Archive for category business models
The Value Proposition in Business Models
Posted by Tim in aggregate, business models, connect, filter on 28 August 2010
Anders Sundelin wrote a post earlier this week about the evolution of the business model concept. He does a great job of showing the various ways in which this idea has been operationalized – it’s still surprisingly fuzzy. For the state of the art thinking on business model innovation, a special issue of Long Range Planning has twenty articles on the topic (all free to download through September).
One element that is consistent across nearly all of the different ways of thinking about business models is that of the Value Proposition. A central part of building a successful business model is creating value for your customers. Innovation plays a role here in two ways: first, innovation is the process of executing new ideas to create value, so it is a central part of any new value proposition; second, we can innovate in the way that we create value, not just in the products, services or know-how that we offer.
In order to innovate the way we create value, it makes sense to look at how we create value from information. In general, we do this by aggregating, filtering and connecting. This works for big firms like Amazon, and smaller firms like O’Reilly Publishing.
I ran across two more examples of how this can work for smaller firms this week. The first comes from Seth Godin’s description of Gerald Roush and his Ferrari Market Newsletter. Here is the description of the newsletter:
The newsletter, it appears, was not just lucrative, it was a bargain. It chronicled the pricing, whereabouts and details of just about every Ferrari ever made. If you were a buyer or a seller, you subscribed. If you wanted to run an ad, you were required to include the car’s VIN, which added to Roush’s voluminous database.
The Roush effect involves extraordinary domain knowledge, a market small enough to understand and diligently earning the role of data middleman. The players in the market want there to be one clearinghouse, one authority who can connect the data, see the trends and publish the conventional wisdom.
Often when people talk about “aggregators”, they are referring to places like Amazon or Google, who try to catalog everything (or close to it). This is a great example of how you can effectively aggregate on a much smaller scale. The Ferrari Market Newsletter isn’t trying to aggregate everything, it’s just trying to aggregate all available information on Ferraris.
In this case, the aggregating is combined with filtering to create an comprehensive aggregation of information in a specific niche. The connections are made between people that are interested in Ferraris – most importantly, between those that want to sell one and those who wish to buy one.
Note that this is not algorithmic filtering, as we see on the comprehensive sites. It is judgment-based filtering. It often sounds as though algorithms are the only way to go these days, and as this case shows, that is not at all the case. There are still opportunities to build effective business models based on personal judgment.
Here’s another example, though it is more speculative. On Techdirt, Michael Masnick talks about the idea of building affinity-based music groups. Techdirt is a consistently interesting blog, and you should definitely check it out. Here is how he describes these groups:
… Topspin’s CEO, Ian Rogers, penned an open letter to Guy Hands, the head of (struggling) EMI, suggesting that rather than think of itself as a “record label” focused on promotion and distribution (two things that are easier and cheaper than ever before), it could instead focus on being the smart filter for music listeners today, struggling to find the music they love amidst so much musical abundance in the world. The suggestion was to take some of the key, iconic, bands under the EMI roof, and put them under affinity-based “mini-labels” with other less well known bands, that would appeal to people who liked the more well known band. It seemed like a great idea, which, of course, EMI has not done.
Here again, the value is created through filtering. And as with the Ferrari Market Newsletter, this model would then try to aggregate all of the bands that relate to each other in a specific way. This is a model that has worked very effectively for many years for Dischord Records – and like Masnick I think it has great potential.
Creating a novel value proposition is an essential part of generating an effective business model. There are great opportunities to do this in creative ways. If you focus on aggregating, filtering and connecting, you can build a good information-based value proposition.
LikeThe Real Problem with the Media Business Model
Posted by Tim in book riffs, business models on 15 August 2010
Almost as soon as I finished yesterday’s post on media business models I knew that I had missed an important part of the story. A big part of the problem with the business model for many of the media segments is that they are actually two-sided markets, and the value proposition on one side has collapsed. You may well ask: what in the world does that mean? Good question.
A two-sided market is one where an intermediary acts to bring two distinct groups together. The wikipedia definition is pretty good:
Two-sided markets, also called two-sided networks, are economic networks having two distinct user groups that provide each other with network benefits. Example markets include credit cards, composed of cardholders and merchants; HMOs (patients and doctors); operating systems (end-users and developers), travel reservation services (travelers and airlines); yellow pages (advertisers and consumers); video games (gamers and game developers); and communication networks, such as the Internet. Benefits to each group exhibit demand economies of scale. Consumers, for example, prefer credit cards honored by more merchants, while merchants prefer cards carried by more consumers.
