PICKING THE RIGHT BUSINESS MODEL FOR YOUR BIG DREAM
What’s the right business model for your BIG IDEA? In simpler terms, “how do you make money” with this incredible idea you have?
Below you will find a table with some guidelines and examples of very successful business models, but before we jump to that, I’m going to discuss why the right business model can make or break your vision.
No Lack of Vision
As a 30+ year technology veteran, board member, investor, and in my current role as GM of a global innovation and development firm, Radius, I’ve come across every manner of innovation and new product idea one can imagine. Tons based upon truly inspiring vision, developed by incredibly passionate people, who DREAM BIG about making the world healthier, smarter, cleaner, safer, and generally a better place to live. And in each case, each vision is accompanied by an abundance of cool ideas in the form of hardware gadgets, software apps, or a combination thereof, up to and including entire digital eco-system visions, like Connected Homes, Connected Cities, Connected Hospitals, Schools, etc. You name it, there is no shortage of wonderfully smart and passionate people, with big hearts and big brains.
And recently, as mentioned, I’ve been very fortunate enough to have a frontrow seat to this activity and watch innovations go from a twinkle in someone’s eye to a working prototype in their hands in days versus weeks or months, through a series of collaborative sessions between customers and our strategists, engineers, designers, compliance experts, software developers and UI/UX experts, including time iterating prototypes. It’s truly a remarkable experience. But back to the question du jour…
How do you translate ideas to value?
After vision and the “WHY” is established in terms of “why do you want to deliver this type of value proposition to the world”, the next big question to tackle is the “HOW” question; as in “How do you expect to make money from this innovation”, i.e. what’s the the market opportunity and equally as important the business model?
There are plenty of people out there to help size and scope markets. The focus of this article is on the important question of business model design and the “how do you make money” from this innovation. I believe the question should be broader, and not simply address the mechanical aspects of marketing and transacting, but rather the full experience of the customer as they are dealing with your organization, as in “how do you deliver value, in order to make money?”
It sounds simple right? It’s not. Adding the “how do you deliver value” piece is the tricky part, especially if you hope to disrupt a market and put competitors at a disadvantage.
Unfortunately, companies put their financial needs ahead of their customer’s needs and overlook this piece of the question.
Business Model design and using a methodology called “Design Thinking” forces you to look through the eyes of your target customer and forces you to think about how value is typically delivered from the outside in and right back out again, from inside out (a.k.a. “the value chain”); and it forces you to examine how/where you should make changes in that “value chain” in order to deliver something that is truly disruptive. Here are a few examples of how/where value chain impacts can be made:
SPEED: delivering value to customers at greater velocity, and more often.
UBIQUITY: delivering value ubiquitously – where customers don’t even need to ask or demand they just get as needed.
FRICTION-LESS: delivering value in fewer steps, fewer clicks, fewer motions, fewer phone calls, fewer forms, etc., i.e ease/simplicity of doing business.
PERSONALIZED: delivering value that is customized to suit personal preferences.
VALUE ADD: creating retention through some type of short-term trade-off (give-away) in order to achieve longer-term retention.
EVERYONE WINS: delivering value to multiple stakeholders in a broader eco-system versus 1:1.
In other words, a different business model, shouldn’t be applied solely for the purposes of creating and maximizing revenue, but rather, revenue is generated when customers’ needs are met differently, and experiences in dealing with you are wildly different/better than when dealing with a competitor.
To give you even more help sorting out business model’s and what’s best for you, here is a very handy Business Model Framework from Mark Johnson’s book (re-published and available through HBR): Seizing the White Space.
This is one important aspect of how we can help you realize innovation, realize your dream.
RELATED PROJECT WORK
WANT TO LEARN MORE?
Start a conversation with Radius to learn how we can help you take your Healthcare project to the next level.