Fluidity – the growing need of organizations today.

fluidy 9Organizations are facing increasing a dilemma in how they organize and manage within their systems and structures.

They are being forced to deal in increasingly complexity and environmental turbulence and ‘adapting the appropriate response’  remains increasingly a difficult one to master, within the existing regime and structures.

On the one hand the value in stability is still essential, working within specific routines and practices gives a clear ‘path dependence.’

This allows for efficiencies and effectiveness to be constantly at practice, constantly building the problem-solving processes, so as to master tasks in complex environments to resolve ‘known’ problems in ‘given’ ways.

We need to become increasingly fluid but how and why?

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A new innovation perspective – change to fluidity

Fluidity 5Today most innovation is focused on creating new products or services. These new innovations frequently change or modify operating models and business models, often not by deliberate design.

We’d stipulate that most innovation should be focused on updating and changing business models constantly and with increasing focus. With this focus new products and services become by-products or outcomes that support or sustain new business models for driving greater lasting sustaining competitive advantage.

In short, most innovation should be focused on creating new business models, with new products or services serving as enablers to intentional business model innovation, rather than the other way round. This is what we mean by flipping perspectives.

Critically we have to become far more comfortable with constant, ongoing change and aligning this into new innovation and business models. This move to positive change is discussed here, recommending a movement that allows the changes we need within our organizations to become more fluid in their adaption, for leveraging and exploiting innovation in new, far more compelling ways.

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Most Innovation is Becoming Business Model Innovation

Ending BeginningAs we consider the interplay between innovation, business models and change, it becomes clear that many companies have a definition of innovation that’s far too narrow.

Increasingly we need to rethink the scope, depth and breadth of innovation possibilities, as well as the secondary implications of innovation.

Ignoring this broader definition of innovation means we can never achieve all of the possible benefits innovation has in store.

We believe ignoring the breadth and depth of innovation can also allow competitors and new entrants to disrupt your position or industry. Fortunately, some of these definitions have been created for us.  Our responsibility is to understand the definitions and their implications, not stay constrained but seek and explore the broader options this can provide.

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Value realization comes through innovation and our business models.

Everything, it seems we work towards in business, is for seeking out new value creation, for new growth, for wealth creation, for providing improved returns on the investments we have been making.

To achieve this we consciously have to set about the value capture and what contributes to its realization. This is where innovation plays such a vital part. If we don’t build our innovation capital we will certainly have a much harder, perhaps even impossible time of realizing new value. We are more than likely to just maintain our existing value or see it steadily decline. So a constant focus upon renewal is always needed. Do we consciously do that on a daily basis or just once a year at annual review time?

Value-adding activities need to be central in nearly all of our decisions. The how we can turn our resources into being more productive, more creative is increasingly becoming one our biggest strategic areas of  future investment decision. Our resources are those all-inclusive assets, capabilities and processes that make up the Enterprise.

Yet it is clear management is spending far more of their discussion time and focus on the ‘harder assets’ that are made up of land, buildings, equipment and machinery – the ‘heavy’ financial capital investment decisions. Any new investment in IT, processes, software are usually well identified in the accounting or discussed within the narratives that support the reported numbers. We constantly report on these in our annual reports to validate and justify management’s decision.

Where we still seem to remain far too silent upon is our ‘softer capabilities’ Of course we extol the virtues of our employees for their hard work, for their vital role within any result, yet we still struggle to go beyond ‘simple’ articulation and quantify this value. Why is that?

Managing the innovation ‘stock’ and ‘capital’ potential

We do need to know our ‘innovation stock’, a large part of our wealth generating capital and where it can be best put to use. We are valuing the knowledge perspective far more and with this we are increasingly recognizing the importance of the intellectual capital that makes up the organization.

We are still caught in old world value reporting systems. We are not assessing our organizations for their true ‘invested’ worth. As the more intangible side is completely under-reported we make educated guesses. We are valuing firms on what we ‘feel’ they will generate in future innovation value but those internally as well as us externally lack the real ability to measure this. Yet we can if we took the same amount of time to understand the ‘make up’ of these.

