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Friday, January 07, 2011

Seizing the White Space: Business Model Innovation for Growth and Renewal

In Seizing the White Space, author Johnson lays out a compelling case for business model innovation as catalyst for robust growth, both through transformation of existing markets- the white spaces within- that every company has and through creation of tomorrows new markets- the white spaces beyond - that many companies find so hard to venture into.
A successful company becomes very good at growing its core.It secures resources, improves existing products and creates new ones, expand markets and increase efficiencies by improving processes, all to extract the most value for its core activities. It also continues to develop and refine the key business rules and metrics that ensure proper execution, establish discipline and exert control through out the organisation. Either explicitly or implicitly the company is operating according to a business model, which defines the way the company delivers value to a set of customers at a profit. What happens when an opportunity arises outside a company core, an opportunity to serve an wholly new customer or an existing customer in a radically new way?

White space- the range of potential activities not defined or addressed by the company's current business model , that is, the opportunities outside its core and beyond its adjacencies that require a different business model to exploit. A business model is a representation of how a business creates and delivers value, both for the customer and the company. The basic architecture underlying all successful business consists of four interdependent elements- Customer Value Proposition (CVP), Key resources, key Processes and Profit formula.

The author contributes significantly to our understanding of CVP- a product , service or combination thereof that helps customers do more effectively , conveniently or affordably a job they have been trying to do. How to maximise a CVP?

  • identify an important -job-to-be-done that is poorly satisfied today for a customer.
  • devise and develop an offering that does the job better than alternatives at the lowest of appropriate price.
Author highlights importance of behavioural norms  as critical processes. Business rules, bahaviour norms and success metrics connect the elements of a business model and keep the system in proper balance. They ensure that the business repeatedly and predictably deliver the customer value proposition and fulfill the profit formula.

Take home:
do not ask yr customer what he/she needs? find out what they are trying to get done.

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