Business Model Innovation Hub

... where visionaries, game changers, and challengers discuss business models

Which comes first: Feasibility Study or Business Model

When evaluating a business option, this could easily become one of the chicken or egg type of questions. Should I develop first a feasibility study and later a business model, or should I do it the other way around. Some times my customers ask this question and I have hesitated to answer them. I feel that a business model could be built on a series of assumptions and later adjust or confirm its results. But a feasibility study is based of various facts or market investigations which are more reliable, but a lot more expensive.

So, let me know your thoughts on this issue.

Regards,

Marcelo

Tags: feasibility_study

0 members like this

▶ Reply to This

Replies to This Discussion

Permalink Reply by Mike Lachapelle on January 5, 2012 at 6:24pm

Hi Marcelo;

A feasibility study and a business model are both tools to address a business problem or identify a business opportunity. There is no 'approved solution' for how they are to be used. What matters is, do they help you to identify and and assess potential solutions.

From my perspective, I would differentiate them in that the business model is primarily a tool for generating ideas and potential solutions or innovations. The data gathering and analysis around the model (e.g. financial viability) can help assess the best or most likely to succeed option. More importantly the business model can be used to identify the key assumptions of a new business, or the innovations to an existing model that need to be tested.

A feasibility study is more focussed on the assessment of identified options or potential solutions. It will be used to determine the viability.

I am by profession a business analyst and have used feasibility studies more than a few times. For me, the study is used where there is a known problem and identified potential solutons. You are trying to use the assessment to recommend one among multiple solutions.

It is conceivable a business model analysis could be used within the context of a feasibility study as part of the identification of potential solutions phase. The formal study would then go on to determine the feasibility of each of the identified options.