We are needing to value the knowledge perspective far more. Far more intangible assets and the knowledge available is being recognized as the valuable aspects of the potential future of a business. These are the more ‘dynamic’ parts that come under human capital (competency, sharing, collaborative, learning quickly, collective competence and enduring value for the future), creative capital (creativity, fast prototyping, design and development, replacement & renewal), the relationship capital (responsiveness, retention, absorption, empowerment, networking), customer capital (the customer base, engagement, the potential and the ability to connect), entrepreneurial capital ( risk- taking, venturing and exploring)  and finally, the process capital (productivity, cycle time, process yield, on time delivery) are becoming far highly valued today. It is these contributing capitals that make up the unique mix we find within our innovation capital. These significantly deliver the value creating abilities.

We need to know the multiple capitals that make the true value of a business.

It is these different capitals that together are making up the intellectual, wealth generating parts. It is those that are more dynamic, the contributing parts of our capitals that should be highly prized today for the investment premium.  Yet often this ‘premium’ is often no more than an educated guess on what we suspect on past track records, assumed as the basis for the possible ‘promise’ in the future. We need to change this guessing into much more harder validation. Lets move away today from those traditional assets ‘seen’ and well measured on a balance sheet (buildings, machinery, the physical more static assets) and capture and report on the real value generating ones that create the innovation growth.

We need to make much more of a concerted effort to identify these intellectual and knowledge providing capitals and perhaps ‘house them’ under this broader innovation capital. As it is innovation that renders that different, unique set of value outcomes far more. Surely it is this innovation capital that is at the core for future wealth, that value creation potential. Innovation capital must be treated as the essential strategic asset and is it is central it needs to be far more reported upon by the management of organizations. Of course it constantly gets mentioned within the narratives by management today but often lacks quantifiable and substantive validation.

For years there has been this call for a far more integrated reporting mechanism, one that ‘accounts’ for identifying the intellectual capital to provide this better understanding. The struggle with this argument is it still seems to be a ‘pipe dream’ as management seemingly fails to understand the mechanisms within these. Can this change, if so how?

 Maybe we should reframe the measuring of intangibles differently?

Today we are operating in business environments that are highly diverse, specific and subject to rapid change. This reacting to this volatility and our ability to spot new opportunities is what is often keeping management up at night and certainly giving the investors equally sleepless nights, trying to second guess organization performance so as to make the decision to continue to invest or begin to divest.

The value creation being created simply needs articulating better. Markets and investors need the value generating perspective far better framed and explained. Today this is often random, ad hoc, left to individual interpretation in their presentation; it needs some form of uniformed framework to bring this together to allow for clearer, more transparent comparison and judgement of real value. It does need a more integrated framework of value creation.

The focus should be on value creation through the business model

Last week I read an excellent paper written by Vivien Beattie and Sarah Jane Smith called “Value Creation and Business Models: Refocusing the Intellectual Capital Debate”. I was kindly sent this by Vivien Beattie after the abstract caught my eye. It has triggered much of my thinking in the last week.

Of course! The Business Model, this is the place for us to gauge measure and gather a real sense of the dynamics that are making up the organization. Today there is certainly far more of an emphasis upon understanding the business model, so why not make this even more central to reporting?

The quality of the business models is paramount to the value proposition to the customer and this triggers even more of value identification within the value proposition, so central to the Business model canvas.

Within the business model we need to gain a real sense of the dynamics that make this up. Where is the intellectual capital being applied to create new innovation, where are the new business opportunities? It is the abilities to ‘connect’ these, in how we acquire, combine and utilize those unique and valuable resources with the business idea. It is this dynamic ‘combination effect’ that delivers the value (proposition) to the customer.

The Business model is the new unit of analysis for evaluating future value

Arguably the business model is holistic and is becoming increasingly the new unit of analysis, that spans the organization and ‘articulates’ its capital and strategic value capturing parts.

Can we achieve a more integrated set of disclosures that combine the Business model, its strategic approach, what makes this up and clarifying its value creating process?

