How To Stay Afloat While Everyone Around You Is Sinking By Simon Kozlowski
It’s safe to say that 2020 has seen business-as-usual flipped on its head.
Most countries have shut down their border, and many nations are in total lockdown until the end of April only those businesses deemed “essential services” (are permitted to trade.
All over the world, thousands of companies that cannot serve their customers remotely large corporations and small businesses alike are starting to sink.
“Is it possible to stay afloat while everyone else is sinking?”
At least a dozen times in the past week alone, I’ve had seasoned business coaches and consultants ask me this question. There is a growing consensus that the well-worn, basic business improvement formulas that were so effective in the past are barely moving the needle in these current times and circumstances.
The answer to the question is a resounding ‘yes’.’
It is indeed possible to stay afloat while everyone else is sinking but as the saying goes, “what enabled you to get from there to here, won’t be enough to get you from here to there’.
In times like these, business innovation becomes a critically urgent conversation.
What exactly is innovation?
How do you apply innovation to coaching and consulting?
What follows is a fast and furious introduction to innovation, to help your coaching business (and the customers it serves) to adapt and thrive in this rapidly changing landscape.
TWO ROADS TO INNOVATION
Simply stated, innovation is about finding new ways to generate value.
There are two roads along which to make this innovation journey…
The first is the low road of reducing the cost of delivering products and services.
As an example, an orange juice company might develop a new machine that squeezes more juice out of an orange, thereby improving each orange’s cost to yield ratio.
This is an example of a process innovation.
The second is the high road of innovation is to increase the perceived value of products & services.
In keeping with the example of the orange juice company, it might decide to create a range of foil-pack cocktail mixers for high-end outdoor events, thereby attracting higher revenues.
This is an example of product innovation.
THE ELEPHANT IN THE ROOM
There is a slight problem, though…
In our super-connected world, new technologies, new markets, and new competitors and new are springing up faster than you can download the latest app onto your mobile device.
On their own, process innovations no longer produce a significant competitive advantage.
So that means that businesses should focus on product innovations, right.
Well, not exactly…
According to Harvard Business School professor Clayton Christensen, there are over 30,000 new products introduced every year, and 95 percent fail.
According to the University of Toronto Professor Inez Blackburn, the failure rate of new grocery store products is 70 to 80 percent.
If improving efficiencies is not enough to survive in a changing market, and creating new products and services doesn’t necessarily increase competitive advantage, then what are the alternatives?
Well, there is a third road to innovation that cuts across those mentioned earlier.
It’s Called Business Model Innovation.
Simply explained a Business Model is how all the various pieces of a business fit together to create value for the customer, including:
Who are the various customer segments that the business serves?
How is the relationship with those various customer segments structured?
What problems does the business solve for those customers?
What value (i.e., products and services) delivered to solve those problems?
What channels are used to promote and deliver that value?
What are the key resources and activities required to create, promote, and deliver the value?
Who are the key partners involved in creating, promoting, and delivering the value?
What are the various costing models and structures in the business?
What are the various revenue streams in the business?
The Business Model Triangle (see image below) demonstrates how these various pieces come together to form the business model.
Business Model Innovation is when you make changes to at least two (of the four) grey circles.
To thrive (or even just stay alive) in this new economy, Business Model Innovation is becoming a critical core capability.
Here is a shortlist of prominent companies that owe their significant success to Business Model Innovation:
iTunes by Apple (Media)
Warby Parker (Eyewear)
Charity Water (Non-profit)
Uber (Transport/ Deliveries)
Encyclopedia Britannica (Education)
Airbnb (Accommodation/ Hospitality)
Here Is A Trustworthy Saying:
The more you know and understand about the successful business model innovations of other businesses, the easier it becomes to innovate your own business model.
And let me share with you the dirty little secret of Business Model Innovation:
90% of all effective Business Model Innovations are borrowed from successful companies and brands in other industries … you don’t have to reinvent the wheel for your industry; just borrow an already reinvented wheel from another industry.
Here are five questions (from a list of about 50) to help you get started on your business model innovation journey:
QUESTIONS 1 & 2
What one thing does your business do better than anyone else in your industry?
What if your business handled that aspect for competitors in your industry?
[If you’re not the best at anything, what are you most likely to become the best at, if you focused on it?]
QUESTION 3 & 4
What are the biggest inconveniences or frustrations that customers in your industry are forced into?
[Hint: You’re probably so familiar with industry norms that you won’t recognize it, so you’ll need to ask.]
How have successful companies in other industries eliminated those frustrations and inconveniences?
How might your revenue streams be more aligned with the value you create and deliver for your clients?
[Asked another way: what if your customer paid you proportionate to the results you delivered?]
If you would like to dive deeper into the study of Business Model Innovation – and you would be foolish not to – here are two great resources that have served me well in my business model coaching and consulting:
Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers
by Alexander Osterwalder and Yves Pigneur
The Business Model Navigator: 55 Models That Will Revolutionise Your Business
by Oliver Gassmann and Karolin Frankenberger
To end off, here is one of my most loved and celebrated innovation quotes:
“At the end of the day, if you have a great product and service paired with the wrong pricing strategy/business model, you don’t have a business. “
— Richie Norton
About Simon Kozlowski
Simon is also the founder of ThirtySeven Innovation, a Smart City strategy consultancy that partners with local governments to make cities more livable, resilient, and better able to respond to challenges. He finds his greatest joy and fulfillment, however, as The Reinvention Coach – partnering with entrepreneurial mavericks and outliers who want to make a dent in the Universe and develop vibrant businesses that disrupt the status quo and redefine their industry.