Great ideas need great business models

Benson Garner
July 29, 2014
#
 min read
topics
Business Models
Business Model Canvas

Having a great idea doesn't guarantee success. A great business idea must also have a great business model to support and sustain it.

Note: Watch and share the videos in this post, but please respect that they are copyright material. Use them freely in your work, consulting, and teaching, but not for integration in products or software without express permission.

Contrary to popular belief it's not finding a great idea that is the most challenging part in a corporate or start-up venture. One of the most difficult tasks is the search for the right business model to support your idea. It's hard work and the threat of failure lurks around every corner.

There are many examples that show that the same idea, product, service, or technology may fail with one business model and succeed with another. Nespresso, the Nestlé-owned coffee company, is one of the most prominent examples. It almost went bankrupt with same espresso machine and pod system that is a multi-billion dollar business today. They nearly went out of business because their first business model didn't work. It took them a while to figure out the right business model, a brilliant one by the way, as we show on the Harvard Business Review blog.

Or consider the first photocopying machine, the Xerox 914. Xerox, then called Haloid, had the great idea of inventing a technology to make photocopies in 1959. However, the photocopiers were too expensive to sell, so the company had to invent a totally new business model to succeed with their idea. That lead to the creation of an entire industry (hat tip to Henry Chesbrough for that great example).

"Xerox 914 ". via Wikipedia.

Nespresso and Xerox had to search for a successful business model for their ideas in an ad-hoc way and the former almost went bankrupt in process. Today we know how to organize this search in a more systematic way.

Use the Business Model Canvas together with other tools and processes in your search for the right business model to help your idea succeed. We'll go through all of the relevant tools in this quest for success in future posts, but let's start with the basics first: what is a business model and what is the Business Model Canvas?

Consider the Business Model Canvas as your strategic management tool that will help you find the best way to create, deliver, and capture value. Use the Canvas to organize your ideas and corresponding challenges in a way that allows you to explore them, manage them, and plan for them.

But like a surgeon you will need to master other tools to succeed with your idea operation. While the Business Model Canvas helps you figure out how to create value for your venture, the Value Proposition Canvas helps you figure out how to create value for your customers. Then you need to master the processes of prototyping, testing, and implementing business models to get the best out of your ideas with the least possible risk. You can see there is a lot to write about in future posts...

But let's take one step at a time. A great business idea must have a great business model. Explore your idea now by giving the Business Model Canvas a try!

(One more thing: Unfortunately, you can still fail even with the right business model for your idea. Sign up below for future posts to learn more ;-)

Have you ever failed with a great idea, but a flawed business model? We'd love to hear your story!

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About the speakers

Benson Garner
Business design consultant

Benson is a business design consultant and a member of the Strategyzer content team. He helps companies of every shape and size, big, small, and everything in between to design or even redesign their business models and their value propositions. And at Strategyzer he also helps to create content for the Strategyzer workshops, the online course, Strategyzer blog, webinars. He is a contributor to our book: Value Proposition design. 

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Benson Garner
July 29, 2014
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Great ideas need great business models
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Great ideas need great business models

July 29, 2014
#
 min read
topics
Business Models
Business Model Canvas

Having a great idea doesn't guarantee success. A great business idea must also have a great business model to support and sustain it.

Note: Watch and share the videos in this post, but please respect that they are copyright material. Use them freely in your work, consulting, and teaching, but not for integration in products or software without express permission.

Contrary to popular belief it's not finding a great idea that is the most challenging part in a corporate or start-up venture. One of the most difficult tasks is the search for the right business model to support your idea. It's hard work and the threat of failure lurks around every corner.

There are many examples that show that the same idea, product, service, or technology may fail with one business model and succeed with another. Nespresso, the Nestlé-owned coffee company, is one of the most prominent examples. It almost went bankrupt with same espresso machine and pod system that is a multi-billion dollar business today. They nearly went out of business because their first business model didn't work. It took them a while to figure out the right business model, a brilliant one by the way, as we show on the Harvard Business Review blog.

Or consider the first photocopying machine, the Xerox 914. Xerox, then called Haloid, had the great idea of inventing a technology to make photocopies in 1959. However, the photocopiers were too expensive to sell, so the company had to invent a totally new business model to succeed with their idea. That lead to the creation of an entire industry (hat tip to Henry Chesbrough for that great example).

"Xerox 914 ". via Wikipedia.

Nespresso and Xerox had to search for a successful business model for their ideas in an ad-hoc way and the former almost went bankrupt in process. Today we know how to organize this search in a more systematic way.

Use the Business Model Canvas together with other tools and processes in your search for the right business model to help your idea succeed. We'll go through all of the relevant tools in this quest for success in future posts, but let's start with the basics first: what is a business model and what is the Business Model Canvas?

Consider the Business Model Canvas as your strategic management tool that will help you find the best way to create, deliver, and capture value. Use the Canvas to organize your ideas and corresponding challenges in a way that allows you to explore them, manage them, and plan for them.

But like a surgeon you will need to master other tools to succeed with your idea operation. While the Business Model Canvas helps you figure out how to create value for your venture, the Value Proposition Canvas helps you figure out how to create value for your customers. Then you need to master the processes of prototyping, testing, and implementing business models to get the best out of your ideas with the least possible risk. You can see there is a lot to write about in future posts...

But let's take one step at a time. A great business idea must have a great business model. Explore your idea now by giving the Business Model Canvas a try!

(One more thing: Unfortunately, you can still fail even with the right business model for your idea. Sign up below for future posts to learn more ;-)

Have you ever failed with a great idea, but a flawed business model? We'd love to hear your story!

related reads
No items found.
Great ideas need great business models

Having a great idea doesn't guarantee success. A great business idea must also have a great business model to support and sustain it.

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Whether you’re looking for more information or you’re ready to start a project, we’re ready to help.
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