This potential approach does need to place a much heavier emphasis on the innovation capital and all the knowledge creating aspects that make up intellectual capital. It would need a significant shift in management’s understandings as they would need to articulate the critical components far more, they would have to find a common communicating language. Where better than the ‘heavier’ use of the business model canvas or the layering structures that makes this understood?

Externally we can also judge far more the potentials within the stated ‘interactions’ between the critical components of the business model. Management does not have to ‘give the store away’ in their competitive position to its competitors but they certainly can do a better job to convey much of the dynamics that make this up, in better, thoughtful ways. Make this more financial contingent for future investments.

Beyond narrative reporting, we need to push further.

Narrative reporting has been suggested as the step for this to happen. To make the business model an essential mandatory part of the management reporting. I think this can even be pushed further. Whenever management has been ‘pushed’ by regulatory forces it has taken the time to learn and understand the parts that make this up. Our intellectual capitals are part of this learning as equally knowing the ‘dynamics’ that make up the innovation capital becomes essential.

The business model, the intellectual capital and the innovation capital simply make up such a significant part of the Value Creation process. Realization of this ‘make up’ and understanding its critical connections is needed far more today to understand. Knowing these can move us towards value our organizations far better than we can do at present.

Communicating the value creation and business model is critical today

Today and in the future, it is the ones that can articulate and ‘point towards’ what makes up the value creation will attract and command investors premium. Those that can describe how they are setting about sensing and seizing opportunities by knowing the more dynamic ‘interactions’ will be in a far better shape to exploit and capitalize on them.

The organizations that understand their unique mix of capitals and how it is made up in this broader sense, will be able to deploy their innovation capital towards the ‘value proposition points’ far better. These will will be through constantly evolving business models, to convert opportunity to their gain, repeatedly by directing their innovation capital far more effectively.

The key today is they need to know what to invest into as the critical resources and this is far less the ‘hard’ assets but more the softer competencies, capabilities and capacity parts that are made up through knowing what contributes into the innovation capital.

Are you a business model innovator?

I think nearly every significant business consulting firm has written about their thoughts on business model innovation. I was reviewing the number of articles I have collected about this and it is becoming mind-boggling how so much advice can be offered and can still make sure it leaves you in deeper conflict and confusion than before.

I’m talking here more about the larger, more established organizations confusions on approaching business model innovation, not the start-ups or the younger businesses. We struggle to get an established well defined approach to approaching business models in these more established organizations. I think there are multiple reasons and I’ve touched on some in past posts.

Is help on the way or are we about to layer on more confusion?

I know there are plans on there way where the combined minds and efforts of Henry Chesbrough, Steve Blank and Alexander Osterwalder are entering the fray even more, in a new educational offering at UC Berkley in late October. I think there is ‘stand-alone’ modules as well in their respective works, especially over at Strategyzer, Alex’s mix of tools, software, academy and on- line resource around the BMI.

Their focus at this Berkley short course will be on developing new sources of growth, by helping companies figure out ways to drive the development of new business models within their company.

They are acknowledging that this isn’t the same thing as a crafting a business model for a brand new start-up, working with a clean sheet of paper.  http://executive.berkeley.edu/programs/corporate-business-model-innovation. Instead, they will examine how to get the most out of the parent company, while avoiding the traps that “help” from the parent company can entail.

The plan is to be introduced to new concepts in business model innovation, open innovation strategies, and applying start-up models in a corporate context. The program will guide participants to reshape their thinking, assumptions and business strategies, to create and restructure teams to inspire innovation.

I have to be honest here; I’m a little nervous that this might just be adding more confusion but let’s wait and see if this does the job. I hope it does not rehash what is already available. A two-day course can be incredibly constraining or equally done well, I mean really well, then it is just the opposite, liberating and defining.

Business Models should be about explicit choices.

Before we get into thinking about new business models, there is a lot of essential links or decoupling to be thought through within large organizations. Do you ever have blank canvases in large organizations? Maybe but the majority of decisions based on new business models might come with some form of organizational baggage.

