Business Model Innovation Hub
... where visionaries, game changers, and challengers discuss business models
Feature Discussion: Business Model Innovation Killers
Every one to two weeks we will feature a new major business model discussion on the Hub. Hopefully we can mobilize all the brainpower, experience, and knowledge of the Hub members to have a high-quality discussion that helps us all advance.
We will kick-off the forum with a first question:
What are the most prominent business model killers in established organizations AND start-ups that you have experienced? What is holding business model innovation back?
Pls bring in examples from your own career or existing case studies to make the discussion as tangible as possible and not only opinion-based.
Replies to This Discussion
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Permalink Reply by Deborah Mills-Scofield on -
Anthony does talk about balance - and it's important to ask questions - just the right ones - like asking why and why not over and over to get to the root problem or the root job a customer wants/needs done.
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Permalink Reply by Andrew Jenkins on -
Having read the other posts, I agree with much of what has already been said. I have worked with large organizations and with startups and they both have their problems.
Startups will jump from idea to idea and call themselves agile but will not have given sufficient time to see an idea succeed. Large organizations become too entrenched and will not support new ideas that are not aligned with their political agenda or reward structures.
Regardless of organizational size, I have also witnessed the following:
- a general reluctance to own the initiative
- confusion about what success will look like
- lack of follow up to monitor progress
- changing roles and organizational structure
To sum it all up, I think the key to avoid business model killers is commitment. Commitment to the idea. Commitment to see it through and, finally, commitment of the organization in terms of of unwavering support and the structure to match it.
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Permalink Reply by Dave Concannon on -
Good point. I've definitely seen this lack of commitment. Some startup companies trying to aim for a strategic value understand when they start that it may take several years before they create the underlying platform or advantage that makes the model viable and that there'll be an associated capital burn until they get there. Then, a year or two down the line they (or their investors) become worried about this lack of revenue and start to deviate to something that looks like it might deliver shorter-term cash flow. Next thing you know, they're jumping between small ideas that aren't viable longer term and the larger plan is a distant memory.
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Permalink Reply by Kenneth McGrath on -
Aside from my major existing client, I've also been using the canvas to help a variety of start-up and existing (but floundering) businesses. Most of these are businesses that my friends own. Many of them are "artists". They tend to hate business language. Consequently, they don't really want to sit down and talk about their existing business model. So I bring out a canvas... and say "Let's draw some pictures that illustrate what you do for people, how you do it, who those people are, and how you make and spend money."
So far, with people in the arts (bands, fine artists, music festival organizers, etc.), this has worked really, really well. I think that it's precisely because they can relate to the creativity - the drawing, the brainstorming, etc. Often they have a vision for their business but they don't know what the details are of that vision. They see the forest but miss the proverbial trees.
Contrast that with people at my "day job". They're financial people. They talk business all the time. Yet their ability to envision connections between the various aspects of the enterprise is extremely limited. They've never been told that it was okay to use visuals. Like Dan Roam suggests in his book "The Back of the Napkin" they've been acculturated through an academic world that values narrative - arguments, statistics, possibly the occasional graph of those statistics. So they've never really been told it was okay to work things out in pictures.
Consequently, many of them have been unable to visualize how aspects of one component within their existing business model affect others. They've been at the tree level, missing the proverbial forest.
So my first answer would be the failure of businesses to VISUALIZE hinders innovation and that's where the canvas becomes so critical in my view. My second answer would be the culture of the business; especially the leadership's desire to really sit down and get a clear picture of things using a non-traditional approach such as the canvas.
I'm amazed at how powerful it is though. I've even adapted it for the non-profit aspects of my day job client's enterprise. The financial perspective is now called the measurement perspective. We have four components, namely:
Revenue Streams and Cost Structure; and
Benefits and Disbenefits
This allows us to consider the social and environmental benefits generated by the enterprise's work along with the financial. The canvas can then, also, be used for Benefits Realization Management (BRM) for any enterprise.
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Permalink Reply by Deborah Mills-Scofield on
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The financial guys can only visualize spreadsheets :) Was with a potential client today that is highly highly visual - unbelievably innovative - what a joy it was - but they have trouble with the 'fuzzy front-end' so I proposed using the biz model canvas to help vet that out - the value proposition and then the right side and go back to the left to see if they can make what customers really want (they are tech-led vs. customer-led - e.g., we have this cool molecule, what can we do with it?) - they seemed to love it so we'll see --
I do have a few clients with strong financial bents that are very visual, but just a few...you're so right
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Permalink Reply by William (Bill) Miller on -
The biggest killer is the lack of an accepted framework for innovation that supports a scope of innovation broader than products and services. I have developed and written about such a framework which is the Fourth Generation (4G) of Innovation Theory and Practice. 4G is described in a chapter in Wiley's new Encyclopedia of Technology and Innovation Management. Within the framework, CEOs and Boards get stuck in "sticking to their knitting" and can't think outside their sand box which is defined by their products and services. GE is a great example of a company that strategically did business model innovation about 20 years ago when jack Welch was CEO. And they have benefited from the result. As an example, they put Pratt&Whitney out of the commercial aircraft business because GE could sell engines near cost and make money on lifecycle services such as maintenance and other services that delivered "up-time" and "return on assets". The key to business model innovation is directly delivering the performance with measurements needed by your customers such as "up-time" rather than selling spare parts and maintenance. Today, an unmet need is a solution to the Toyota problem which is a way to eliminate recalls due to design defects ,expecially those in complex systems with large amounts of software. A solution exists called immune system engineering which is a new service capability waiting to be delivered.
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Permalink Reply by George Reinhart on -
I think having a vested interest in the old model (aka current model) and little incentive to change are the biggest killers. I worked with a "best practices research and peer networking" organization that was having its lunch eaten by a start-up and the old established guard just would not accept that any way other than their own was a better way. Their motto was "We've been doing it this way for 90+ years so it must be right." Meanwhile the start-up was growing by double digits every year and the tried-and-true has barely managed to keep its head above water. It has always surprised me how the places where you might expect to see thought leadership are often the last places you will find it in practice. They are fine when it is all theory but they crumble when it comes to having the courage of their convictions. It takes real courage to change.
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Permalink Reply by William (Bill) Miller on
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Here's a diagram that helps explain why people don't react.
- Attachments:
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Failure to React.gif, 32 KB
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Permalink Reply by Ronald (Ron) Dale McFarland on -
Bill, I had a look at your attachment. Great illustration.
What this says is that we have go aggressively go out and get the needed information (clarity) as fast as possible (and possibly as quickly as possible) to quickly gain the needed clarity on the one hand and avoid the opportunity weakening on the other.
Ron in Tokyo
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Permalink Reply by William (Bill) Miller on
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Ron,
Yes, but information is not sufficient to create action. Think of sports such as basketball. You need to know where the ball is, but you also need a game plan and practiced plays (capabilities). What holds people back is the inability to quickly learn the new game plan and play book. So experimentation with new plays is required for clarity. Most organizations kill this experimentation by saying that six sigma is required.
Bill
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Permalink Reply by Ronald (Ron) Dale McFarland on
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Bill,
Good point. Thanks,
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Permalink Reply by Ronald (Ron) Dale McFarland on
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I have found repeatedly people who do not want or are afraid of change hold my projects back. I have learned that that group can be as high as 84% of the people in an established company. The secret is to look for the 16% that are looking for change. Work with them. Get some pilot events going of your project. Then, after quite a few sucesses bring your project out in the open to the rest of the organization.
Treat this 84% the same way you would treat a competitor. You don't want him to know too much too soon.
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