The economics of these markets are explained very well in the book Invisible Engines: How Software Platforms Drive Innovation and Transform Industries by David S. Evans, Andrei Hagiu and Richard Schmalensee (and I just noticed today that the book is available as a free download at that link!). In many of these types of markets, the intermediaries get a pretty good chunk of the money – this has been true in markets like software and the media in particular. In others, like mobile telephony, the money gets spread more widely.
The internet is breaking down some of these two-sided markets in two different ways. One way is that it can make it easier for the two groups to connect up with each other – driving down the profits of the intermediaries or even cutting them out completely. This is what is happening with travel. Online fare finders have driven the marginal cost of comparing flights and prices down near zero, putting pressure on travel agents. On top of that, many airlines now do a substantial amount of their own booking through direct websites, cutting out both online and offline intermediaries.
Bob Garfield explains how the other way these two-sided markets break down in his book The Chaos Scenario. This video summarises the main points of the book pretty well (it runs for 35 minutes, and is pretty entertaining, but the critical points come up in the first few minutes):
The Chaos Scenario from Greg Stielstra on Vimeo.
All of the advertising-based mass media are two-sided markets. They create content that they essentially give away free to consumers to create a large audience. They then sell access to this audience to advertisers. As Garfield points out, there are basically two problems now with this model – the first is that widespread access to content has driven down the price that consumers are willing to pay for it, and more importantly they have fragmented the audience. The second issue is that the explosion in available content has also driven down the prices that advertisers are willing to pay for access to any one particular segment of the market.
This has led to a collapse in advertising revenue for the major players, including newspapers, magazine publishers, and television networks (both free-to-air and cable).
This leads to the real problem in these business models – filtering is a critical part of creating value for consumers, and the fundamentals of that part of the business model haven’t changed much. The problem is that it is impossible to replace this advertising revenue – the other side of the value creation equation has changed enormously. The key point is that being a platform in a two-sided market can be incredibly lucrative (think Microsoft – where their operating system connects software developers to users), but it requires two business models – one for each side of the market.
Problems arise when the value generation equation changes in one of the business models. This usually requires changes in the other side of the business model as well – which is a very complex business model innovation problem!
Note: Greg Satell, who writes Digitaltonto one of my favourite blogs, doesn’t agree with Garfield’s stats, and consequently disagrees with my conclusions here. Be sure to read his response in the comments.
Which Part of Your Business Model is Creating Value?
Posted by Tim in business models, filter on 14 August 2010
Andrew Keen posted a fascinating interview with Jeff Jarvis yesterday. All of the interview clips are worth watching – they touch on a number of interesting topics, including the relative benefits of publicness and privacy, the future of news and how to best develop new business models for journalism, why google struggles with social applications, and the changing nature of internet-based business models. The latter is included in this clip:
One of the really interesting points here is that the economics of media has changed dramatically. Jarvis points out that with 30% of internet users creating content now, there is no longer economic value in acting as a gatekeeper – which is the way that many media firms have tended to view themselves. Instead, value is created through curating, which I think of as depending on filtering methods.
This is a critical issue in looking at topics like building a new business model for news. One of the reasons that the established media companies are struggling right now is that they are not coming to grips with these important economic changes and the implications that they have for which business models work and which ones don’t.
The problem here may actually be that the current business models are actually still ok, but that the firms have been protecting the wrong part of them. Mike Masnick made this argument a couple of years ago, saying:
You can actually be succeeding in a market you don’t think you’re in.
When it comes to the entertainment industry, that may be exactly the case. We’ve been arguing that there are plenty of business models that don’t involve actually selling the content, but involve selling other, related products that are made valuable by the content. In fact, that’s what both the music and the movie industry already do. Everyone may think that you’re buying “music” or “movies” but that’s very rarely what you’re actually buying. You’re buying the experience of going to the movies. Or the ability to have the convenience of a DVD. Or the convenience of being able to listen to a song on your iPod. And, in many cases, it’s not just one thing, but a bundle of things: the convenience of being able to hear a song in any CD player, combined with a nice set of liner notes and the opportunity to hear a set of songs the way a band wants you to hear. It can be any number of different “benefits” that people are buying, but it’s not the “movie” or the “music” itself that anyone is buying.
