Mindset For Business Model Innovation Archives - Entrepreneurs with Denis Oakley

Entrepreneurs with Denis Oakley

I HELP BOLD LEADERS TRANSFORM THEIR BUSINESSES AND THE INDUSTRIES THEY COMPETE IN

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Mindset For Business Model Innovation

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When to use the business model canvas?

When do you think about your business? That’s when you should be using the business model canvas. Is that simple enough?

The business model canvas is a tool that quickly allows you to focus on what is essential in a business. Most of the time we don’t see what is essential and we make mistakes as a result. We focus on the wrong thing or take too long to get there.

Years ago I ran a startup with my wife. She was good at some things, I was good at others. When it came to discussing how to run the business we both looked at it from our perspective and end up going round and round.

With the financial crisis of 2008 hit, we lost that luxury. Our customers still loved what we were doing, in fact, I had an email from one just as I wrote this, over a decade later, but none of the customers had any work. There was no demand for what we were selling.

It got close to Christmas and we looked at the cash we had. Christmas presents were out. It was a matter of buying some rice to eat, or some baby milk to feed the baby. Not, an ideal situation.

Sketch, Iterate Whenever Your Debate

That’s when I first started using the business model canvas. We’d sit down on a Friday evening, sketch out the business model again and look for a path to success. During the week we’d run another experiment. And repeat. We did this for 27 iterations. Every week a slight variation on the business model, changing operations or marketing, trying to find that golden path out of the meh situation we were in.

There are lots of different ways that we found that it worked. The touchstone is this.

A big report gives you data. The canvas gives you a space to explore that data and visualise it.,

When you can visualise your business more clearly, you have the ability to change it faster and with more confidence.

When you can visualise your business better you can explain it better.

So when should you use the business model canvas?

Use the business model canvas when you are confused, hesitant or uncertain about the future.
Use the business model canvas when you are confused, hesitant or uncertain about the future.

You should use it every single time when you are confused, worried, uncertain, doubtful, hesitant about the path ahead.

By visualising the business model, and how it works, you are able to run a thousand mental experiments about what to do next.

That gives you clarity of thought and allows you to make better decisions.

Over the next few days, I’ll walk you through exactly how simple that is. . .

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Normal Business and the Skills You Need

CEO’s and leaders require different skills in a time of change than they do in normal business. It goes beyond skills to include mindsets. Leaders have to change what they do and why they do it. Let’s try and understand why.

When we are in normal business – the process of creating, making and selling products in a similar way over a long period of time -the focus is on making the business work better.

Better, Faster, Cheaper

In normal business management’s job is not to discover anything new (other than normal product innovation). It is to focus on marketing and selling the product effectively, increasing market share – new stores, franchises and partnerships. It’s about managing the supply chain to drive down the cost of the product (and increase product quality).

Above all, it’s increasing volume of sales and increasing margin so that each year there is a consistent increase in profitability.

In these times you want a safe pair of hands. Someone who is good at making the right decisions that improve the effectiveness and efficiency of the company. The company needs to keep doing what it does, better, fast and cheaper…

Why Blinkers Work

Now a quick segue.

Horses are shy. They are herd animals. When they see something that scares them they bolt and stampede. That’s a great survival trait. When you are a warrior on a horse charging at the enemy it’s less useful. Having the cavalry break and scatter because of the noise and sights of battle is a bad thing.

What cavalrymen did to solve this problem was to put blinkers on horses. These are small patches of leather that go around the horses’ eyes. They block all the peripheral vision. The horse can only see forward. This made it very easy to get them to charge the enemy lines (though not run onto spears – horses aren’t that stupid).

Management Delivers Better

In normal business, we put blinkers on managements’ eyes. We want them going straight ahead, focused on doing more of what they are doing. Better, faster, cheaper.

This gives us great results. In normal times this is how businesses grow to great size. Businesses kick out the mavericks, the bolting horses, that don’t wear the blinkers and head off in a different direction. The rest charge straight ahead getting stuff done.

How blinkers help in normal business and why they cause problems in revolutionary business
Fig 1 – In normal business the untrained or poor managers is constantly looking at the wrong thing and not delivering.
Fig 2 – In normal business the successful manager is laser-focused and consistently delivers
Fig 3 – In revolutionary business the blinkered manager is blindsided because the old methods no longer work and he kills the business
Fig 4 – In revolutionary business the blinkers have to come off and new opportunities spotted and then targeted with the laser focus.

Until Times Change

In times of revolution, like now, this doesn’t work.

Let’s give an example.

Livery stables in London were places where your horses could be stabled, groomed and looked after when your carriage wasn’t being used. Under normal business, the Liveryman had to make sure that the horses were well fed and groomed. He’d grow his business by the horses being healthy and strong and attractive. Customer service, and bowing and scraping, kept regular customers happy. That was normal business.

When automobiles started to appear on the streets of Pall Mall. They weren’t a threat. noisy. Unreliable. Dangerous. The liveryman offered a far better service with beautifully polished carriages. Most liverymen ket doing what they were doing and got wiped out as horses disappeared off the streets of London. Better, faster, cheaper led to a dead end. A faster horse, it turned out, wasn’t what people wanted.

Then Different Skills are Needed

The skills that the liveryman needed were

  • The ability to take off the blinkers
  • The ability to look around, see the world had changed and realise that they needed to do something different
  • The ability to conceive of a different way of delivering
  • The repurposing of their faster, better, cheaper methods, to a new business model

Put in a context like that it’s obvious that the liverymen should have adopted the automobile. Some no doubt changed their business models to become car salesrooms, service centres, tow trucks, scrap yards and more.

In the context of our own time, it’s a lot less obvious what the right thing to do is.

When do we change our business model? How do we change it?

You can read the process that I use to help bold leaders change their business model here.

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Normal Business and the Skills You Need