Business Models Happen

So I’ve been following Umair Haque for a while. A few months ago he made a comment that stuck with me, but didn’t sink in until just recently. He was discussing edge economies, so not traditional established businesses, rather new organizations creating value in a new ways. When discussing these bold new businesses he sort of made an offhanded comment that “business models just happen“. Wait, what?

That statement sort of offended my sensibilities at first. How can business models just happen? They take time, they’re complicated, and most of the time they fail. Also, edge economies are less proven. Wouldn’t that require more big brains and lots of ‘innovation’? It felt odd to say those models just happen.

Then, last week, I was doing some client work with experience models. I think I made my own offhanded statement saying something like “well if there’s nothing to experience, there doesn’t seem to be any value to pay for.” Not a real lightening rod of a thought…but then I realized; no experience, no value…no value, no business model. I was starting to get it.

So I went back to Haque’s article, and things made more sense. It’s all about what type of value are you delivering – connections, experience, physical goods, service, piece of mind, whatever. If you create that (and it’s valuable to someone), the business model will happen. It’s not that the business model doesn’t matter, it’s just that the model is only part of the platform. Without the value, you have no (real) model.

I was left wondering why this concept had been so difficult to digest at first, seems straight forward enough. I decided it was tough to swallow because business models just don’t change that often, and new business doesn’t mean new model. You may sell something new to the world over the web, but if it’s just about web fulfillment, it’s not a new model (which is fine). In fact most businesses are buying into proven models and spending all their resources making that model survive.

All this just takes me back to why prototyping is so important for building a new venture. It’s abou tfiguring out the need and the value first and then building a model that will complement the core promise. By prototyping, you’re committing to exploring different ways of delivering value. If you do it right, you’re not too invested to learn. If you do it right, you’re making room for some serendipity. If you do it right, you aren’t looking for shortcuts, you’re looking for answers.

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