Tag Archives: Business model innovation

The Critical Step Before Business Model Innovation…First Things First!

ambiguityOnce upon a time there was a little division in a big med device diagnostic company that wanted to extend into the unfamiliar territory of disease prevention.

The division was trying to win internal support and significant funding. They knew they needed a strong business case but had not yet figured out the specifics of their offering. There were a lot of unspoken assumptions and hypotheses. Moving forward by simply saying “we think we can, we think we can!” might work for little engines, but was not a good business practice for this group.

In short, the group was at a fork in the road. Going to the left they could travel on “Ambiguity Lane.” Staying to the right, they could move forward on “Clarity Way.”

Ambiguity Lane
In some ways, Ambiguity Lane seemed easier in the short-term because it postponed figuring out the foundational stuff that really needed to be figured out. Ambiguity Lane involves jumping ahead into business model development and skipping over the work of first gaining sufficient clarification on the offering or identifying and validating key assumptions. In this context, people travel Ambiguity Lane with a passive and often unspoken ambiguity that serves to postpone commitment.

On one hand, getting a business model in place sounds concrete and has an element of CYA, which can have a certain appeal. On the other hand, this sequencing also means living and speaking in ambiguities that avoids real commitment.

Even those team members that felt the seductive pull of Ambiguity Lane also saw its risks: 1) Internal leadership could more easily ignore the project or refuse to support it since it was lacking in substance and focus, and 2) The business model would be weak and not very actionable because it was built prematurely and based on too many hypotheticals.

Clarity Way

Going down Clarity Way was a happy choice to some; and initially felt risky to others. Clarity Way requires an honest assessment of what the team knows (and doesn’t know) about their offer and how desirable it is to customers, how feasible it is technically, and how viable it is financially. This road exposes critical business assumptions and opens them up to verification or correction. Clarity Way gets key questions on the table and solved in order to move into business model innovation with a solid foundation and in the right sequence.

The team members that wanted to travel on Clarity Way felt it would be premature and risky to jump into business model innovation without conducting some due diligence first. They did not want to pretend they knew more then they actually knew or use ambiguity as a cover for not having worked things through. They felt that the other road, Ambiguity Lane, was actually the greater risk.

 

Making the Choice

Turns out that Clarity Way has lots of blue sky and sunshine. Its travelers believe that transparency gets the best results, in line with the famous statement by Louis Brandeis: “Sunlight is said to be the best of disinfectants.”

Ambiguity Lane is grey and misty. It’s easy to get lost or misled when it’s hard to see clearly. As common sense philosopher Thomas Reid said, “There is no greater impediment to the advancement of knowledge than the ambiguity of words.”

After some soul searching, the little division in the big med device diagnostic company choose Clarity Way. They knew how much was at stake for the company by extending into the unfamiliar territory of disease prevention.

The Clarity Way travelers also saw the value of first getting everyone’s ideas, concerns, and questions on the table, identifying which hypotheses needed to be tested, and getting initial input from customers. By doing so, they felt they’d be able to make informed decisions, understand and avoid internal roadblocks, and solidly move forward into developing their business model and business case to unlock investment.

Happy Ending!

Once the team came together on Clarity Way and shared what they knew and what they assumed, they immediately recognized that the appeal of their offering was predicated on three major hypotheses. They did a fast round of customer research and validated two of those mission-critical assumptions. One assumption however, related to how desirable their offer would be to customers, was way off. With egos aside and a quick pivot, they corrected their thinking and modified their offering substantially. Doing so called for a totally different business model than would have been developed had they not made the commitment to do first things first. The team got the investment they sought and solid support from the CEO.

Life and business requires enough ambiguity, and we definitely need skills to navigate through it. But don’t let passive ambiguity be an excuse for not diving in and doing what needs to be done. Please get clear on your offering and why customers want it and will pay for it. Then and only then should you work on your business model so you can really get it right.

First things first!