Deciding among existing options is not enough anymore when business models and value propositions are expiring like a yogurt in the fridge in many industries. The real challenge is to create viable alternatives to play with, test, and choose among. Only then will you find the best ones. Let us show you how to kick-start your ability to create alternative business models and value proposition with a simple prototyping exercise.
To find great business models and value propositions you need to be able ask “what could be?”. You need to imagine different possible futures. You need to create alternatives to choose from. Yet, that requires skills that you’re more likely to find in the design professions than in the business world.
Imagine you hired a star architect to build your dream house. It’s unlikely you’d immediately start refining the first sketches into detailed plans to execute them without delay. Wouldn’t your architect develop different alternatives with you to explore which one works best? Of course an architect does this at the early stages because it’s nearly impossible to change course later on for cost reasons, even if you chose a wrong direction.
It’s the same for business models and value propositions. You’re better off prototyping different alternatives early on to identify the best (most appropriate) one. And it doesn’t stop there. You’ll immediately test those alternative ideas with the market and partners, which is likely to lead to new alternatives or redesigned ones.
Prototyping alternative value propositions and business models
To avoid getting stuck with the wrong business models and value propositions you need to prototype your ideas at the early stages, rather than - for example - refining them in a detailed business plan. In fact, a business plan will maximize your risk of failure. It’s dangerous to fall in love with your first ideas and it can be very costly to go down the wrong path.
To find the right business models and value propositions you need to master the art of prototyping. In a previous post we explained that prototyping is “the practice of building quick, inexpensive, and rough study models to learn about the desirability, feasibility and viability of alternative solutions.”
Let us introduce you to an exercise that we use with (senior) executives from the largest companies around the world to initiate them to prototyping business models.
Exercise: Find three radically different alternative business models for the same starting point
We developed this simple exercise because most business people haven't been trained to rapidly develop alternatives. We do this with them before getting them to work on their own business models and/or value propositions.
The exercise consists of developing three radically different alternative business models, each one starting with two key resources, a bicycle and $1,000. We only give them only 6 minutes so they focus on developing the alternatives, rather than the individual models.
This is only an introductory exercise, but when you get good at prototyping business models you'll develop alternatives based on the Business Model Mechanics we outlined in Why Some Business Models Are Better Than Others.
Feel free to adapt this exercise to your own context by replacing the bicycle and $1,000 with the key resources that you might have! In a real world business modeling workshop you will give people about 15 minutes for their first prototypes (rather than two in this training exercise). If you have several people in the workshop you can get them to develop alternatives in parallel.
Now try it out yourself. Grab three Business Model Canvases set your timer to 6 minutes: ready, set, go!
Are you done with the exercise?
Key takeaways you can "teach" with this simple exercise:
Get your team to do this exercise at your next meeting and discuss how this experience went for everyone.