Business Model Innovation Algorithms: Smarter search for New Business Models — Part 1
Entrepreneur and author Steve Blank has a famous quote: “A startup is a temporary organization designed to search for a repeatable and scalable business model.”
Startups are famous for their ability to come up with disruptive innovation. But that disruption does not just pop into existence: the startup actively searches for it. Startups are in a way small search engines, looking for the best possible solutions in a highly unpredictable environment: the market.
To find better business models, faster, we need better search strategies.
But, although startups can in some cases come up with mind boggling new business models, the overall success rate is quite low. That low success rate is at least partly because the search strategies many startups apply are not optimal.
Think about it. How does a startup search? What are the things it actually does in order to find those repeatable, scalable business models? When you read stories of startups that made it (or didn’t), it sometimes seems more like stumbling around in the dark than a conscious, directed effort.
When you’re in a startup yourself, or when you’re an investor, it makes sense to take a hard look at search, search strategies, and how to apply them more effectively. How can we become better at search? Can we create techniques and strategies that help us get better outcomes?
Business Model Innovation sessions based on books like Business Model Generation help you to get started on this, and they are certainly very effective — much more so than traditional business plans, since instead of focusing on a single solution they explore multiple options.
But in terms of search, they can be much better. What if instead of exploring a handful of options it would be possible to search and compare hundreds or even thousands of business model options? What if the possible performance of business model options could be simulated and compared? What if it would be possible to create algorithms that support the human creativity in the innovation process with the raw power of simulation?
We need Search Algorithms for Business Model Innovation
The first step to exploring the enticing ‘what if’ scenarios mentioned above is to take a hard look at search and search strategies, applying it to business model innovation. In upcoming posts, I plan to dive into this topic in detail, finally coming up with a step-by-step algorithm for a better search for new business models. I’ll look at concepts such as search space, the fitness function, the fitness landscape, local and global maxima/minima, and hill climbing.
If you’re interested to know more, please let me know!