So maybe the impact of the changing economics that Jarvis points out is really on the perception of business models more than on the business models themselves. I think that Masnick has hit on an interesting point – and as I’ve been arguing for a while, I agree with him that the main reason media companies are in trouble is that they haven’t been protecting the right parts of their business.
This is why it is so critical to analyse your business model now, so that you understand why it works (or doesn’t), and so you know which parts are essential, and which can be changed more easily.
Listening to customers…. really listening.
Posted by John in business models, design, innovation, innovation strategy on 11 August 2010
One of the consistent messages from innovation surveys is that customers are a major source of innovation. Sometimes customers with more extreme uses for products will adapt products to suit their purpose and then the manufacturers find out what is happening and take these adaptations on board. If you’ve seen the videos of big wave surfing, many of the board modifications were made by the surfers and then adopted by the makers.
On other occasions, a customer might give an idea back to the producer but often they won’t give the feedback unless it is asked for. Getting to know your customer better is a good way to improve your innovation performance.
One of the featured companies in the Brisbane Innovation Scorecard was Aluminum Boats Ltd. This company is in a tough industry where costs are rising and the strong Australian dollar makes competitiveness a real challenge in export markets. Nonetheless they have managed to grow the business and continue to win contracts. For this company, the customer is central to the innovation process and the strategy of the company. To get the type of innovation they need, the company forms long-standing relationships with key partners. As stated by the managing director of the company, Roy Whitewood,
We set out to be different from the beginning. Most boat builders in our class tend to work on one-off projects.
Four years ago we chose a different direction for Aluminum Boats. We selected big clients and work with them to solve problems. We innovate openly with our clients in design and process. In this way we also manage all aspects of our boat building with the highest quality materials and latest construction techniques.
On receiving the award for product innovation at the launch of the Brisbane Innovation Scorecard, Stuart Pascoe, Aluminium’s GM, talked about the commuter ferries that were the focus of the prize. He talked about not only listening to the customer, but also the customer’s customer. So not only did they work with the ferry operator to design the right boat for the job but they also talked to the commuters who used the ferry. When they asked commuters about what is was like to live on an island in the bay and commute to Brisbane, it seems that many didn’t like the slow travel times. One of the reasons for the slow commute was the problem of hitting dugongs. These are protected animals. The result was a dugong-friendly fast ferry and as Stuart puts it in an interview, a hit might give the dugong a headache but it won’t kill it.
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After the launch of the scorecard, I took a taxi back to the university to catch up on work. I was set to make a few phone calls on the way when I realized that the taxi driver was a very talkative fellow, so I put the phone away. One thing about Australian taxi drivers is that they are very likely to ask you everything about your life, without any sense of this being inappropriate. This driver wanted to know what I had been doing in the city, so I told him about the launch of the Innovation Scorecard and the companies that had been recognized for their leadership in innovation. When I mentioned Aluminium Boats he turned to me and said that he knew the company well and thought they were an excellent business.
It turned out that my driver was a volunteer coast guard and was a part-timer skipper of one of their boats. He said that they had a few boats but the one designed by Aluminium was by far the best. When I asked him why, he said that the company had spent a lot of time talking to everyone who worked on these boats. They really wanted to know what it was like to be searching for people in the water at night and what it was like to spend a long time on the boats during an emergency. My driver had told them about vision problems in low light conditions and the need to have a special set up in the cockpit with night-vision. This need was incorporated into the final design. Tim writes about empathy-driven innovation and Aluminium Boats is a very good example of what he is talking about.
The thing is that Aluminium is organized for ‘listening’ and its not just something that is part of their marketing. Having 90% permanent staff in an industry where subcontracting is common, fewer customers where long-term relationships can be formed and sticking with design and construct jobs are all strategic choices that help them to listen better.
As Stuart Pascoe, GM says
We don’t bash the problem over the head with a hammer. We go out, meet the agencies and find a way around it.
Craft-Based Innovation – Dodocase
Posted by Tim in business models, innovation strategy on 8 August 2010
Check Kevin Rose‘s of the Dodocase for iPad, one of the more gorgeous things I’ve run across recently:
Schumpeter defined innovation as the formation of new connections which drive economic growth. In The Nature of Technology, Brian Arthur reinforces this idea by saying that all new economic ideas build on the combination of things that already exist. In this case, Dodocase has come up with an innovative craft-based business model by combining the idea of artisan book-binding techniques with the new technology of the iPad. Both of these are then combined to answer the question ‘what if our iPad case looked like a Moleskine notebook?’
