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.
Over 50 years ago, an American physicist turned historian of science. He started to research how science changes. We all know that scientists change their minds as the evidence changes, but we didn’t (still don’t really) know exactly how that change happens.
This philosopher, I’ll call him, though historian of science is just of good, discovered a few things.
First, he realised that scientists don’t actually change their minds when the evidence changes. There is a lot more going on inside science. There are always problems with the theory that don’t match up with the evidence.
When I was at school learning about astronomy, it was pretty clear that there were problems in trying to explain the sun’s orbit around the earth. None of the theories we explored actually managed to fit the observed data. The best solution was to fix the planets into crystal spheres, which solved a lot of this. That obviously caused various other problems. Before you think me a flat earther, we were studying medieval theories of astronomy. Oh God – I need to say this. The sun is at the centre of the solar system, and everything else rotates around it, more or less. There are also no crystal spheres.
There’s a very similar problem at the moment. The standard theory suggests that the universe is expanding after the big bang. Edwin Hubble, who was named after the Hubble Space telescope, actually the other way round, discovered that there was a number, a constant, that captured the rate of expansion and helped us to decide how large the universe is. The problem is that when measuring one way, it gives totally different results to another way. Unless scientists can figure out why the two measurements are different. Like using two rulers of the same length to measure your kitchen table. And each ruler coming up with a different result EVERY time – then the standard theory has to change. This is a big thing, and the theory has to change.
That’s going to change a lot of careers, a lot of science. The way that we look at the world, and there is resistance to change.
Kuhn’s theory explains how science changes – how we went from a world of crystal spheres to one of the satellites and are heading to one of the weird twisted post-relativistic spaces – and some of his ideas help us to explain how we think about business, how business models change.
So for the next few pages (maybe a hundred), we are going to be looking at how business revolutions happen. And business models change using the lens of Kuhn’s work.
Quick pause. Denis – this is a book about business, about practically helping my business to survive. I’ve been patient with you so far as you dive into metaphor and historical references, but this is going too far. You are talking about philosophy and science and big bangs. How is this going to help me?
Good point. Let’s rewind a bit. Over the last 50 years in business theory (the stuff that academics write and MBAs study) we’ve been super focused on competition. The big book in business is called ‘On Competition’ by Michael Porter. When you strip away all the big words, it basically says ‘business gets better at delighting customers because of competition’.
A little bit later, other academics, including some who spent some time in business rather than just thinking about it, started saying that this isn’t enough. They argued the case for innovation as a force for change, that was Clayton Christensen in the innovator’s dilemma. This helps, but no one has really explained how business works. Why do some business models grow and survive? Why do some depreciate and die?
Is it the result of creative waves of destruction, as Joseph Schumpeter wrote? Lots of people seem to love that idea. But that is covered in just a few paragraphs of his book on Capitalism, Socialism, and Democracy. It doesn’t explain why.
So what we are doing here is taking some early steps towards a theory of why and how business models change – which is interesting – and how you can use those changes to make a real impact on your business – which is important.
As we bring this chapter to a close, let’s head back into science for a clear example of why this is important for you.
If you have a cannon that you load up with gunpowder and some iron shot what are you going to hit? Well, if the enemy is coming towards you as part of a human wall, then there’s a good chance that you will do some damage. You will learn to get pretty good at this through lots of trial and error.
Or you can spend some time applying Newtonian physics to the study of steel balls and call your new knowledge ballistics. That’s going to let you start hitting things a lot further, faster, and more precisely. Boom! That is exactly what we are helping you to do here, as we delve a bit into the philosophy of business.
Read, enjoy, or flip the pages – reading only the bold bits – until you get to [the relevant action bits].
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