Starting a co-op? Do a business model canvas

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28 Nov, 2020

Turning ideas into actions
Because a business plan comes later in the development phase, many of the ideas in it have usually been fleshed out or tested in some way.

So, how does a group of entrepreneurs – especially those starting a co-op – get through that first ‘ideas’ stage and prepare to start a business? By using a Business Model Canvas.

Origins of the Business Model Canvas
Initially proposed by entrepreneur and business theorist Alexander Osterwalder, the Business Model Canvas is best captured in the book Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers.

In it, the authors describe a canvas that entrepreneurs can use to explore ideas, and then those ideas into a reality. They tested this canvas through a crowdsourcing effort with 470 different ‘practitioner co-authors’ in 45 countries.

Definition of a business model
The book defines a business model as ‘the rationale and infrastructure of how an organization creates, delivers and captures value.’ So, it’s really about being able to think through, articulate, and map what you’re trying to do, why you want to do it, and how you will do it well. This process will help you define your value proposition.

For groups forming co-ops, this blend of creative and practical thinking is essential.

In “The Case for a Socially Oriented Business Model Canvas: The Social Enterprise Model Canvas,” Sergio Sparviero notes, “business models are simplifications of real systems that are used for explaining performance and competitive advantage or for rethinking and redesigning an organization’s strategy in order to benefit from innovations and other opportunities”.

In other words, a business model is a testing grounds and thought experiment, and a tool for educating and communicating with potential shareholders. And a good business model often plays “an important role in coordinating and facilitating social action within the organization and with external stakeholders”.

How the business model canvas fosters innovation
Co-op entrepreneurs are no strangers to innovating on traditional business models. If you’ve chosen the co-op model, there’s a good chance you need to innovate. This could mean scaling your independent business, bringing an important asset to your community, or creating a service no one else will provide. The business model canvas can help you innovate.

Prototyping your business adds perspective
In an interview with Institute Management Development, Osterwalder talks about how entrepreneurs should design their business model, much like architects do for buildings.

“It needs to work like an architect drawing table to put your business model together and experiment,” he says.

In short, the canvas provides an opportunity to prototype a business model. It also provides a way to test theories, map out processes, and understand the business environment before putting a lot of effort into developing the business.

 

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