How To Prototype Radically Different Business Models

How To Prototype Radically Different Business Models

businessmodels

 

All businesses must learn to reinvent themselves, because their business model will eventually expire regardless of the industry in which they play. We use a prototyping technique called ‘Constrained Prototyping’ to help people break through creative blocks and imagine radically new futures for their business. Let me show you how you can apply this technique to your own case.

 

If you’re reading this article, you probably fit in at least one of these categories (it’s time to read some of our previous posts if you don’t):

  • You understand that your product can fail if it’s not embedded in the right business model.
  • You know that business models have an ephemeral nature and must evolve with their environment to stay relevant.
  • You’ve learned that a superior business model can become a strategic advantage that helps you compete better than other players.

Companies that turn to us are either proactively designing new business models, or have foreseen looming threats to their business forcing them to reinvent themselves. In both cases, a team of strategists and executives face the challenge of designing new futures and planning the transition to high-growth areas.

It all starts with prototyping, a design technique that we’ve already written about in previous posts. Prototyping helps you explore possible alternatives quickly and cheaply to assess their feasibility, desirability and viability. It’s a common practice in the design profession that the business world could strongly benefit from. The fact of the matter is that, in a rush to develop a venture and get new products to market faster than others, business people don’t take enough time to study if the big idea they’re betting on is the best option out there. Borrowing a couple of design techniques like prototyping can prevent businesses from investing millions of dollars in an idea that will blow up.

 

How_to_prototype_radically_different_business_models

 

The hardest part of prototyping is to come up with new ideas. Many people struggle with brainstorming sessions and find it daunting to imagine new scenarios for a business that they’re so accustomed to. So they tend to copy business models that already exist in their industry when they should be exploring beyond their current boundaries. Copying business models that already exist in your industry can only take you so far. It’s a short-term fix. As Alex Osterwalder always reminds us, “business models expire like a yogurt in a fridge”. You need to invent new alternatives to become the Nespresso, the Skype, or the Google of your industry.

How_to_prototype_radically_different_business_models

 

One of my favourite techniques to kick-start prototyping sessions and get our creative juices to flow is called “Constrained Prototyping” (let me warn you: it’s not an easy exercise but it is fun and it produces great results). If you have never prototyped before, practice with this exercise first before trying out constrained prototyping.

Constrained Prototyping

Material: A Business Model Canvas (download one here)

Goal: Push yourself to sketch business models that are radically different by using a ‘business model constraint’. A ‘business model constraint’ is a blueprint that you must work with when you prototype your business model.

Instructions: Pick one of the blueprints (see below).The blueprints presented already have sticky notes on them (e.g. ‘base product’, transactional sales’). You will have to build your business model prototype around this blueprint and with the same sticky notes. Go ahead and try filling out the rest of your Business Model Canvas. We call this ‘Constrained Prototyping’ because you must work with the constraints that exist on the blueprint that you picked. You need approximately 30 mins to completely fill out your Business Model Canvas. When you’re done, repeat the exercise with another constraint card.
Blueprint 1: Recurring Revenues (à la Nespresso)

How_to_prototype_radically_different_business_models

 

I encourage you to use this card if you currently earn transactional revenues but no recurring revenues. This is the blueprint that Nespresso uses. Nespresso changed the game in the coffee business with its base product (coffee machine) and consumables (coffee pods) model. Its base product generates transactional sales and leads to recurring sales of consumables.

Make sure your business model has:

-A base product in your Value Proposition block
-A consumable in your Value Proposition block
Transactional revenues from the base product in your Revenues Streams block
Recurring revenues from consumables in your Revenues Streams block

Now it’s your turn to prototype a business model!
Blueprint 2: Free Salesforce (à la Tupperware)

How_to_prototype_radically_different_business_models

 

I encourage you to use this card if your marketing & sales costs are particularly heavy, or if you want to explore a model with lighter costs. This is the blueprint that Tupperware uses. Tupperware made a bold move when it used its passionate customers as a free salesforce at ‘Tupperware parties’. Its sales costs were substantially reduced.

Make sure your business model has:
-A passionate sales force in your Channels block
-That salesforce (people or a company) in your Key Partners block.

Now it’s your turn to prototype a business model!
Learning: Constrained prototyping can feel very difficult for a few because you’re forced to take a specific direction for your prototype and might feel stuck. Blockages happen to anyone not used to prototype, but you only need to practice a little bit more until you can easy design radically different business models. In our prototyping sessions, we use up to 5 different cards to really explore a wide spectrum of business model ideas.

Caveat: Don’t fall in love with you first business model prototypes! These prototypes are a starting point. Keep exploring models and transforming them as you learn more about customers and the business environment. Make sure you study multiple options before choosing one to focus on.

 

 

[Strategyzer]

June 12, 2016 / by / in , ,

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