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.
My journey to entrepreneurship is unique in my sense. When I became an entrepreneur, 3 things stood out to me from the books I was reading at the time. They were a desire to be free, find my way, and achieve some mastery over the world and my environment.
Being an entrepreneur does give you that freedom for a while. That too for a price.
Setting up a business is exciting. There are so many moving parts involved. You are hustling, trying to learn things quickly so that you can somehow fabricate this new world factory, from what seems to be smoke and mirrors. And a never-ending supply of cash. From your wallet. Which gets thinner and thinner.
First Year as an Entrepreneur
In the first year, the targets we had set weren’t achieved but we were moving in the right direction as we were able to make a few million dollars of sales.
The business model had been based on a simple idea. Companies like HSBC spent millions on CRM systems that helped them know their customers. I discovered that we could pay this small software company about £100 a month to get exactly the same. Using this new technology would allow us to run things about other companies in the industry. Plus, if we jumped on the web, we would get an inexhaustible stream of leads. So we used Salesforce and SEO to great effect. At one point, we were getting about 30% of global traffic coming for our products coming to the website. That got us into the finals of HSBC Startup Stars in 2009.
Up in HSBC’s head office in Canary Wharf, I was interrogated by the Chairman of the Confederation of British Industry and Martha Lane-Fox, who had just sold Lastminute.com, an early internet travel company, for billions.
When it came to Sir Digby Jones to question me, he was blunt.
He told me; ‘You are Fucked’.
Hardships
The recession means that no one is going to be buying steel. (I knew that and was putting a brave face on it)
The Chinese have got so much overcapacity in Steel that your industry will never recover. (I didn’t know that and really didn’t want to hear it)
We didn’t win the competition – there wasn’t much we could do against the brutal truth of market forces.
Soon after that, it hit us.
We didn’t get orders.
Worse. Our customers didn’t get orders.
The oil price crashed. The steel price crashed.
We tried everything, but how can you get orders when the industry that you supply has no work? And their customers are demanding 30% price clawbacks in order to survive.
I got onto an accelerator course run by Dr. Siva for CRADLE, one of Malaysia’s economic development bodies to learn about entrepreneurship as I was self-taught up to this point.
Among the tools, he taught us, was the business model canvas which was only a few years old at the time.
We will spend a lot more time on this later. The important part now is that I was able to sketch out how the business worked in about 10 minutes.
Then looking at it, as we hurtled towards bankruptcy, I was able to ask the question, what if we changed this about the business?
Most of the normal tactical stuff – cost-cutting, creditor management – was only useful for slowing our uncontrolled tumble from the sky. It didn’t help us get out of the stall and establish any control.
Silver Lining
Every Friday, my wife and I sat down with a few beers, looked at the business model, and discussed how to change it. We looked at what had worked during the week, and what hadn’t. I’d say we had optimism, but in reality, it was a bleak pessimism, we had to make this work as there was nothing else.
We made it through 27 iterations. Somewhere around number 20, we had to choose between buying some rice to feed us or baby milk for my daughter. Eventually, we came out to the other side.
What I learned was that the business model canvas was an amazing tool that really helped us understand what we were doing, and then enabled us to dynamically change the business and respond to the way the market changed in a dynamic way. The alcohol definitely helped with being slightly relaxed, so we were able to be a little bit bolder than business orthodoxy would let us.
I’m not sure if Alexander Osterwalder and Yves Pigault designed it to be used this way – but for us, it works, and the business went on for a number more years until we got blindsided by a totally different problem.
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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