This post is an extract of my forthcoming book on business model innovation. The innovation book looks at why business model innovation is needed and how it works. You can read more about it here. These posts are early drafts of planned content and I’m putting them out to get feedback. Please do comment below, or subscribe to these pages to get each new section as it is published. In today’s post, we will be looking at finding opportunities in this new world.
When we look at competitor’s business models, I normally take the following approach.
What’s their value proposition – who are they selling to?
Those are normally easy to grab off their website. A quick scan of the internet will tell you how they make money and their marketing channels.
For key resources and key activities, looking at financial returns if they are a listed company is always useful – as is reviewing the jobs that they post and what people say about them on the glass door.
The other great source is to search ‘company name business model’. Often you will get a number of blog posts and articles that help clarify your thinking.
We do this quickly, and in 20-30 minutes, you should have something that is good enough. 80% rule works here. This is not going to be the same business model canvas that their senior management has – but with 20% of the time, you can get 80% of the value. That’s good enough.
What is the Emotional Base of the Company?
The first step is to consider what sort of epicenter they have. What is the emotional base of the company? Years ago, I did a lot of steel trading.
Our major supplier had a big warehouse full of steel in the Netherlands. I can stop there really, can’t I. 🙂 They were massively resource-driven.
Our office, in contrast, was quite different. The first thing that we did when we set up the company was to buy a Salesforce licence. This helped us to understand our customers and what they were thinking – a classic customer-focused epicenter.
We cover epicenters in a lot more detail in another chapter. Your goal here is to write down what you think the epicentre of the company is – maybe a couple of bullet points to justify it. That’s it. No rocket science – just how you feel about the data of the business as it lays in front of you on the canvas.
Once that’s done, start telling stories about the business model.
The classic entrepreneurial elevator pitch comes in handy here. Imagine if you like Elon Musk in an elevator and multiple drones like entrepreneurs saying:
“In X industry, people are unhappy because of y. We are going to do z to solve y. And we will make money because this group will pay us for doing z. This is going to work because of…”
The Elevator Pitch Model
Take that elevator pitch model, or any other one – and start applying it to what you have written down on the paper. Resist the temptation to not do this, because you know the company.
There is a big gap between what your mind thinks it knows and what it is able to articulate as it tells a story about how a business succeeds.
As you try and tell the story, you fight lots of burrs and inconsistencies in the business model. Things that just, don’t seem to make sense.
That is brilliant. You’ve either got the business model wrong, or there’s a problem with the business model. Go out do some more research, ask a few questions, mull it over (Does mulling – thinking things through deeply have anything to do with the mullet hairstyle? Is the lack of mullets the reason why rock music is far less philosophical today?) and see if you can resolve the anomaly.
That usually clears things up – if it doesn’t, there’s normally a deeper problem with the business model. This is where someone else is useful. Sometimes we just don’t get how business models work. Several times with blockchain business models, I’ve put my hands up after a few hours and said, ‘I just don’t get it, and then a few minutes later, after I’ve been talked through, I get it in a flash of light. If it still doesn’t work, then we have a really interesting situation.
Problems and the Management of the Company
What can I see as a problem and the management of this company can’t? What can I see that they can’t? And why? What can they see that I can’t? And guess what, why can they sit it? (there are a lot of whys in this)
Play with this problem and bullet out your thoughts on why it is a problem, what the causes and consequences are. Then put it aside.
If you are a fan of strumming, you’ll know that herrings don’t taste amazing raw. It’s only when you put them into a tin, let them mature and deliquesce that they reach the true pinnacle of gastronomy. It’s exactly the same for the problem with the business model that you’ve just spotted. Put it on one side, let it ferment.
We’ve spent some time telling stories about this business model.
The next step is to delve down into the patterns.
If You Want to Read More
I keep everything structured on my niftily titled business model innovation book page. Head there to browse, binge, read straight through, or cherry pick. Please do take a moment to comment below or upvote comments that you agree with
Subscribe to the New Book Chapters
As I write each new section you can have them sent to your email. The plan is to write something 2 – 3 times a week. It is easy to unsubscribe, but I hope you won’t as the goal is to delight and entertain as well as educate and train you through this business model innovation journey.
