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Before Establishing Your Business Model, Anticipate the Potential Effects of What You Can't Control

May 24, 2008
How many times have you started doing something new, and found out that the environment changed in a way that made your new offering inappropriate? That happens all the time in business. Successful business model innovators avoid this problem by looking at what could happen before anything changes.

Something that is minor irritant or opportunity today can become an enormous factor tomorrow. Forecasting is seldom accurate. To prove that point, go back and look at the forecasts for oil prices when oil was selling for $11 a barrel just a few years ago. No one saw the price going over $40 in 2008. Now, that's not even close.

Why do people do so poorly at forecasting? Most estimation makes assumptions based on what's happened in the past. Few will even attempt to consider what hasn't happened before. Even when they do, they get it wrong.

What was the matter with those forecasts? They didn't project billions of people expanding their consumption of energy at five times the historical rate. Why did that consumption occur? Well, communist and socialist countries took down some of the artificial barriers to growth that had been in place for decades.

The problem is even worse for predicting trends. The only thing we can accurately say about the future is that it will come, and probably be different from what we expect. The events on and since September 11, 2001 have brought this point home for many business people. On the other hand, we can make important progress towards getting more benefits from unexpected changes by thinking systematically about their potential in advance.

Design 4-7 extreme scenarios (not forecasts) of what could happen (both greatly less and more of each potentially significant factor than today), and think through the as many dimensions of possible value as you can.

You will eventually begin to see paths for adding value that work across all of those scenarios. Those value adding ideas will turn out to be especially powerful because they will leave you better off, not matter what comes next.

Why look at so many value-improving dimensions? It's simple: The reasons for accepting or rejecting products are always changing. Here's a recent trend to consider as an example: The most frequent reason for returning consumer electronics isn't a defect . . . it's because purchasers can't figure out the buttons and the directions.

The lesson for you is to assume that you need all the imagination you can muster to establish a superior business model that can weather anything that comes your way.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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