A business model is a framework for finding a systematic way to unlock long-term value for an organization while delivering value to customers and capturing value through monetization strategies. A business model is a holistic framework to understand, design, and test your business assumptions in the marketplace.

What Is A Business Model?

A common misunderstanding is to think of business modeling as a one-page business plan. However, a business plan is a document with a specific aim. It contains a bunch of assumptions about your business.

It also contains financial projections about the business for the next 3-5 years. However, those assumptions can be hardly tested. The business plan thus remains a document that lives in the imaginary world.

Not A Business Plan

Another misconception around business models is to confuse them with the monetization strategy or the revenue model of a company. While this is an essential piece of the puzzle, it is just one of the components of a successful business model.

Not A Revenue Generation Strategy Only

Where scientists have labs where they can manufacture and run experiments. Entrepreneurs have the real world as a way to measure their assumptions. Designing and executing business models for an entrepreneur is like designing and running experiments for scientists.

Business Modeling Is About Experimentation

Customer obsession goes beyond quantitative and qualitative data about customers, and it moves around customers’ feedback to gather valuable insights. Those insights start by the entrepreneur‘s wandering process, driven by hunch, gut, intuition, curiosity, and a builder mindset. The product discovery moves around a building, reworking, experimenting, and iterating loop.

Business Modeling Is About Customer Obsession

A north star metric (NSM) is any metric a company focuses on to achieve growth. A north star metric is usually a key component of an effective growth hacking strategy, as it simplifies the whole strategy, making it simpler to execute at high speed. Usually, when picking up a North Start Metric, it’s critical to avoid vanity metrics (those who do not really impact the business) and instead find a metric that really matters for the business growth.

Business Modeling Is Also About Setting A North Star