Seizing the White Space- Business Model Innovation for Growth and Renewal
In this book review Paul Hobcraft looks at “Seizing the White Space”- Business Model Innovation for Growth and Renewal, a book by Mark. W Johnson, published by Harvard Business Press.
“Seizing the White Space” can have a hard time if you stack them up together as you really need to sit down and read the book as it builds the argument up on ‘why business model innovation’. “Business Model Generation”, yet another book on the same subject, i.e. Business Model Innovation, stands out as something very different. I would certainly argue it is a ‘positive tension’ between the books and their arguments to understand Business Model Innovation more thoroughly. Pleasing as Business Model Generation is, it does not go into the subject as deeply in its explanations or building the why of the argument as “Seizing the White Space” does, it seems to dive in head first. You need BOTH to swim and survive.
Looking specifically at “Seizing the White Space” in this review what do you find in the book that brings BMI to life?
The book does offer much of the rigorous level of enquiry you require to think through BMI. The book does lay out a compelling case with some detailed case studies as examples. Mark comes from his reinvention background where rubbing shoulders with Clayton Christensen and having collaborations with Scott Anthony, Erik Roth and others in exploring the theories and solutions to disruptive innovation have made him respect the risks inherent in any Business Model invention. Mark states it is hard work with an incredible amount of uncertainty. The risk from just reading this might be it just freezes you and that is partly why you need the other part of the book equation- “Business Model Generation” to help unfreeze you. It is their combination that gives you the best chance of refreezing a new business model innovation by thoroughly working through both- they do complement each other.
There is a clear emphasis of understanding existing Business models as a must
The emphasis running throughout the book “Seizing the White Space” is before you venture into any new BM, it is emphasised time and again that you do need to ensure you have a deep understanding of the existing or your current business model. Equally, know how to analysis the competitors differences as well .Why? Early on in the book Mark provides a simple yet powerful framing model typical of consultants and useful- defining the White Space. It takes you through the nature of the opportunity and the nature of the customer for thinking about what fits where, is it in existing core operating space, adjacencies that fit core but begin to move a little away and then that white space. White space is defined as “the range of potential activities not defined or addressed by the current business model, beyond its core and adjacencies that require a different business model to exploit”. So the book journey begins.
So what is a business model?
In essence it is a representation of how a business creates and delivers value, both for the customer and the company. Often this cannot be articulated as well as you would expect in many existing organizations so they leave themselves even more vulnerable to attack.
The four-box framework lies at the heart of the book
The heart of the book and Marks Business Model proposition is his Four-box model framework.. There are some people occasionally that can intuitively understand how to innovate through new business models- Steve Jobs, Jeff Bezos- but most of us need an explicit framework and manageable process to reduce the uncertainties and explain the risks to others as Mark argues the better we understand BM’s then the better we will be at creating them.
At the heart of the book is a four box model framework requiring a clear, strong customer value proposition (CVP), secondly the show me the money part- a profit formula that defines how and where the company will capture value for a given set of customers at a given price. The third and fourth element of this framework is key resources and key processes as the means by which the company delivers the value to the customer and itself. These are well explained within the book.
The challenge of Business models is unravelling the complexities
Mark raises an interesting challenge “No one to my knowledge squarely focuses on the elements in the business system that are central to value’s creation and delivery and the way those elements work together to ensure or impede the overall success of the enterprise”. I have to admit I did think of Business Model Generation and its co-authors here but I think these two books were written in parallel. Mark has taken up this challenge and explains the elements well, with many examples and explanations, to allow us all to see an emerging more holistic business system understanding need.
The critical need is to understand the jobs-to-be-done
The real value of the book for me is where to focus your CVP. Mark picks up on previous work done by Clayton Christensen and drives home that it lies in jobs-to-be-done. He argues we all need to speed past “customer needs”, “needs drive” and the “voice of the customer” and get to the heart of any real new, exciting value proposition by finding out what customers want to really achieve not what you want them too. It sounds simple here but do believe me, most companies NEVER get there! Understanding this jobs-to-be-done and its importance to finding potential Business Model Innovations is a really important take away not recognised in its importance by many.
