Platt Perspective on Business and Technology

Opening up the online business model for new and emerging opportunity 5: blue ocean strategies and business models 3

Posted in startups, strategy and planning by Timothy Platt on June 1, 2013

This is my fifth 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 1-4.)

I discussed in Part 4, a series of balance point issues, there focusing on startups and early stage businesses. More specifically, I at least began a discussion 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,
• And 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.

My goal for this posting is to follow that up with at least a starter discussion as to how these issues would play out for a more established business.

• As already noted in this series, an established business and certainly a successful one that is maintaining positive cash flow and profitability, is going to have a stronger financial base for being able to afford innovative initiatives. But at the same time is it probably going to be more entrenched in established ways and with a more established operational and strategic approach as well as with a more set corporate culture. That can create formidable barriers to the disruptions and pattern breakings of true innovation. So the established and successful business might even desperately need to be able to innovate to keep from slipping long-term into a business process and product and service dead end and into eventual obsolescence. But the momentum of its very success can hinder its finding a successful path to actually realizing that.
• This means the established business is in many cases, going to at least start out with it stable and tried and true and fiscally grounded dominating, and with any who would push a more innovative agenda viewed more as company mavericks than anything else – and with any more innovative business approaches and tracks very subservient if even present.
• And to put this into fuller perspective for its implications, consider such a business in a stable and mature industry where products and services are settled and customers tend to see them as fully developed and of mature technology and vision.
• Now add in a startup or an agile established business that sees real opportunity in breaking into this market and with a disruptively new offering, or a disruptively new business approach for offering products and services in this arena that would make it formidably competitive there. Now consider that set-in-its-ways and even staid company as being confronted by a disruptively innovative challenge.
• Suddenly they are repositioned in their established markets from being a significant and perhaps even major player to being at risk of simply becoming irrelevant.
• Back up from that and consider, pre-innovative competitor, the risks that this company has been taken from falling into settled and comfortable complacency. Innovation may not be easy or comfortable for it and certainly if that means breaking out of a long-established and even rigid pattern of practices and understanding. But that innovative track is needed too, and finding a good balance and a long term necessary balance is probably going to mean making an innovative track that is both genuine and robust – even as the main production lines pursue current opportunities and more tried and true.
• In this, the here and now organizational and financial strength of the organization with its steady cash flow and reserves should be tapped into and even with the additional risk on investments that carries to build for the business’ long-term future.

Which of the two basic approaches should be Plan A and which Plan B? Which should operationally, and by priority predominate? I would argue that these are, in a fundamental sense the wrong questions. A better approach would be to acknowledge the coordinate value of each of these business tracks, with each oriented towards its own timeframe and with both fundamentally essential. And the real question is how best to coordinate them and make them mutually supportive. I am going to look into that set of issues in my next series installment. 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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