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.
Let’s take these ideas back from the science and start applying them to business.
A few chapters ago, we talked about the business model cycle. About how businesses models are born mature and eventually die or become irrelevant.
If we talk about normal science, from the last chapter, we can say that we have normal business as well.
Normal business is all about having an established market, business models that work, and a nice stable of products and services. The business manager’s job is to slowly grow the business by extending the range of products and services and making them more profitable, through cost reduction and price increases.
This is what MBAs are trained to do. MBAs are trained to deliver the best possible results from a normal business. Normal business is generally a bad place for entrepreneurs and startups. They cannot bring anything to the table that existing players don’t already have a significant advantage in.
Before we move on, let’s have a quick think about what normal business can look like.
Normal Retail Business
Normal retail business in pre-internet days was having a shopping mall with a couple of anchor tenants. Increasing revenue meant opening more floor space in the same mall or opening a store in another mall. Every store was similar, and so costs and revenue increase linearly with floor space, with some variance based on local conditions and store management.
Normal oil and gas business pre-fracking was the exploration of remote parts of the world for oil-bearing rock, the provision of drilling rigs, and then the infrastructure to bring the oil or gas out to the refinery.
The car manufacturing pre mobility and electrification was the ability to build huge assembly plants creating a number of models on a common chassis, using a huge automotive supplier base and a network of distributors to ensure that your factory exceeded the minimum efficient scale.
Normal Banking Business
Normal banking businesses used to have branches and large customer call centers, making money on the spread between the money that they borrowed to customers and the higher rate than they lent it out to borrowers.
The normal software business was to sell business customers licenses and install servers on their sites. Charging handsomely for bother the license and the integration with their other systems.
I could go on and on. A normal business is a business that has been running for a while. It has a fairly clearly defined way of doing things.
One of the reasons why I gave historical examples was that in many big industries there is no normal business anymore. In all of the cases above, I can think of multiple new business models that have a claim to becoming the new normal.
But this is the subject of revolutionary business, which we will talk about in the next section.
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.