My blank canvas moments in large organizations always held some constraints. These come in many different guises: there are both clear strategies (or should be) and much conflicting interpretations at each level within organizations, there are significant heritage and legacy issues to evaluate, there is a current set of operating models that might conflict or compliment any new business model design and then we can never ignore the detailed organizational design itself.

Here I’m talking about the make-up of IT, structure options available or achievable, the processes, governance, metrics, cultural, talent available and the organization-wide clarity on its priorities. Many of these actually ‘hold the business to ransom’ and if the CEO or board are not totally comfortable and have not thoroughly discussed it, new business models have a very hard time to work within the constraints known as well as hidden.

Then you have the outside forces at work, the ones that are most probably forcing the re-think or need for a new business model. These are the forces at work, have the context of markets changes or likely too, what are our present or emerging competitors doing differently than we are, what new capabilities and competencies are coming to bear and the whole context thing (macro, trends and technologies).

So the CEO or board are central to BMI’s to get off the ground and this must be the primary focal spot for discussing and educating around the Business Model. The vital message here is designing the pre-work to BM’s is the ‘sweet spot’ to get well designed and recognized, then more into the actual BM constructs and what is needed.

So what motivates change by considering new business models?

IBM conducted a survey some time back of the CEO’s ranking for exploring new business models. These were four ‘stand out’ ones of 1) Cost Reduction, 2) Strategic Flexibility, 3) Focus and Specialization, and 4) Rapidly Exploiting New Market or Product Opportunities. There were two more but these were the big four. These four certainly have huge scope behind when you think about them and can start any business model development discussions.

One way to explore these four ‘stand outs’ regarded by the CEO as the most important

If one takes a concept from a A D Little report on their view on business models I like their idea of their archetypes approach.  A launching point within any business model discussions within large organizations is to apply these ‘archetypes’ to the above four CEO needs.

The five outlined in A D Little’s report were asking open questions to see potential or not:

  • Share the cake differently (novel ways, challenging traditional approaches, partnering)
  • Supplant someone (they suggested the middleman in the report)
  • Shift the cost curve structurally (deploying different asset bases)
  • Redefine the customer experience (exploiting uniqueness and new values)
  • Convert product into service or combine them.

Now I think  possibly working through the four needs of CEO’s and the five archetypes you really can get into exploring new business models in meaningful productive ways. A 4 x 5 matrix perhaps. The emphasis points within these discussions changes and the depth of conversation determines next steps.

Getting the framing right is the best argument for change

CEO’s and boards I believe always listen to well-argued cases where you can pin point failure or lost opportunity or new sources of potential revenue and growth. Getting this framing right in the first place, knowing what and why you believe you need a new business model becomes more valuable, a real catalyst to change and this is the powerful enabler to unite behind.

Surely this going back to getting the ‘need for’ is far more valuable initially to lay in the foundation than working through the principles and typical pros and cons of one design or approach over another. I think we can get caught up with this rush to justify and validate one specific business model or another? Is this the ‘cart before the horse?’ Or just enterprise kicking in?

Sell the compelling reason for making change by identifying a real need, work through if this can or cannot be completed through an existing design, and then throw yourself into all the ‘delights’ of  what makes up the components of business model design.

Are we starting in the right place or diving in by layering on more BM design?

Just a bit of a Monday morning reaction perhaps, but reading the different activity going on within cracking the business model code for adoption within large organizations that seems to be buzzing within the Business Model Community at present. I would suggest there needs to be some great care, otherwise we kills the goose, not fatten it up by building the right thinking and value proposition for what it could really offer large organizations!

Are we stepping back far enough and giving this the ‘helicopter’ treatment before we launch into further solutions, courses and seminars, maybe just fitting the existing frameworks into something  without the real stepping back this might need?

Multiple Use of the Business Model Canvas

Recently I was having a ‘conversation’ with Alexander Osterwalder concerning the limited adoption of the Business Model Canvas within large organizations. I was asking him if he agreed and if he had any thoughts on this.

Now if you know Alex, he is either jetting off to somewhere in the world to keep spreading his Business Model gospel, or about to get immersed in his next idea associated with it, so these conversations are grabbing him through twitter or short email exchanges.

