In the opening keynote session at #mtpcon London 2022, corporate innovation expert and award-winning author Tendayi Viki, Associate Partner at Strategyzer, discusses the importance of placing product people at the heart of business model design, to innovate and achieve aligned outcomes.
Watch the video in full or read on for key highlights from the talk.
- A great product and great technology are not enough to innovate effectively
- Product needs to be an expression of our understanding of the business model
- Experiments build confidence, though evidence is not created equal
‘Is your innovation project on track?’ Tendayi begins, challenging the audience of product people to assess whether ‘we’re on track to actually create value for customers’. Rather than review the next release or position on the product roadmap, Tendayi asks whether we have found ‘a business model that actually works and is scalable and is profitable’ and by doing so, questions, ‘what are the things we are looking for?’
Great value propositions, he explains, are increasingly embedded in outcome-focused product practice, as we establish a product-solution-fit that ‘actually addresses essential customer jobs to be done […] their essential pains’. That said, focusing solely on delivering ‘a great product and great technology’ is not enough, Tendayi says, as ‘it’s possible to make products that delight customers and still fail’.
Minding the business model
‘Instead of just minding the product, I think we should also mind the business model’, Tendayi says, defining the business model as ‘the rationale of how an organisation creates, delivers and captures value’. After surveying the Mind The Product audience, and finding the majority are not actively involved in business model design on a day-to-day basis, Tendayi notes that ‘focussing on the product only’ creates risk, as ‘having a great product is not the same as having a great value proposition’. In an ideal situation, the design of the business model should inform the direction of the product, as our work is a prioritisation of the value we’re trying to deliver.
Looking at the practicalities and frameworks available to product people, Tendayi references the Business Model Canvas, a strategic management template created by Alexander Osterwalder. The canvas is made up of 9 boxes telling the ‘narrative’, with backstages helping to clarify ‘our offering, our value proposition’, made up of partners, resources, activities and the cost structure, which deliver to front stages, comprised of customer relationships, segments, channels and revenue stages. The balance between these stages, Tendayi says, is ‘how we end up creating value’. With the canvas as a reference point, assessing whether you’re on track means understanding how you are to ‘find a business model that works’, which according to Tendayi is ‘the fundamental question for innovation’.
Tendayi references Nespresso—a great product and great technology—first invented in 1976, but one which wasn’t paired with a great business model until 1988, when John Paul Galia took over the project, understanding how to commercialise that particular technology that they’d invented. ‘Successful innovation is a combination of your invention, your great technologies, your great products’, the right roadmap and the right practice, whilst ensuring ‘you’re developing business models that are scalable, and profitable’ and create customer value.
Business model confidence
Being confident that your business model is the right one, ensuring that you’re on track, and that the direction you’ve aligned around will result in successful outcomes is only possible if you ‘run experiments’ Tendayi says, explaining ‘the job of the experiment is to help a team reduce the risk in their ideas’.
A common mistake, he says, is for teams to assume the amount of work a team does equate to ‘the amount of risk that they can reduce in their idea’. The experiment validity should not be confused by vanity metrics, (such as a measure of the number of interviews with more activity, meaning lesser risk), but rather assessed against how strongly new evidence ‘supports our hypotheses about how we think the business model is going to work.’
Tendayi also recommends impact metrics to evaluate the strength of your evidence to better classify it. For example, you can rank customer actions as of greater value than customer feedback. The actions they take may also be categorised by high or low investment, for example, a customer giving their email address is less meaningful than their payment details. Tendayi also points to facts being stronger than opinions and recommends we become aware of our own role in tests, perhaps influencing customers with our own biases or additional context – real-world activities should take precedence over those in a lab context, he says.
‘Not all evidence is created equal’, Tendayi adds, recommending the Innovation Project scorecard, a tool fully aligned with the 9 building blocks of the business model canvas that allows innovation teams to assess the progress they are making to find business models that work, ensuring ‘you’re evaluating every product project not based on your gut instinct, but based on the evidence that the team is actually is actually gathered’.
Customer value
Tendayi closes by recommending we focus on customer value ‘beyond just the intention of your technology […] think beyond product and consider whether you’re giving customers a great value proposition’. Furthermore, designing a business model that is scalable and profitable and enables you to execute, all while testing assumptions, running experiments and tracking progress, based on the strength of evidence. ‘That’s a fundamental practice that we have to build […] mind your innovation portfolio’.
There’s more where that came from! Explore more insights from #mtpcom
- Seven key takeaways from #mtpcon London+EMEA: Day 2
- Learnings from London: The secret sauce to hiring great product people by Kate Leto
- Finding your frosting as a product leader by Jeff Birkeland
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