Business Model Strips for Customer Growth Hackers: A New Business Model Notation System

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“Customer Growth Hacking is at the heart of the Entrepreneurial Revolution (ER), the epicenter of which is in Silicon Valley.” Rod King

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First, let’s take a short quiz:

Who is a CUSTOMER GROWTH HACKER?

 1. Is (s)he someone making TRADITIONAL BUSINESS PLANNERS obsolete?

 2. Is (s)he someone making TRADITIONAL MARKETERS obsolete?

 3. Is (s)he someone making TRADITIONAL BUSINESS STRATEGISTS obsolete?

Actually, all of the above answers are correct. Do allow me to explain.

For me, the best way to define a “Customer Growth Hacker” is to introduce the graphic below. As the old saying goes, a picture is worth a thousand words.

 

 (You can download the deck of slides for this presentation from here:

http://www.slideshare.net/RodKing/5-business-model-strips-for-custo... )

To iterate, a Customer Growth Hacker (CGH) is defined as an “individual, team, or organization that carries out experiments to rapidly and inexpensively discover as well as solve Big Urgent Market Problems (BUMPs).” A Customer Growth Hacker wears the hat of a Marketer/Ethnographer, Quant-Strategist/Data Analyst, and Product Developer/Business Model Innovator. The goal or ultimate Job-To-Get-Done of a Customer Growth Hacker is to rapidly and inexpensively acquire, retain, and grow customers.

It is definitely tough for an individual or entrepreneur to be a successful Customer Growth Hacker. Yet, the (exponential) success of any business requires a Customer Growth Hacker. No wonder that many potentially scalable startups fail especially those run by single entrepreneurs. In practical terms, a Customer Growth Hacker describes a minimum viable team that seamlessly integrates the expertise of a Marketer/Ethnographer (“red hat”), Product Developer/Business Model Innovator (“green hat”), and Quant-Strategist/Data Analyst (“white hat”).

Can I describe myself as a Customer Growth Hacker? Certainly, not! I aspire to be a Customer Growth Hacker but I’m not one yet. I often wear the white and green hats, that is, the hats of a Quant-Strategist/Data Analyst and Product Developer/Business Model Innovator. And even there, I’m not a software developer or coder. Also, I certainly cannot describe myself as a Marketer or an Ethnographer. As things stand, I need partners in order to function as an effective Customer-Growth-Hacker team.

In this article, I’d like to briefly talk about how a Customer Growth Hacker approaches business model representation because business model visualization is at the heart of business model innovation. In recent years, Alexander Osterwalder’s Business Model Canvas has emerged as the most popular tool for representing or documenting a business model. However, as I’ve argued before, the Business Model Canvas is good but not great especially as a visual tool for rapidly and inexpensively prototyping as well as testing business models; see this document. The Business Model Canvas lies closer to the pole of “fat” tools of business modeling.

“Fat” business modeling involves tools that use block diagrams and concept diagrams to represent how businesses create, deliver, and capture value. Tools for fat business modeling include the Value Chain, Activities System Maps, Strategy Map, and Business Model Canvas. I’ve excluded Ash Maurya’s Lean Canvas, since it does not completely represent a business model. For a Customer Growth Hacker searching a market place for Problem-Solution Fit, fat tools for business modeling such as the Value Chain and Business Model Canvas are too detailed so that they consume a lot of resources when documenting, modifying, and validating business model hypotheses. A Customer Growth Hacker needs and predominantly uses tools for "Lean" business modeling

In the phase of “Problem-Solution Fit,” a startup should focus on rapidly discovering market problems. Consequently, a lean business modeling tool should use a line diagram (“business model strip”) representation of a business model especially one that focuses on a customer growth engine that delivers value to targeted customers or users. Conceptual line diagrams are the de facto tools for rapid prototyping in many domains including architecture, engineering, and physics.

As Problem-Solution Fit is validated and the project moves on to the phase of validating “Product-Market Fit,” a Customer Growth Hacker can zoom out of a business model strip to view more details of the modular business model engine. Eventually, the Customer Growth Hacker can zoom out to a block diagram such as in a Business Model Warship or Business Model Canvas. The graphic below, which introduces a new Business Model Notation System, shows a spectrum of 5 business model strips.

Line diagrams for business model strips are especially usefully for describing stages in the evolution of markets and products. Such strips facilitate the identification and categorization of business model patterns. Generic business model strips for the evolution of markets and products are presented below.

 

 

Unlike in the case of the Value Chain and Business Model Canvas, the above diagrams can be used to rapidly document, analyze, prototype, and design models as well as customer growth engines in any industry. Below are some diagrams showing the use of business model strips to illustrate the evolution of business models in the financial industry. More information on business model strips can be found here.

 

Many people think that the current global economy is fast and turbulent. But, as some are wont to say: “We ain’t see nothing yet!” The coming era of the Internet of Things would make historians call this era, the “Tortoise economy.” The Internet of Things would herald the “Cheetah economy” where everything is moving at touch of a “smartphone” or what Bill Gates once called, the speed of thought. In the Cheetah economy, we’ll witness a “Cambrian” business model explosionthe business models of established (legacy) businesses would be routinely disrupted and destroyed. No business model would be sacred. Many business models would have to be rapidly created, reinvented, innovated on, and improved upon.

For rapid business model prototyping, we need leaner business modeling tools. The Business Model Canvas may be suitable for use by corporations in the Tortoise economy. However, if startups and nimbler businesses want to survive as well as prosper in the Cheetah economy, I’d suggest that they focus on becoming Customer Growth Hackers who have an unfair advantage in use of the 5 business model strips.

In the current Tortoise economy, it’s the big that eats the small. In the Cheetah economy, however, it would be the fast that eats the slow. Don’t deliberately allow yourself to be eaten … Or, at least, don't allow yourself to be eaten in the breakfast of the Cheetah economy!

 

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