Short and sweet

Excellent! One thing I’ve seen: once the Canvas is in an org it spreads organically, virally without my intervention… interesting research topic!”

Those of you in the business world that have either been hiding under a rock recently or obviously as it seems, in a number of larger organizations, the Business model canvas comes from the pioneering work Alex did for his PhD. This was published not just in his thesis but in a bestselling book, as lead author, called ‘Business Model Generation” http://amzn.to/uY9U4b. Also take a look at his site : http://bit.ly/m4DNC1

The books claim of “You’re holding a handbook for visionaries, game changers and challengers striving to defy outmoded business models, and design tomorrow’s enterprise” on the cover, it sets itself up for the imaginative person striving to alter the status quo within their business.

Without doubt this book weaves design throughout, to give you a visual feast through its canvas approach. It leads by example in wanting to replace or alter the more established business book with its style. It is a beautifully designed book to enhance the pleasure of reading it and it is not a typical business book, it conveys the essentials that you need to know quickly, simply and in a highly visual format.

So what is holding the large organization back?

I’ve previously commented Business model innovation meets one of today’s business needs. Many of the tools we have relied upon for decades just simply do not ‘articulate’ the job on hand. Models enshrined in business folk law like Porters 5 forces, Boston matrix and a host of others gave insight, were very analytical, but gave declining comfort on foresight and this is what is needed today.

the times they are a-changinbob dylan

We have seen the significant shift from internalizing to externalizing through open innovation. In seeking differentiation, businesses have had to loosen up and give up some of their ‘control’. The world seems more dynamic and complex, it is a place where you have to find a unique position in the market, and one built on competitive advantage seen through the eyes of your customer not from within your four walls. The business model captures ‘breaking’ opportunities and clarifying existing value propositions, so why this lack of uptake?

Often a potential problem is to do with it’s positioning- for the BM is it:

  • Alex spends an incredible amount of his engagement time with entrepreneurs, small business owners and to a far more limited degree, I sense, within the larger organizations. Is this one reason? There is only a certain amount of time and I’m sure Alex has to be selective with what and where he wants to deliver this message across the world. He might though, need to draw in a fellow BM disciple, who could focus and spread the message to the larger organization as his ‘patch’.
  • Is his message skewed towards the entrepreneur more? Even the subtitle on the front of the book might be a little challenging to the incumbent. “You’re holding a handbook for visionaries, game changers and challengers striving to defy outmoded business models and design tomorrow’s enterprise”. Maybe those (the majority in large organizations) find this more of a “oh, I wish” but are simply not sitting in that sort of position to change the world? Maybe the book needs a mini-repositioning? Or a further one where a new book brings all the ‘collective’ knowledge that has been learnt since the first one, all together as a companion, or as a field guide?
  • Is it also because it might be hard to imagine that you can capture a complex picture within a one page canvas? Within large organizations you deal in pages (I mean pages) of business plans, marketing plans, briefing papers and countless justifications. Could a business model be captured so easily? Well actually yes, if anyone is wondering.
  • Is it partly because the Business model does not have enough of a blueprint of proven techniques or follows a more (comfortable) descriptive process, yet to be fully established? I’d argue that this has dramatically been changing in what I saw in a recent workshop given by Alex- it is going more along that route but perhaps not there yet, for wider adoption or ‘comfort’ for some. Perhaps it now requires a more radical ‘layered’ supporting structure that underpins the canvas? Or you simply shout “get on the train, it is about to leave without you”
  • Or more than likely, it is far more to do with that classic ‘lead and lag’. Larger organizations are slower in adoption; it is just a matter of course. Be this in new technology, new processes, social media or a host of new things they tread more cautiously, they are slower to adapt. Those that get ‘it’ internally spend often frustrating months, sometimes years, trying to convince others to make a change, to change a process, a planning structure, even a widget within an established product that often holds it back. Then the CEO reads it in a magazine, hears it from a friend and away we go. Why not buy him/ her the book and save yourself the time and trouble!

Irrespective of the answer to any of the above, my question here is: “can they afford to keep on ignoring a brilliant tool? One that will help them ‘galvanize’ the understanding of their business model and provide an amazing tool to explore other potential ones?