There is so much emphasis these days on getting to scale that we often lose sight of the value of craft. Here is the video that documents the construction of the outer case – you can see the craft in the process:
The bamboo part of the case obviously requires some skill to build as well.
The really interesting part of the Dodocase story to me is the price: it lists for about $60 US – which as about as much or less than you’d pay for nearly all of the mass-produced iPad cases that are available. Traditionally, we’ve often thought that the problem with craft-based business models is that it is a much more expensive way to produce things.
But as the Dodocase shows, this is not always the case. The real problem with craft is that it is slower. There is currently a 4-6 week wait list to buy one.
Innovation is about coming up with new combinations of ideas. They don’t always have to be cutting-edge things. The Dodocase is a great example of combining ideas that have been around for a long time – people have been binding books in this way for centuries, and the Moleskine-style design has been around for ages as well. They’ve combined these two ideas to come up with something that is unique.
And pretty cool…
(hat tip to CrunchGear for pointing me to these two videos)
The Problem with a Solutions Business Model
Posted by John in business models on 18 July 2010
You have probably heard of the phrase “jumping the shark”. This phrase goes back to an infamous episode of the 1970s sitcom called “Happy Days” when the producers, faced with declining popularity, tried to revive the show by getting the Fonz to jump over a shark on water skis. In the corporate world, there are many ways to jump the shark when faced with business problems. Hiring a star CEO, restructuring or making an acquisition can all be shark jumps but I’m currently thinking that there is a unrecognized form of jumping called a ‘total solutions’ strategy.
I’ve been talking to several companies about strategy over the past six weeks and nearly all of them were flirting with idea of becoming a ‘solutions’ business. This is seductive because it holds the promise of cross-selling more products and services, as well as greater pricing power and the reduced chance of your buyer deserting you for another supplier. So far so good, so what’s the problem. Well, the problem is that this strategy is really hard to execute. When I give presentations, I like to use a lot of examples of different companies and their websites are a convenient way of picking up key facts and figures. I haven’t turned this into a large-scale study but I strongly suspect that there is a correlation between the mentioning of the word “solutions’ on the corporate website, and the destruction of shareholder value. I have about five examples from Australian top-200 companies and I suspect there are many more.
Some businesses might be able to become integrated solutions providers, but many don’t. Why is the promise of a solutions business such a trap for so many executives? I’ve come up with a few reasons why this might be the case. You might be a able to think of a few more.
‘Solutions’ aren’t a substitute for good old-fashioned strategy
I’ve been looking at a ‘total lifting solutions’ crane hire business that is now trading below its asset value. This company offers every crane you can think of from little ‘cherry pickers’ to massive crawler project cranes. The problem is that the smaller end of the business is subject to very few barriers to competition (every undegrad business student can tell you about Porter’s 5-forces). There is no point being a solutions business if half of it makes you a price taker. “You cannae change the laws of strategy” with a buzzword.
‘Solutions’ become a mandate for diversification and acquisitions
As a test of my solutions and share performance hypothesis, I looked at the website of the worst performing stock in my share portfolio. To my horror, the front page mentions total solutions in the marine engineering industry. Where the company seems to have gone wrong is taking on more business units to become a ‘one stop shop’ (another phrase that should put fear in the hearts of shareholders). The issue then becomes a classic case of corporate indigestion. Too many businesses across several product and service lines and the challenges of actually integrating all of these and getting people in the company to know ‘who does what’ becomes too hard to overcome.
‘Solutions’ become an obstacle to clear thinking
Like the Dilbert cartoon, it is sometimes hard to see what is actually meant by solutions. Everything is a solution. A glass of water is a solution to being thirsty and a haircut is a solution for long hair. Thinking about strategy and business models is hard work and ambiguous words like ‘solutions’ become an obstacle to clear thinking.
I might be being a bit harsh, but I think there is a real problem here. Next time you hear someone use the ‘s’ word, be very careful.
IP protection and Open Innovation can work together (if you do it right).
Posted by John in business models, innovation strategy on 8 July 2010
I’ve just finished reading a nice article on IP strategy and open innovation that was published in the MIT Sloan Management Review last year. It’s worth reading because the authors, Oliver Alexy, Paula Criscuolo and Ammon Salter have been doing research in this area for a while and now have a good corpus of evidence about how to successfully manage open innovation. I’ve written a blog post previously on one of Ammon’s papers where he talks about the Gollum effect, where obsessive IP protection shuts down the possibilities for valuable innovation partnerships.
