3 Questions That Can Help Save Your Business, Before It’s Too Late

Not all businesses can be saved, but many die unnecessary deaths.

Modern leaders challenge their existing products and business models, even when year over year revenue numbers are looking strong.

In fact that’s the best time to reimagine your business, before it’s too late.

Netflix, 3 Horizons

When Netflix had strong DVD by mail rentals, they didn’t simply ride them off into the sunset. They introduced streaming services. Once streaming services started to take off, they introduced their own original content. Netflix continues to reimagine their business in ways that build upon their core strengths and vision.

Over the years, I’ve tried and tested many techniques to help corporations reimagine their businesses and invest in the future.

Here are my top 3 “go to” questions, which come up over and over again in my advising work. Hopefully they can unlock creativity for your team, as they have for my clients.

Question #1 — “What would we do if we could no longer sell our product?”

The answer to this question should not be, “Pack up our things, turn off the lights and go home”.

The people I advise in corporations have deep domain knowledge and experience. They know the product features and customer base, inside and out.

This question taps into their expertise and yet challenges them to come up with different ways of delivering value.

“What if we could no longer sell our product through retail stores?”

Source, Business Insider

Retail stores continue to struggle in 2017. If you sell a physical consumer product, chance are you will need to explore new distribution channels. The answers to this question could help you avoid the looming retailpocalypse, which will most likely drag your business down with it.

“What if we could no longer sell our product through retail stores?”

“What if we could no longer sell physical newspapers?”

Source, Pew Research

Physical newspaper sales continue to decline in 2017. You have talented journalists and reporters with amazing content. It would be a shame to let all of that talent go to waste because the media format is no longer in style.

“What if we could no longer sell physical newspapers?”

“What if we could no longer sell automobiles?”

Source, BloomberView

Auto sales are on a slower downward trend in the US. It may not have the same sense of urgency as newspapers and retail, but every automotive exec I speak to is keenly aware of ride sharing and autonomous vehicles. What is the plan for when your auto sales plateau and start to decline?

“What if we could no longer sell automobiles?”

Not being able to sell your product can be viewed as an opportunity, instead of a threat.

Question #2 — “What kind of startup would make us obsolete?”

The answer to this question should not be, “A smaller version of our existing competitor”.

A startup is not a smaller version of large company. Startups can navigate extreme uncertainty at high speed and scale faster globally than ever before.

While you are busy arguing internally over the definition of Minimum Viable Product, a startup has already launched and learned in the market.

Disruptive startups go after high retention, low satisfaction products.

Source SFMTA Transportation Report
  • Uber & Lyft practically destroyed the taxi industry in major cities across the U.S. Everyone used to take a taxi, but few of us enjoyed the taxi cab experience.
  • Warby Parker & JINS are destroying the market share of companies like Luxottica (who just delisted from NYSE). People like me who wear eyeglasses are tired of paying exorbitant prices for frames that do not fit well.

Disruptive startups will unbundle your products.

  • Adobe PhotoShop does almost everything, but it does not do everything well. Sketch unbundles PhotoShop capabilities into a niche offering and attempts to do it better. Young designers are rewarding them for doing so. This isn’t surprising, since PhotoShop is now over 25 years old.
  • Atlassian’s Jira does almost everything for project management, but it’s so overwhelming that many customers give up and go for something simpler to use like Trello. Atlassian realized this and recently acquired Trello.

Do not wait for a startup to disrupt you. Disrupt yourself first.

Sketching out what kind of startups will disrupt you is a great first step, but you’ll need a structure in place for it to be a repeatable process.

  • Internal Advisory Board — Sometimes called Growth Boards, these are internal executive boards that reside within your corporation. They function much like a startup advisory board. I originally got this idea from working with Eric Ries on the initial GE FastWorks teams.
  • Dedicated, Cross Functional Teams — Your new internal startup teams will need product, design and engineering capabilities.
  • Internal VC Funding — Sometimes called Metered Funding, this helps prevent your new initiatives from being prematurely over funded. Think of it as seed, alpha and beta funding which give you the option of making more frequent investment decisions across an innovation portfolio.

Successful startups are not born out of a singular, brilliant idea and a 5 year business plan.

It’s a winding, messy path to success. Get ahead now by spreading your bets against a variety of internal startup ideas that could kill your business over the next 3–5 years. Invest in your own people and make investment decisions based up on the evidence they create.

Question 3 — “What will we do when our patents expire?”

The answer to this question should not be, “Exploit the legal and regulatory systems to stave off incoming competition”.

Patents are a key part of making your business defensible, but they should never be the only part that makes it defensible.

Your products need to compete on price as well as solving a meaningful job for your customers.

If your corporation is surviving on patents alone, then you have cause for concern.

For example after their key patents expired, Keurig tried implementing a DRM solution to prevent competitors from inserting their pods into Keurig coffee machines. Instead of competing on price and doing the job better than anyone else, they attempted to exploit the legal and regulatory system by implementing DRM. This resulted in several lawsuits and Keurig eventually being acquired while the stock was falling off a patent cliff.

Give it away, give it away, give it away now.

One answer to this question could be to give your patents away, before they expire. Tesla is a recent example of this, choosing to open source their electric car patents.

“Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers. We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position in this regard.” — Elon Musk, 2014

This is one technique to gain trust and credibility in the market, but it doesn’t have to be completely altruistic.

What would your business model look like with open sourced patents?

It can feel too overwhelming to think of your patents expiring and their relationship to your business.

If you look at the conditions of Tesla patents you’ll find:

  • asserted, helped others assert or had a financial stake in any assertion of (i) any patent or other intellectual property right against Tesla or (ii) any patent right against a third party for its use of technologies relating to electric vehicles or related equipment;
  • challenged, helped others challenge, or had a financial stake in any challenge to any Tesla patent; or
  • marketed or sold any knock-off product (e.g., a product created by imitating or copying the design or appearance of a Tesla product or which suggests an association with or endorsement by Tesla) or provided any material assistance to another party doing so.

I illustrate patents as a key resource with the Business Model Canvas. I learned this from Alex Osterwalder as a way to challenge leadership teams on how to brainstorm, getting ahead of the extinction event.

Business Model Canvas from Strategyzer

Visualizing the model of open source patents, you can behave more like a business designer looking for opportunities:

  • Identify your patents as a key resource in your current state.
  • When this key resource is removed, how would you generate revenue?
  • What are the relationships between this key resource and other aspects of your business model?

Tesla has dropped “Motors” from their name, while investing heavily in lithium battery production. I personally think they are giving their electric car patents away and investing in a much broader strategy.

Regardless, if you are mercilessly iterating on your product with customers, then you shouldn’t be too worried about others copying your technology.

Competitors can only copy the how, but not the why.

They do not know why you’ve made past design decisions, what you’ve learned since and where you are headed next.

We’ve asked these questions, now what?

Use these answers as a catalyst to reimagine the way you deliver value to customers.

A product is merely the current state of which you deliver value. With some creativity and guidance, you can deliver even more value in a different form while building on your strengths and vision.

If you would like to learn more about how I approach these questions with corporations, visit the Precoil library where you can access free lean startup and design thinking tools, templates and videos.

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