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.
What makes something desirable? Why do fans flock after certain pop groups and not others? Why do some products and services have a chance, and others are simply drab?
We’re not talking about the physical appearance or even quality of a product here. We are thinking about what makes something prized, desired, wanted by the consumer.
We’re asking a simple question: Why should they care about our product or service?
Finding a Market for your Product or Service
Over the years, I’ve worked with hundreds of entrepreneurs. They have often been incredible, smart, and genuinely passionate about their product, but this conversation has stumped them. I was talking to an Asian entrepreneur the other week. He was telling me about the boar he had designed that would not only be able to break the water speed record, but also wouldn’t make you seasick. That’s very cool I thought. I have a lot of engineers in me.
But who would want it? Where’s the market? His product as it stood was simply not desirable.
This is one of the building blocks of a business model. A business model needs to do three things if it is to be valuable.
It needs to be desirable, feasible, and viable.
These aspects broadly correspond to different parts of the business model canvas. The right-hand side of the canvas – Customers, Value Proposition, markets, relationships, and revenue answer complex questions that establish the desirability
Who are the customers?
Is what we are making valuable to them?
Can we persuade them to try it?
Do they trust us?
Will they pay us anything for it?
Debenhams
Let’s take the case of Debenhams, a British clothing retailer. It’s bankrupt now and acts as a good example.
From my perspective as a white middle-class male, I always thought its customers were a bit older than me, without particularly good taste. I’ve been thinking about them like that for 25 years.
I have no idea what I’d go there to buy, and despite having a Debenhams in the local shopping mall near me in Malaysia for 15 years, I didn’t even go in.
Can you see how the desirability of the business model is collapsing?
Was I the target audience? Arguably not, but for a mass-market clothing chain, I shouldn’t have been entirely immune to its attractions.
Let’s be cheesy and talk about Tesla.
I’m not a customer, but if I had the money, why wouldn’t I be? It’s a no-brainer that petrol engines are killing the world. So if I want to live a “good” life, I should swap my petrol car for an electric one. I’ve never been near a Tesla showroom, and I’d feel a bit guilty taking one for a test drive if I had no intention of buying. Trust, sure, even though Elon Musk’s a bit of a prat. And yes, I’d like to get rid of a bit of my guilt for earth killing.
Boom, that’s a super desirable product for me.
This desirability cannot be overstated enough.
I chose Debenhams as an example because it was a big company employing thousands of employees and a value in the billions. How could it be so un-fucking desirable – that it went bankrupt? It was so undesirable that people bought the brand and the logo, but didn’t want its shop, stock, or staff.
A Continual Shift in Desirability
The world is changing rapidly. Crazily rapidly right now. It is always changing. That means that there is a continual shift in desirability.
Most of the time, when we look at businesses, we tend to think in terms of the desirability of the products or services that they offer
Does Debenhams have clothes I like? Do I like the cars on the Tesla showroom forecourt? Do I want a trip to Mars?
That’s a problem that managers have managed for decades, if not centuries. One style goes out of fashion, let’s replace it with a new model. That’s why we don’t drive Ford Prefects any longer.
But…
Is the business model desirable?
20 years ago, when my wife discovered that she could buy her clothes online at Next and return them if she didn’t like them, she dropped the Debenhams business model.
The Debenhams model relied on her going into town, going to a shop, trying stuff on, leaving the shop, coming home, and showing me. The Next model relied on her surfing the shop whilst she sat on the loo, choosing something nice which would arrive the next day. It was then in a package for me to drop back at the post office because she didn’t like it. Or she preened for my admiration, and I’d say “You look wonderful!” And she did
It’s the whole package of everything that makes it desirable.
Is Tesla desirable because of the car? Or is it desirable because they sell cars directly, and you don’t have to negotiate with a car dealer? It’s the combination of all these things that make the business model desirable or consign it to oblivion.
Who frequently gets it wrong?
Startups frequently get this wrong. In the immortal words of Anonymouse, they are just building better mousetraps, they are building better products or services, but there is little conception on how to get the whole package to feel amazing.
We’ll come back to this in far more detail as we go through the book. For now, what you need to be able to ask, and then answer is
Is my business model desirable?
What evidence do I have that it is desirable?
Is it becoming more desirable or less?
Who and what is driving those changes?
What is going to break first? What is going to be the straw that turns my business model from something pretty reasonable to something that is rapidly going downhill with no path back to solvency?
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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