The main point of the paper is that some organizations obsess about IP with a ‘one size fits all’ approach, which disables innovation. Universities in particular are becoming notorious for this and it is having a detrimental effect, as the authors explain.
For example, Rolls Royce plc finds that it takes 18 months to negotiate a research collaboration agreement with a university partner; having routinely experienced such delays, the company is considering whether to terminate its extensive network of university research centres altogether.
Obviously, if enough IP is patented then there will eventually be something of value that may become a ‘blockbuster’ product. However, as Tim has observed before, a patent is not a business model and the costs of holding and maintaining all this unproductive IP are staggering. In the US, 99% of all patent-licensing revenue can be attributed to 40% of patents. The main beneficiaries of the remaining 60% are the patent attorneys and at the level of firms this poor use of IP results in the destruction of shareholder value.
Siemens and Proctor and Gamble for example, recently reported that they use a mere 10% of their patents but nevertheless pay millions in annual renewal fees for the remaining 90%. In addition, all the IP they have generated can create patent thickets that inhibit potential collaborators.
So bad IP strategy can destroy value, but how can IP be aligned with successful open innovation? According to the MIT Sloan Review, IP can disable open innovation when:
* One-size-fits-all approaches, such as “no patents no talk” predominate.
* IP and open innovation strategies are disconnected
* Lawyers are a roadblock to open innovation, dictating the who, when and how
* There is a “patent everything” outlook
* IP is treated as an end it itself
* IP builds fences through the hoarding of patents and excessive secrecy
However, IP can be an enabler of open innovation when:
* IP management is adaptable
* IP and open innovation strategies are integrated
* Lawyers help pave the way for cooperation
* Smart patenting – which involves only valuable inventions -prevails
* IP is seen as an opportunity for value creation and the building of ecosystems.
* IP is available to others and, through licensing and cooperation, is likely to be profitable
In summary, IP protection can be useful when it is part of an open business model rather than a substitute for a business model. Rather than a trench to stop competition and extract rents, IP becomes a vehicle for communication and collaboration, as the authors suggest:
Generally, intellectual property is beneficial to open innovation when it is used as a signaling device than as a control right.
Different Forms of Filtering Create Different Forms of Value
Posted by Tim in aggregate, business models, connect, filter on 8 July 2010
Ethan Zuckerman wrote a very interesting post today called What if Search Drove Newspapers? He talks about several different initiatives designed to gauge readers’ interest in different news stories, particularly those that are currently under-reported, and then devising methods for reporting stories on these topics. He asserts (correctly, I think) that this is basically search-driven content development. In particular, this is a strategy that will work well with Google.
Zuckerman concludes by making an interesting point (but you should go read the full post):
I’d propose another way in which search-driven content creation might be evil – it’s a step towards news outlet as search engine and away from news outlet as source of serendipity.
The front page of a newspaper is a statement not just about what’s happened in the world in the previous 24 hours, but what the editor believes is important for you to know about. There’s always more that happens in the world that can fit on a paper page – or even a much larger web page – and the editorial decisions made shape a vision of what you need to know as a reader and what you can safely ignore. Smart editors use this ability to engineer serendipity, pushing readers towards topics they might not have known they were interested in, featuring more obscure content that’s got good storytelling and a high likelihood of capturing a (previously uninterested) reader’s interest. (I wrote about this idea at more length in a post called The Architecture of Serendipity.)
The way to create value in digital business models is by creating value through aggregating, filtering and connecting ideas. The thing that I think is interesting about Zuckerman’s piece is that it basically looks at Google-style filtering as the only method for driving search. This method is algorithmic filtering – This is what people often end up talking about when they discuss news aggregators and other search-driven journalism.
However, there are at least five forms of filtering, and using each of them can create value differently. I think that we need to explore these other forms of filtering in trying to create online value – in the news industry as well as in other contexts.
The editor deciding what is important is expert filtering. This still is used in several contexts, such as at politico.com (discussed previously here). The expert network could be a very interesting approach to filtering new as well.
The main point here is that there is definitely still opportunity to take advantage of judgment in filtering and connecting news stories. Mechanical filtering methods (the algorithm-based approaches) appear to be dominating right now, in large part because of Google’s current gigantic footprint on the internet.