I would argue to the large organization “simplicity can sometimes be deceptive” and just find the time and really focus upon the potential that lies within the Business model canvas. It is a powerful tool in the right hands. Let me suggest a number of reasons here:

So the BM Canvas and its value to large organizations.

BMI provides an increasing value, my opening set of arguments.

  1. It can help discover new perspectives on challenges, also new perspectives on solutions.
  2. These perspectives can be new insights, new customers, new resources and new channels.
  3. Framing BMI in the canvas approach can underpin the Business Case through the nine building block analysis and provide a great one page justification.
  4. It can define needs- needs in the market, needs required from solutions and their impact. It can compliment ‘jobs-to-be-done especially.
  5. It can investigate value propositions (ranking, impact, capability, competition).
  6. It can help investigate higher impact propositions (value- based, enhanced economic, applications etc) to stimulate internal thinking and greater generation of potential BMI’s.
  7. It can form the basis of any model for showing where the money lies in potential profit, the possible costs and the resources needed.
  8. It can help in evaluating competition or watching for new entrants if ‘it’ or you understand the needs of the customer and where opportunities might lie.
  9. It can explore and explain consumer thinking (pre and post discovery and execution) in easy visual ways.
  10. It can be used as a neutral observer, uncovering opportunities or validating them in other industries that today may not be relevant but need to have a ‘watch’ placed upon them.

My other powerful argument lies in the yet to be fully explored multiple uses:

I call these my “large organizations eight powerful reasons to adopt the Business model canvas” and place all the options in front of you, to be explored, to be tested, to be given a decent trial.

These are:

  • To simply explore new business models as the book originally sets out in the how, what and where of doing this through the canvas approach.
  • To ‘map’ changes to existing business models as they evolve or need to pivot differently. There is a growing body of work on the pivot by Steve Blank and Eris Ries. This is not exclusive to the entrepreneur, where they have tended to focus but much of their thinking can be applied to the larger organization to learn, understand and gain from (http://bit.ly/bYhHwQ and http://bit.ly/1fpIpK ). Just spend some real time on these two sites, it is time well worth spending to learn and challenge your current thinking on many approaches to your market and knowing the different value generation points in any engagement with your customers.
  • To sketch out competitors positions to explore possible opportunity gaps should be one of those consistent ‘habits’ that so many large organizations often have a real blind spot to undertake and then get caught out and surprised when they see their share slipping away. The BM Canvas can spot and track competitors.
  • Use it as a dashboard for innovations that have an impact on existing business models. Whenever you have any major BM change you capture it on your BM Canvas so all above and below can see the change. Again Steve Blank has been pioneering this concept for using the BM Canvas to ‘signal’ significant changes that he as a VC investor really only needs to get involved in. This can apply also as a ‘trigger’ point for communicating significant changes happening, up and down the organization.
  • Use it to compare business model components across countries where different models are being applied to build businesses. This enables all involved to quickly focus on the differences on these operating models and market formations to get quickly at strategic discussions. This gives the visitor clarity and draws out critical ‘talking points.’ for allowing the visiting fireman to actually say more than “how can we help” but “let me show you ways to be safe.” It brings everyone onto the same value proposition and to rapidly explore the different options far more quickly than through those countless power point slides we have all endured, explaining each of the factors within the market. It gives business reviews a (fantastic) template. Try it!
  • When you are pitching for funds it provides the top picture that others can quickly see and appreciate the why and how- they ‘see’ the value and the $$ potential, Again this has been grasped by some of the more enlightened venture capital investors, just wanting to know where the money is coming from, and then when the changes occur, as they always do, why the ones running the business made the changes from the original BM proposition. This offers ‘intelligent enquiry’ not getting involved in the running of the business but supporting owners or business managers with appropriate experience to compliment theirs.
  • To have ready alternative scenario’s for volatile business conditions as ‘early ready’ that have mapped out potential changing conditions and where and how the business model might be adjusted or radically changed. The earlier ‘warning system’ pays in volatile times and we are all facing those at present.
  • Rapid concept brainstorming to move into prototyping evaluation and market testing. Testing many different variations in small bite sized bets is rapid prototyping, do this through the effective use of the business model canvas. Testing fast in the actual market place new business models and then learning from them to improve the approach is absolutely critical. Get the customer involved.

