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Business Model Innovation

August 3, 2017

 

Our guest blogger this week is Tsuyoshi Amano. He has been working on the exploration of business models for innovation. I invited him to share some insights on the topic:

 

Innovation is always difficult, mainly for two reasons: uncertainty and complexity. They are similar but slightly different. Uncertainty can be rephrased as unpredictability. You cannot predict what is innovation because it does not exist yet. Harvard Business School Professor, Clayton Christensen formulates five principles of disruptive innovation, one of which is "markets that don't exist can't be analyzed".

 

Complexity can be also described as interdependence of different parts. A part of your business influences another part of it, and vice versa. This makes it hard to build a business like a jigsaw puzzle, or through a step-by-step process. That's why more agile and lean methodologies, as well as design thinking, have been popular for startups and entrepreneurs to make things happen.

 

For my research, I have attended many workshops for business model development and also organised some of them by myself. In those workshops, I have witnessed many cases struggled with facing the challenges. Thankfully, there are various useful tools for helping you to develop business models such as Business Model Canvas and Lean Canvas. However, what I recently identified is lack of exploration for possible business models before moving to the detail of a single business model.

 

For instance, in some design thinking sessions, participants usually conduct great user research and gather excellent insights from the research, but when they turn the findings to be a business idea, they suddenly jump into a certain type of solutions such as a mobile app without much consideration about other possible business models. Actually, some experts recommend to draw many business models on multiple Business Model Canvas (for examples, Founder-Centric and the inventor of Business Model Canvas, Alex Osterwalder).

 

From my experience, however, I would say it does not happen in many cases. Here again, there are two possible reasons. One is that people do not spend a lot of time for exploration and easily fall in love with an idea to streamline the implementation process (which is not bad in a traditional management sense). The other is that even Business Model Canvas might be too complicated for novice entrepreneurs. These points may require you to have a staying power as a business pioneer, but your hard work for exploration will pay off as you eventually avoid to stick in a single (possibly wrong) direction.

 

I believe that tools like Business Model Canvas are useful for multiple purposes from exploring to representing to analysing business models, and there are many resources to guide you to be successful.  We are currently developing a simple and engaging card game, Stretch, to quickly explore different business models and also stretch your mindset to be more creative. It's still work in progress, but please sign up for updates if you are interested in it!
Thank you Yoshi, we will!

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