Proposed here is an educational initiative that would enable more people within an organization to understand its current business model and to rethink the parts that are no longer aligned with business realities.
Many people think of innovation as an action, but have you ever seen anyone innovate? What was that person doing at that time, specifically? I’m afraid these questions do not have an answer because innovation is not something we do. It is a result of what we do – a set of specific categories of actions that can be defined, described, measured and improved upon.
So, what is innovation, then? I personally think of it as a label for a successful result. When an idea is successfully conceived, executed, and validated, we label it innovation, but only in retrospective. We control specific actions related to conception and execution, but validation is the prerogative of the market.
This misconception about the nature of innovation is a serious problem because it results in frequent misallocation of time and resources that could be employed where impact is more probable. Since a key ingredient of innovation is outside of our control, it is futile to theorize about the result, and more useful to focus on the actions we do control.
One possible solution consists of a change of perspective, a change in focus, and a change in action.
Step 1: Change in Perspective: Acknowledge innovation is a result, not an action.
This simple change in perspective should move the concept of innovation into its proper place. Business model innovation is now acknowledged as a goal, and as such it allows us to focus on the specific actions to take towards that goal. These actions are few and they are straightforward.
Step 2: Change in Focus: the specific categories of action that will make innovation more likely
At least three things must happen for an idea to become an innovation: first, it must be conceived, second, it must be executed, and third, a market must validate its value by adopting it. Therefore, I suggest we have three categories of actions for business model innovation: 1) actions related to thinking up new models, 2) actions related to executing these models in part or whole, and 3) actions that will make it more likely that a market will validate the value proposition of these models.
Step 3: Change in Action: steer away from seminars on creativity shmeativity, and teach your employees a few simple practical skills
As you read onward, you will notice that I have left out the category related to execution. Here’s why: execution is what companies do best, and I expect they have access to the necessary skillsets and mindset to do a great job. What most of them are not good at is actions related to exploration, to unlearning, and to questioning the taken for granted.
A. Thinking skills are a prerequisite. That is where ideas come from. But few of us, myself included, actually apply ourselves to real thinking. That takes skill, effort, and dedication. I recommend at least two approaches to thinking, relevant to the task at hand:
Model thinking – particularly business modeling skills - at least to the level where they are able to map out, unassisted, the current business model of the company;
Critical thinking – particularly reasoning and argument analysis – at least to a level where they can analyze and question choices made regarding the building blocks of the existing business model (e.g. value proposition for each customer segment, channels, relationships, resources, key activities, partnerships etc)
B. Public Speaking skills are a second must. It is rare that someone can singlehandedly conceive and execute an idea. So, if the collaboration of others is needed, then the next two skills should be given due attention:
Persuasion skills – particularly pitching – at least to a level where a person who discovers an insight can then put it in a communicable form that is necessary to convince others to support the idea and dedicate resources.
Team design skills – particularly when the project happens somewhat outside the existing hierarchy – at least to a level where the owner of the idea can conceive of its project as a collection of tasks that require a specific bundle of skills to be represented on the team. Once a pool of candidates is generated, then it is time to practice the finer art of selecting a subset that plays well together. This is a good example of a skill that can only be acquired through practice – any amount of theory will not suffice.
C. Since market validation is outside of our control, we can only focus on actions to increase the likelihood that our novel business model is better aligned with socio-economic realities in general, and the targeted market in particular. I believe that can only be accomplished through continuous and rigorous research.
Research Skills – particularly primary market research skills such as interviewing – at least to a level where they can test the newly formed hypotheses in the field, by asking potential customers, channels, partners suppliers etc to validate their assumptions;
Finally, there is much literature on the mindsets that are conducive to great things. Among them, a design mindset certainly applies to everything discussed above. But there is another mindset that trumps all other. If I had my wish, this mindset would be venerated and cultivated in any business. It is the Scientific Mindset, that blend of humility and persistent curiosity, of a genuinely open mind and skepticism.
They say the same mind that has created a problem cannot be the source of the solution. I think that is even more true of a mind that has created a successful business model - it will be difficult to turn on itself and unlearn a perfectly viable way of thinking and acting, in the name of a goal to innovate. And without doing so, the business model remains a function of a single perspective, with many blind spots.
One practical impact of the suggestions above will be to expose this existing model to questioning from a wider set of perspectives. These perspectives are safe. They come from your employees and one would expect them to have a stake in your success. They are also informed perspectives, now that you have taken steps to ensure more people have acquired the basic skills necessary to understand and question the current model. Finally, through actions taken to test new hypotheses on the field, talking to clients, channels, partners etc (essentially, other key stakeholder categories) more people will actively capture and bring home even more informed perspectives.
This Entrepreneurial Literacy initiative could be achieved with minimal cost. Quite posibly, the cost need not exceed the price of two beers.
Step 1. All the skills suggested above can be acquired through theoretical exposure to educational resources (full courses) available for free from prestigious sources such as Harvard, MIT, Duke, Yale, Stanford etc. A growing number of platforms makes this possible (Coursera, Edx, Udacity etc etc).
Step 2. The participants need access to minimal resources that are likely already in the posession of the company: research databases, audiovisual equipment, a reference library, etc. Ideally, as different people learn differently, a wider range of options will exist. Most importantly, learning should not occur only via consumption of knowledge, but also creation of knowledge in response to what has been absorbed.
Step 3. The digital experience can then be complemented by face to face conversations, in small groups, in informal settings - quite possibly over drinks (the main expense). Two elements are key: (1) the context should be different from the work place and (2) a moderator ensures the conversation is purposeful in its goal to map, question, and rethink the current business model. It is key that it is a conversation, not a lecture. Participants need to derive satisfaction from having their voices heard, in addition to the pleasure of knowing and understanding more.