. Keep your solution as simple, understandable and focused as possible.
9. Always ask whether the hypothesis can be, at least in principle, falsified. Propositions that are untestable, unfalsifiable are not worth much. Consider the grand idea that our Universe and everything in it is just an elementary particle — an electron, say — in a much bigger Cosmos. But if we can never acquire information from outside our Universe, is not the idea incapable of disproof? You must be able to check assertions out. Inveterate skeptics must be given the chance to follow your reasoning, to duplicate your experiments and see if they get the same result. Test a little, learn a lot. Use prototypes and simulate to verify and validate.
10. Here is a list of rookie business model canvas mistakes

Choosing the right revenue model depends on several factors. For example, for companies, the benefits of the subscription model include more stable and predictable revenue streams, improved inventory management, “stickier” customer loyalty due to consumers’ reluctance to change vendors, and the ability to sell more products to this seemingly captive group.

Coming to the wrong conclusions from data derived from customer discovery interviews can doom your idea and contribute to new product or business failure. Getting the facts is but one step in the process. Interpreting them and constantly testing assumptions is just as important in business as it is in science. If you don't, you could find yourself in a very black hole.

Arlen Meyers, MD. MBA is the President and CEO of the Society of Physician Entrepreneurs on Substack and Editor of Digital Health Entrepreneurship