Business Model Design and Learning

Testing Your Hypothesis—Four Evolving Concerns

As I mentioned earlier, every entrepreneur or new business starts out with a hypothesis about the customers and the market, and then develops a business model in alignment with that hypothesis.22 Most likely, your ­initial model won’t be fully formed and you will have to refine it repeatedly as you try it out.23 First, you need to determine whether you can make it work at all, and then you have to figure out whether you could make money with it. Ultimately, you will never know if your business model is going to work until you’ve tested it with real customers paying real money. Johnson, Christensen, and Kagermann state that successful new businesses typically revise their business models four times ...