This does not mean that this is the only way to go, though. In order to create value with one of the different forms of filtering, you have to think through very carefully how you are going to do each of the aggregate, filter and connect steps. I’ve been arguing for a long time that the money in digital business models comes from filtering well, and that the firms that realise this are the ones that will do well. A business model with mechanical aggregating, and judgment-based filtering and connecting should still work. It might not be all things to all people, but then, very few successful business models are.
Business Model Innovation for Higher Education
Posted by Tim in business models, innovation strategy on 11 June 2010
Can universities keep delivering education in the same way that they have been for past few hundred years?
The reason this topic is coming up frequently these days is that digital technologies are having an increasing impact on the delivery of education. Consequently, Don Tapscott wonders if the university model of delivering education can still work, while Seth Godin thinks that the increasing availability of information could make universities irrelevant. David Parry believes that the way forward is to ensure that universities protect their social value, not their current revenue models.
I’ve been asked to give a short talk on this topic for the upcoming Annual Meeting for the American Association of State Colleges and Universities. Here it is:
AASCU Talk – Tim Kastelle from Tim Kastelle on Vimeo.
Here are the key points from the talk:
- The idea of ‘business models for education’ might not seem right to some people, like academics. However, the point of the business model concept is that it outlines how we can deliver value – and higher education clearly delivers value (at least we’d hope so!). Consequently, it makes sense to carefully think through how this value might best be delivered.
- The best way to counter the threat of becoming an information commodity is to develop a value creation strategy that includes ways to aggregate, filter and connect information. Successful digital business models do all three things. As we think about business model innovation for higher education, we also need to do these three things effectively.
- If you haven’t seen the Khan Academy yet, you better take a look. People are already working on business models based on aggregating, filtering and connecting. It is easy to discount efforts like this, particularly by hiding behind things like accreditation. However, if people can learn effectively in this format, and use it to build skills that they can profitably apply, it needs to be taken seriously.
Having a state-granted qualification-giving monopoly is not a sustainable strategy. We in higher education have to be thinking about how to best deliver high-value education – that is the only way we will be able to keep doing the jobs that we love.
Innovation Through Prototyping and Experiments
Posted by Tim in business models, filter, innovation on 23 May 2010
I’ve talked before about the importance of experiments in the innovation process. Experiments are essential for two reasons. First, they allow us to be more confident that our ideas will work. If we run a successful small experiment, that gives us some idea of how the innovation might work as we try to scale it up. Second, they allow us to sort our ideas more effectively. If we can devise a quick and dirty way to test out an idea, it will help us figure out which ones won’t work.
This seems fairly straightforward for testing product ideas, or really anything that is based on physical existence. But how can we experiment with intangible things, like services, or business models?
Diego Rodriguez provides some ideas in a great post that is part of his Innovation Principles series – Anything can by prototyped. You can prototype with anything:
You can prototype with anything. You want to get an answer to your big question using the bare minimum of energy and expense possibly, but not at the expense of the fidelity of the results. It’s not only about aluminum, foamcore, glue, and plywood. A video of the human experience of your proposed design is a prototype. Used correctly, an Excel spreadsheet is a wonderful prototyping tool. GMail started out as an in-market prototype. A temporary pop-up shop is a prototype. Believing that you can prototype with anything is a critical constraint in the design process, because it enables wise action, as opposed to the shots in the dark that arise from skipping to the end solution because zero imagination was applied to figuring out how to run a create a prototype to generate feedback from the world.
This really points out the great flaw in not thinking about innovation as a process. If innovation is simply coming up with great ideas, then you don’t need to prototype, and you don’t need to put any effort into diffusing the ideas. The great ideas will just sell themselves. This, of course is false.
The problem is that often inventive people just want to stop once they have their idea. It takes a lot of work to figure out how to prototype it to see if it will work, and it takes just as much work to develop a business model that will get the idea to spread. However, as Rodriguez points out, we need to invest just as much imagination into prototyping as we put into problem solving. On top of that, I’ll add that we need to invest this much imagination again to building our business model.
Successful innovation actually requires three separate creative acts: one great idea to solve a problem, another idea to test it, and a third idea to get it to spread. We have to be good at all three kinds of creativity to drive innovation. This is one reason that it is a often a collaborative process.
The action point today is clear: the next time you have a great idea, invest some time into figuring out how to prototype it. Once you’ve done this, then you can start working on your business model!
