Platt Perspective on Business and Technology

Opening up the online business model for new and emerging opportunity 4: blue ocean strategies and business models 2

Posted in startups, strategy and planning by Timothy Platt on May 23, 2013

This is my fourth installment to a series on new and emerging online business models and on developing best practices for finding and creating new and novel online business opportunity (see Startups and Early Stage Businesses, postings 142 and loosely following for Parts 1-3.)

I finished Part 3 of this series by beginning a discussion of a potential paradox, noting that:

• The businesses most able to support innovation financially, can be the least able to do so strategically and organizationally, and those most able to do so strategically and organizationally can be least able to do so from a firmly supportive financial base.

And I stated that the strategic and operational goal of any business that seeks to innovate should be to pursue, develop and implement approaches for combining sources of necessary strength so “able” and “willing” can come together in support of innovative excellence. I said that I would at least begin functionally unraveling this challenge here in this posting.

To round out the background context for this posting, when I wrote Part 2 of this series, I raised an open question that I simply noted there, stating that I would come back to it later:

• And what should be an innovative business’ perhaps more conservative Plan B, and when should a striving for breakout success and the blue ocean strategy and development that would lead to it be the Plan B?

My goal for this posting is in fact to address both of these sets of points:

• The first of those can be seen as a matter of finding a productive, risk management-aware balance between maintaining business stability and capability on the one hand while opening up that business to the possibility of breakaway, innovative success with its increased risks on the other.
• The second is one of knowing which of these two basic approaches: stable and fiscally centered, or innovatively risk taking should predominate and lead in defining and setting the business’ overall strategy and priorities, and which should follow.

I approach those decision points from a variety of approaches when making an assessment, and will at least briefly note some of those possibilities here. I will start, however, by noting that no such assessment no matter how grounded can safely be considered as if set in stone and good and valid for all time – and no matter how cogently valid when initially arrived at. So I am writing about an ongoing process. And in that, both the results reached and the approaches taken in making an analysis of this type can be context and business development stage-dependent.

With that in mind, I will begin considering a startup or early stage business that is still developing itself and still finding its way into a prospective marketplace.

• A point that I have made several times in this blog, but that bears repeating here is that it does not make sense to build a startup if your goal is to be 37th best: the 37th most competitively effective and profitable in a field of 40. The numbers vary as I state that point, but the basic idea remains the same. If you are going to go to the expense, effort and risk of building a new business, you should be looking for and developing toward a realistic capability of being among the best in your market, and certainly for your prospective customer base.
• That might mean staking out a narrow and specialized market niche that you can excel in or it might mean building a more general product and service offering business. But in either case, if you are to build to be the best, that is probably going to mean building to be different, and to offer something unique and uniquely valuable to the customer.
• This point is particularly true if you seek to build your new business venture into an already crowded field. It is obviously less important if you face less direct competition. But for a startup or early stage business, capacity to offer new and different, and innovatively valuable to a marketplace and its customers can be the defining distinction between being successful and simply surviving – or not succeeding at all.
• Now consider building a new business in an at least somewhat competitive field and environment – which I posit as a basic, predictably standard new business context. You are going to be building in the face of competition with more established businesses that already have positive cash flow and at least some profitability, and that in many cases will have at least some reserves to cushion any risks they take in business evolution and development.
• So you need to build securely and soundly (e.g. see for example, my series: Understanding and Navigating Burn Rate at Startups and Early Stage Businesses, postings 67-78.) That represents the sound and stable business strategy and development track. But at the same time, much of what you do has to be driven by an ongoing effort to define, create, develop, monetize and profitably offer a unique value proposition and that represents the more risk accepting innovative track.
• The more competitive the field you would build your venture into, the more risk accepting you are likely going to have to be, and the more towards the front this innovation driven business development track is going to have to be.

Now let’s flip that around and consider the same set of operational and strategic dynamics from the perspective of the established business. I am going to continue this discussion, picking up on it there in my next series installment, where I will also explicitly compare and contrast these strategic and operational contexts and how they would be addressed. Meanwhile, you can find this and other related postings at Startups and Early Stage Businesses. You can also find related material at Business Strategy and Operations and at its continuation page: Business Strategy and Operations – 2.

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