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.
If you have done the exercise suggested above, or you’ve followed the worked example, what should be clear is that you have a much better understanding of the business. My first draft of the business model canvas for denis-oakley.com needed 26 words.
The model allows you to condense a lot of information. You can combine the power of a picture – the standard business model canvas framework – with the power of words.
I’ve done hundreds of business models for clients, and the following are some of the most frequent assumptions that we discover during the process.
- Everyone in a very broad target group will like/want the product/service
- The value being created is useful or wanted
- The idea is good. Normally parts are, and lots aren’t
- Day-to-day activities are clear. Often too much focus is put on setting up the business than figuring out how to run it
- Resources = cash. Really resources = moat or USP. What do you have that others don’t
Motors
A motor in a business model is a small group of activities that work together to make the business successful. In the case of denis-oakley.com, there are two
- Experience
- Creates better consulting, which
- Creates more value, which
- Increases experience
And
- Consulting
- Creates more experience, which
- Generates more content, which
- Increases Lead Generation, which
- Grows Consulting
Most businesses have something like this
Uber’s motor is:
- Balance supply and demand
- Makes Uber more attractive to Drivers and Passengers
- Increasing market share
- Which helps to balance supply and demand
Being able to be clear about your motor then allows you to focus your time and resources on these motors as you develop your business. If we think about Denis-Oakley.com again, pricing is down in the revenue box. It’s a long way from the main business motor. If we play with different pricing models there will be a change in the business, but it will be far smaller than the ones powered by the motors
What are your business motors?
Patterns
There are relatively few unique business models. As you look at more and more of them, you see that various patterns repeat. Many B2C companies for example have powerful motors around the front end. Marketing – Customer- Value proposition. That’s a very traditional, often advertising-led model. In contrast in manufacturing, you often see a Resource – Activity – Cost triangle as they compete primarily on their efficiency in creating high-quality low-cost products.
For example, a steel mill has a $5 billion fixed asset in the form of its steel mill and 200 years of onsite manufacturing knowledge. It uses this experience to make steel each day and bring the cost down which increases its IP (Resource) and allows it to make steel better and cheaper in the next period.
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
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