This blog was written by Isaac Jeffries, an associate of TDi.
Designing new business models is exciting – conversations full of optimism and intrigue, especially when you get the gut sense that this idea is a winner…
It’s important that we don’t fall in love with our first idea. Yes, it’s a good idea, and there are several aspects that will probably succeed. But an idea being exciting does not mean that it has earned permanence.
It’s more likely that this idea contains the DNA of a highly successful model, but it needs to go through some refinement in order to get it out.
What we should talk about is persevering with the essence of the business, whilst letting go of some particular details.
It’s called “Pivoting”
Keeping one foot planted on the ground, then moving the other around to find a better position.
“An awful lot of successful technology companies ended up being in a slightly different market than they started out in. Microsoft started with programming tools, but came out with an operating system. Oracle started doing contracts for the CIA. AOL started out as an online video gaming network.”
– Marc Andreessen, Entrepreneur
Pivoting is tough to swallow, because it starts by accepting the idea that:
“We won’t survive where we are, but we might thrive somewhere slightly different”
This comes with the excitement of future success – there are several ways in which we can pivot, and there’s a good chance one of them will work if we think this through.
However, it requires a risk seeking disposition – a willingness to try something that might not work.
Here are some useful questions to prompt your thinking:
What if we had to offer the same value proposition to the same customer, but through a different product/service?
What if we had to offer the same product/service to a different customer segment – what would be different about the value proposition?
What would happen if we gave our core product away for free? Where else would we make money?
What if our service delivery had to move to an entirely digital platform? How could we serve customers without ever meeting them in person?
What partner activities could we do better ourselves?
What headaches could we remove through outsourcing? Which resources and activities could be palmed off?
If we wanted to massively increase prices tomorrow, what would need to change within our customer segments and service delivery? What would a premium model look like?
What problems will our customers be concerned about in five years’ time?
You’ll be surprised by the opportunities that sit slightly to the side of your idea.
Better yet, you’ll be surprised at how a small change can open up a whole new market, and yet other drastic changes may not diminish your value proposition at all.
Remember, experiments are your best friend. If your gut instinct is right, an experiment will back you up.
By being proactive, we can spare ourselves a lot of wasted energy and emotional stress, and quickly find our real audience.
Try it for yourself. Ask your team:
Are our customers validating our current business model?
If not, which parts are being validated?
Which elements (product, price, customer, design) are up for grabs in a pivot?
Using a Business Model Canvas, what would 3-4 different pivots look like on paper?
How can we quickly and cheaply test our new assumptions?
If our tests come back with good news, are we prepared to try something new?