Stop asking your customers the wrong question
So arriving at Marks statement “transformative, growth-generating new opportunities, then pursuit should start with finding those important unfulfilled jobs” for those customer value propositions (CVP) then stop asking customers “what do you need?” but “what are you trying to get done?” An important point of further differentiation to be careful on though that Mark points out is there are functional, emotional and social unfulfilled jobs-to-be-done everywhere and they make different and new CVPs. When you know them you can look whether these are able to be resolved by existing core business delivery methods and structures, or needed a more adjacency move or are those white space opportunities. If it is pure ‘white space’ then Mark’s Business model framework really kicks in.
If it is a potential BMI, then the four-box business model is the framework for generating the right deeper questions and testing assumptions to refine the elements needed in the new Business Model.
If I haven’t lost you so far, then diving into this book all is well explained but it does have to come with a little rooting around or dipping in and out once you have worked through it.
Tools & Methodologies within the book
The book does provide some very helpful ‘levers for exploring product/ service, access needs, payment thinking and a useful compare and contrast offering. They prompt this deeper thinking. Mark even gives you good Business model analogies to help jump start your creative juices by considering how other industry examples might be applied to your context. There is a need to compliment this set of tools and methodology though in my mind.
A word of caution- test and validate constantly
The other helpful but cautionary aspect of “Seizing the White Space” is the significant emphasis Mark places on testing and validating assumptions. He advocates a consistent revisiting of these through three stages of incubation, acceleration and transition. Pressure comes because we inherently lock in expectations in revenue, numbers, growth far too early and you have to ask the question of how can you ‘ring fence’ this white space opportunity so the antibodies often around in the core don’t destroy the opportunity to protect its immune system. Clear, strong leadership needs to be really clear on the REAL differences on why a new Business model innovation has to be separated, protected and nurtured in sometimes radically different ways. If not that promising value proposition dies from the inside out.
Do I have a criticism of “Seizing the White Space?”
It is sometimes hard to dip in and out of the book, it is a solid read, it builds the arguments piece by piece, sometimes repeating them perhaps a little too much, but I suspect it is reassuring to work through and have a constant reminder if you are the C-level person who has to evaluate the CVP in a more systematic way that can challenge his existing business model. There is some large risks as well as opportunities in changing your business model.
A final observation- this book is very valuable for Business model innovation understanding
One final comment is one chapter at the end “Overcoming Incumbent Challenges” I find is a little out of place, it is written with a lighter touch and in many ways it could have led into the book as an introduction as it presents the growth gap, the reasons for it, many internal and external reasons why you have to move past the core and adjacencies and prepares your thinking for those white spaces. The chapter finishes by reminding us there are many dogs guarding the gates of innovation and they are many and varied, and they often lurk there in disguise.
Mark ends with his appeal to leaders, embrace and communicate the necessity of business model innovation to get safely past the ones that guard these gates to the future. Devising the way to communicate this down the organization leads me onto the other book “Business Model Generation” for its review and essential companion to “Seizing the White Space”
“Seizing the White Space” certainly offers a sound blueprint for Business Model Innovation. Alexander Osterwalder’s and his co-authors book “Business model Generation book” provide a richer canvas to construct it around. You lavish on this canvas, you engineer through this blueprint. Both take you to a better design of a Business model innovation. Know and use both is my recommendation.
By Paul Hobcraft
Paul Hobcraft runs Agility Innovation Specialists; an advisory business that focuses on stimulating sound innovation practice. He helps build innovation capability and capacity for organisations, teams and individuals. Agility Innovation research topics that relate to innovation for the future, applying the learning to further develop organizations core innovation activity, offer appropriate advice on tools, techniques and frameworks.
Paul´s personal journey has been varied, challenging but fun. This has taken him to live and work in Saudi Arabia, Kenya, Malaysia, Switzerland, the Netherlands, USA, Australia, and recently eleven years in Singapore. Paul is based in Switzerland and presently focuses his time between Asia and Europe. Welcome to read more at: www.agilityinnovation.com