If you’ve been living under a rock for the last five years…
First off, welcome back we need you.
Second, let me get you up to speed. The hottest two business concepts over the last 24 months have been pivot and business model innovation.
Business Model Innovation(BMI): the proces by which an organization reinvents how it does business to gain a competitive edge by delivers radically new value to existing or new customers.
Pivot: A substantial change to one or more components of a business model.
They are both eternally linked offspring of the turbulent and ever-compressing business life cycle the world has bore witness to since the early 2000s. Sure you around to see the slow grinding demise of the record industry and how the likes of Amazon were taking it to traditional retailing before you pulled the boulder over your SME safe room. What you missed was the increase in intensity, frequency, and ubiquity of this faster business cycle as well as its quite disruptive proliferation throughout the entire business ecosystem. Yea, it’s the reason that boulder you were under flipped over like a little pebble.
There is no avoiding it, three momentous forces – technological, social, and economic – have conspired to rock the business world and caused things to become more complex and uncertain. The symptoms of which are manifested in concerns such as:
- The business making only a fraction of its profit potential
- Things not being broken, but not feeling right either
- Making the numbers because the old ‘go to’ methods have fallen flat.
Point blank, it is a fundamental change in how ventures will survive… or be castoff.
The impact of this change has permanently burned two concerns into the back of business leaders minds, ‘What game should we play?’ (what’s the business model) and ‘How do we win?’ (what’s the pivot).
Having discussed this point with numerous individuals the most common question I get asked is, “How do I work my way thought this problem?”
This is THE critical question.
Before I answer this, let’s review WHY reinventing a business model is so powerful and the reasons WHY so many stumble in its application.
Business model innovation matters because:
- It helps one stay ahead in the product innovation game
- It provides a more sustainable advantage and is far more difficult for competitors to imitate or replicate
- It points out how to effectively exploit opportunities in existing or new markets
It is for these reasons periodicals write about organizations that heroically punched their way through disruptive chaos and emerged on the other side stronger and wiser. From the outside it seems that those who got it right practiced ‘no guts, no glory’ entrepreneurship. This misperception emboldens many SMEs, which can send them down a path that results in modest changes or worse yet careen off course. Circumstances driven by the fact that:
- Wanting to do it yourself is admirable… but breaking an existing pattern of thinking is hard to do alone.
- It’s tempting to believe that it will fix itself in time, it seems to have before… truth be told it hardly ever happens.
- Driving by your gut (conventional insights) can work in the short-term, but it’s jaded by internal perceptions and can lag today’s reality by years if not decades, so doing nothing is not an option.
- Learning about tools, processes, and tactics is the way to go… but utilizing the wrong ones, or in the wrong sequence, results in major lost time.
- [Re]igniting a great business when things are moving so fast is kind of scary and you can’t do it alone. No one can. No one should.
So lets address HOW you can get unstuck and blow past your expectations.
It’s about careful reflection and calculation; here are the seven elements that make sure you do that.
- Get liberated. Break connections to make room for your new ideas.
- Benchmark. Put a stake in the ground by using your current insights and information to forecast a ‘business as usual’ case. Be honest.
- Undergo discovery. Bring in new perspectives that will help you understand your current business model and the specific environment in which you exist. Build a better understanding of the drivers (e.g. customer needs, new technology, etc.) and constraints (e.g. competitors, financial, etc.) and then reflect on what it means to your venture’s future.
- Develop then design. First things first… craft the overall strategy then the right playbook will fall in place. Identify the current job(s) your ideal customer needs done, what you’ll solve, and how it will reach customers. Craft your unique ‘How’ and ‘Why’ by learning form other business models and leveraging frameworks such as the Customer Development Model, Scenario Modeling, and Business Model Canvas.
- Get out of the building. Engage with clients to validate your work. Turn your educated guesses into market verified facts by talking to them about your understanding of the problem, your solution, and delivery model. Most importantly don’t wait until you think you have everything solved, actively seek out their opinion every step of the way.
- Measure. Create a dashboard to focus your attention on what is most important right now, to provide the signals for your mid-course corrections, and most importantly to see if the results are better than your business as usual case.
- Rinse & Repeat. Continuous scanning and re-evaluation is more important than ever because the natural life-cycles of businesses are being interrupted by external shocks technological, social, and economic shocks at an ever-increasing rate.
Often times business model innovation isn’t pretty, it requires trial and error, and the ability to absorb many microfailures… to use the words of Greg Satell in his post ‘The New Media Value Chain‘ it’s crappy. Unfortunately, most organizations don’t embrace those who repeatedly take a ding because they stepped out on a limb to help advance the business.
Whether you’re the founder or charged with advancing a project I want to arm you with the ability to develop some of that ‘crappy innovation’ with less painful dings, or at least help you advance the conversation. That’s why I’ve to kick-off off this Business Model Innovation Process series.
Next up, Benchmarking. I’ll see you next Monday.
In the meantime, let me know what you think about the above hit list. What would you amplify, add, or tweak?