Just consider all of them. Learn the basics then experiment and you will not look back. I will be doing some more research and validation in the coming months on these, hopefully with large organizations willing to open up to this exploration and thinking.

Find a common language is simply needed

I do think the Business Model Canvas is about to go through a (further) tipping point, that crossing the chasm into mainstream adoption. Finding a common language is one of the critical tenets that Alex has been arguing with his Business Model approach. To find this common language and recognizing the value of this tool in many different situations can be valuable.

Gaining this common voice to the business model, so all those around can understand it easily and quickly, is a major advance on what we presently use in having to explain our business models. For me there is something intuitive about the BMC approach. But to then empower everyone, to go out and seek increased value from new ones seen, that can then be communicated on one page, well that’s the real power of the Business Model Canvas, for any organization, large or small.

Making untested hypotheses compatible to Business model innovation success

An email from Business model innovation hub (http://bit.ly/bnTd6G) landed on my laptop that stopped me to think a little harder on the whole momentum of Business model innovation. It summarized the ‘breaking’ collaborative work going on between Alexander Osterwalder, Steve Blank, Alan Smith and Bob Dorf. This is around untested hypotheses coming out of new Business models, that need a better structured and systematic way of exploring these to test assumptions, as early as possible within the lifetime of the model.

A breaking collaboration that seems really valuable

Steve Blank has summarized this first step in the collaboration in an entry on his site www.steveblank.com under http://bit.ly/9cElPf. He stopped me in my tracks (well briefly) with the statement that the “Business model canvas was at the end of the day a tool for brainstorming hypotheses without a formal way of testing them”- “a static planning tool”- the very thing I thought the canvas was taking us away from.

What the group is working upon is a “strategy stack for entrepreneurship”. A way to successfully validate and execute the Business model. All this sounds positive and interesting although it is was a little surprising to label the canvas initially that way. I would argue there are a number of other aspects that need focusing upon to validate and execute the Business model, including researching much both in formal, more structured ways and informal ways, applying given tools and techniques that clarify assumptions better.

Going beyond simply guessing

His diagram to drive home the point was highly effective- if all entrepreneurs do is ‘guess’ and on these quesses convince others to invest then something needs to be resolved to avoid this risk in the future and to build business models that have a higher chance to be successful.

Is all Business model work simply quessing? Still I don’t really want to go there as Steve Blank has some clear views on the alternatives that do make good sense- he coins this ‘Customer Development’. By spending some time on his site you will get a great understanding of his thinking and solutions and if it does reduce down this quesses then great and it raises my expectations from this collaboration.

The value of the Pivot

The heart of his own hypothesis, besides his Customer Development lies the Pivot, this is the point when reality leads you to change one or more of your business model hypotheses. Take a look at this excellent introduction to this concept from Eric Ries here (http://bit.ly/1fpIpK).

The pivot is the step you make from constantly  validating learning from your customers and then adjusting with this new knowledge your business model (in this case). It does make sense to adjust, adapt and manage the learning from implementing your Business model by adjusting to new information not throwing everything out when your Business model concept meets the ‘reality of the market place’. You pivot on what you have and adapt to new insights to achieve a better fit. Steve recommends a path to ‘discover and validate’ each assumption behind your business model and change it from fresh insight.

Where there is need to ‘test hypotheses in the Canvas

Steve offers a great visual of the different points that need testing and validating consistently within any new Bm based on the Business model canvas approach.

It strikes me this collaborative piece of work seems really valuable and ‘sensing’ the power of the minds within that meeting we should be expecting something a little different and exciting that moves both Steve’s and Alexanders work that significant step further.

I look forward to future posts on part of something that was certainly missing in the present work for Business model canvas, the steps necessary for validating and executing within Business Models. I certainly believe it will continue to evolve as we all gain from exploring Business model innovation in the future.