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 I arrived at university, I was desperate for sex and somewhat lacking in social skills. Not being a desperately smooth talker, my initial attempts were embarrassing. Then one night in a club, I hit on on a plan. I’d just ask girls if they wanted to have sex. It was crude but effective. Usually, I’d convert to use a marketing term, at about 15-20%. As I think back though, it was not only somewhat embarrassing but there isn’t a great story in there.
This brings us to how we start thinking about how to put together new business models. Most business people are like me at university. They want to get to the sex straight away. Flirting, romance, and connection are inefficient steps on the way to profit.
As we’ve seen in previous chapters, a business model is a social construct. It exists because we believe that it does. Part of the strength of that belief is based on the power of the story. Google and Amazon, writing, in 2020 seem strong. Because they have amazing stories about their business models. If the top 5 mobility companies in the world, as I write this, only two are traditional car companies – Volkswagen and Toyota. The others are Tesla, Uber, and Didi Chuxing. Why these three? Their business models tell a powerful story.
Business Model Criteria
It is important for a business model to have a strong story. Going back to my university experience. I didn’t have a strong story, and so I played low-cost numbers games bouncing along the bottom. Others of my cohort got their stories much more in a lie, and one, Bear Grylls, turned it into a career.
Stepping back from a diet of sex and raw bugs, what we have to do when we design the business model is to consider whether it meets the following criteria.
Is there a pot of gold at the end of the rainbow? Business models transform. They create huge amounts of value for customers and, derivatively, for you. If your business model story is going to be a bit meh, a damp Mills and Boon novel, or so memorable that people comment on your tie design after you tell them it hasn’t gone what it takes.
We’re designing business model stories that light up eyes as financiers and investors follow the breadcrumbs through the forest.
Does that mean it’s got to be new and exciting?
It’s a take on the world that people haven’t seen before or done in the same way with an interesting twist. An interesting twist is certainly not following the following recipe: Take the name of the most famous/profitable/fastest-growing/ coolest unicorn that you can think of, add it to a random industry/sector/product, and say ‘We are the X of Y. We are the Uber of Spacetravel or the Airbnb of livestock management. It doesn’t work. It just shows a lack of thought, imagination, and inevitably a business model that will underperform.
When I’ve mapped out interesting business models with clients in front of investors, you know that you have a good story because the investors lean forward slightly, pupils dilate, nostrils widen ever so slightly. It’s exciting.
Novel, Exciting, Different, Powerful.
These are the elements of our business model story.
It also needs to be simple.
Before I went to university, I went to a traditional all-boys school and learned lots of Latin. I’m sure that had an impact on my dating skill. One of the books I read was Aesop’s fables. 240 short stories with a moral. It’s been in print for 2500 years. Why? Simple stories, easier to tell. Easy to remember.
Tortoise and the hare anyone?
Business model stories need to be like Aesop’s Fables. Simple, easy to tell, easier to retell, and with a strong moral profit message.
If the strength of the model can’t be explained in a moment or two (less than a couple of minutes), then chances are you are either trying to delude the market or are deluding yourself. Simplicity and clarity are absolutely key.
This doesn’t mean that underneath there is not a lot of detail, nuance, and complexity. There should be.
The best business models are almost like a Mandelbrot set. The further in you go, the more fascinating, beautiful, and complex it becomes. On the surface though – it is a clear and simple tale.
Tell it once and watch the listener tell it on, and do it better that’s the goal.
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.
