In an effort to clear my to-read backlog before the year is over, I finished another business-oriented book; Seizing the White Space: Business Model Innovation for Growth and Renewal by Mark W. Johnson. It’s a pretty standard fair innovation business book, and it struck to me that positive reviews of books like this should really come after a long delay. This book was published in 2010, and it explicitly exhorts companies – quite rightly so – to not focus too much effort on identifying, let along fixating on, an exact business model too early in the course of implementing a new idea or a business model. It points out that
If you finalize a profit formula too early, or, worse, are compelled to conform financials to the core businessâ€™s profit formula, then when things change â€“ as they inevitably will â€“ youâ€™ll end up making wrongheaded compromises.
Incubation should be focused on establishing profitability, but itâ€™s critical not to put pressure on the project to reap revenues at any great pace until the acceleration stages and in many real cases, large-scale revenues wonâ€™t accrue until the transition stage [ed note: which takes place up to 8-10 years from launch].
Now, let’s take a look at a few facts; first, Seizing the White Space is focused on creating and nurturing new business models, a vastly different undertaking from simply new products. Second, tangible profits from implementing a new business model are, according to the book and common sense, not apparent immediately – they may take years to materialize, as noted above. Now, I think it’s a given that most businesses really care mostly about (sustainable) profits. With those points, here’s the problem: the book was published some 18 months ago. 18 months is hardly enough time for even the fastest adopters of the advice therein to show any real, large-scale, sustainable benefits that come from following the advice laid out in the book. That is, there simply cannot be any real-world proof that these ideas work – yet the book has received rave reviews. Why?
It’s because of this revelation that I suddenly find myself hesitant in recommending it. That doesn’t mean it’s not filled with useful tools or sage advice – it is. Seizing the White Space presents useful frameworks that help in identifying opportunities and it provides many good examples of things done both right and wrong. Among some of the noteworthy points are:
- Structure can unlock creativity; and of, course, improper structure can and often does inhibit it.
- The profit formulas of online retailers are highlighted in a very positive light; the fact that they can make big profits on small mark-ups is impressive, but it begs the question of how much further can one improve from there once all suitable business is online? Going from a 40% markup of a department store to a 5% markup of an online-only establishment is a big efficiency improvement, but you can’t improve another 35 percentage points from there, now can you?
- There’s a good point in noting that needs-based, or voice-of-the-customer analysis, is not sensible despite it sounding like a good idea. Instead of asking “What do you need?” from customers, companies should start asking – or actually rather than asking, observing and analyzing – “What are you trying to get done?”
- Many books bring this point out, but it’s worth repeating because as many companies fail in that; one must keep idea / innovation incubation effort free of interference from the core [business] and the way it operates. Innovation cannot be managed per se, but it can and should be inspired, supported and encouraged.
- Companies often falter in discontinuities; “When faced with industry discontinuities, many companies falter. Some fail to recognize the complicated external forces propelling the event, or if they do they’re unable to trace the implications correctly or completely. Others hold tightly to their old paradigms and try to adapt them gradually to meet the changed circumstances.” Sound familiar in, say, the mobile industry? 🙂
Another interesting point was the notion that the world of business has become pretty dynamic or chaotic, depending on your viewpoint. It’s pointed out that:
If ever there was a time that business could just execute year after year and achieve lasting success, it is long gone. [..] But there comes a time when established product lines fully mature, when process innovation reaches the upper thresholds of efficiency, and when new product development slows. Then companies face a looming shortfall – a growth gap – between their desired growth path and the growth that the existing business and envisioned adjacencies can deliver.
Of course, the above rhetoric has a deeply-embedded view that eternal growth is not only possible, but also desirable and indeed crucial for companies. Anyone who has read more than this post on my blog by now knows that I do not share that view. But let’s leave that argument aside – after all, it is possible for a single company or even an industry to keep growing even in the long-term, just not the whole economy as an aggregate.
Even though I can’t really recommend the book, due to reasons discussed above, I do not want to discourage reading it either. In the context of the traditional business paradigm, it certainly provides helpful frameworks and guidance to steer companies toward a more dynamic, responsive, less restricted future – and we all know business model innovation is sorely needed in many areas. Seizing the White Space is a good guide for accomplishing that, and certainly much better than doing nothing.