The BUSINESS MODEL PREMORTEM GAME: Why and How Your Business Model Could Crash

Business Model Premortem Game

Dr. Rod King

ROD U

Why and How Your Business Model Could Crash A Holis(c Perspec(ve

Following Elements of a Business Model Crash Are Based on the Content of

Saar Gur’s (DraC) Presenta(on to Stanford Graduate School of Business

“WHY MOST STARTUPS FAIL AT ACQUIRING NEW CUSTOMERS

(And How You Can Succeed!)”

January 2014

(h#p://www.slideshare.net/saarsaar/why-‐most-‐startups-‐fail-‐at-‐acquiring-‐new-‐customers-‐and-‐how-‐you-‐can-‐succeed)

#4ROD. Dr. Rod King. [email protected] & hSp://businessmodels.ning.com & hSp://twiSer.com/RodKuhnKing

A Business Model Illustrates

How an OrganizaYon Creates, Delivers, and Shares Value (Happiness)

A Business Model consists of three sub-‐models or 3 Ps: q  P: Provider’s Model: Create Value q  P: Player’s Model: Deliver Value q  P: Performance Model: Share Value (Happiness)

Gary Klein’s Premortem Technique

“We’re looking in a crystal ball, and this [business model] project has failed;

it’s a fiasco. Now, everybody,

take two minutes and write down all the reasons

why you think the project failed.”

P: PROVIDER’S MODEL

P: PLAYER’S MODEL

P: PERFORMANCE MODEL

delivers

requires

drives

requires


Level

1 2 3 4 53P-‐BUSINESS MODEL NETWORK: Anatomy of Business Model

Profitably Create, Deliver, and Share Happiness

delivers

requires

drives

requires


3P-‐BUSINESS MODEL NETWORK: Anatomy of a Business Model Crash Profitably Create, Deliver, and Share Happiness

Level

1 2 3 4 5


P: PLAYER’S MODEL


Revenue (Delight): q Declining or no sales

(revenue streams) q Poor customer engage-‐

ment/acquisitn/retentn

Inputs/Partners q  Few or no mentors/guides/

coaches/partners q  Inadequate funding

Internal Resources q  Team with inadequate

competence/synergy for doing con(nuous innova(on and improvement projects

Channels & RelaYonships q Poorly selected/sub-‐op(mal

channels q Poor customer rela(onships

Player/Gamer/Customer/ Job-‐To-‐Get-‐Done q Undefined customer persona q Undefined customer problem,

needs, or job to get done

Cost (Pain): q High Admin/Staff Cost q Costly infrastructure q High Customer Life(me

Cost (CLC)

PERFORMANCE (PROFIT; VALUE) q High Unit Cost or CLV q Liele Sales or No Profit q Bankruptcy/Failure

Product/Service; Value ProposiYon q Bad, “buggy”, or poor quality

product/service q No or Bland Value Proposi(on

Processes/AcYviYes q  Focus on Waterfall (Sequen-‐

(al) Planning/Execu(on q  Poor Strategy/Execu(on q  Slow or inadequate learning

delivers

requires

drives

requires

drive(s)

(NO Problem

-‐Solu(

on Fit; N

O Produ

ct-‐M

arket F

it)


Level

1 2 3 4 5


P: PLAYER’S MODEL

















Cost (CLC)




delivers

requires

drives

requires

drive(s)

(NO Problem

-‐Solu(

on Fit; N

O Produ

ct-‐M

arket F

it)


Level

1 2 3 4 5


P: PLAYER’S MODEL



















Cost (CLC)


impact(s) affect(s)

impact(s) deliver(s)

impact(s)

impact(s)

affects

affect(s)

affect(s)

impacts

delivers

requires

drives

requires

drive(s)

(NO Problem

-‐Solu(

on Fit; N

O Produ

ct-‐M

arket F

it)


Level


P: PLAYER’S MODEL


1 2 3 4 5

Channel Management

Customer Rel. Management

MarkeYn

g/Sales M

anagem

ent













Cost (CLC)







Environmental Constraints Influencing

A Business Model Crash

S: Stren

gths

O: O

pportuniYe

s

W: Weaknesses

T: Threats #4ROD. Dr. Rod King. [email protected] & hSp://businessmodels.ning.com & hSp://twiSer.com/RodKuhnKing

1 2 3 4 5

Level


P: PLAYER’S MODEL


Value Crea)on: PROVIDER

Value Sharing (Happiness): PERFORMANCE

Value Delivery: PLAYER

3P-‐BUSINESS MODEL NETWORK: “SWOT” Factors of a Business Model Crash Profitably Create, Deliver, and Share Happiness

ENVIRONMENT


P: PLAYER’S MODEL



1 2 3 4 5

Level 3P-‐BUSINESS MODEL NETWORK: Environmental Factors of a Business Model Crash Profitably Create, Deliver, and Share Happiness




Indu

stry Ecosystem

(IE): Sup

ply

Market E

cosystem

(ME): D

eman

d

Key Trends & Complementors (KTC): PESTLIED (-‐/+)

Macro-‐Economic Influencers (MEI): Global Economy #4ROD. Dr. Rod King. [email protected] & hSp://businessmodels.ning.com & hSp://twiSer.com/RodKuhnKing

1 2 3 4 5

Level


P: PLAYER’S MODEL





3P-‐BUSINESS MODEL NETWORK: Environmental Factors of a Business Model Crash Profitably Create, Deliver, and Share Happiness

Bargaining Pow

er of Sup

pliers

Bargaining Pow

er of C

ustomers

Threat of New Entrants

Threat of SubsYtute Products or Services #4ROD. Dr. Rod King. [email protected] & hSp://businessmodels.ning.com & hSp://twiSer.com/RodKuhnKing

1 2 3 4 5

Level


P: PLAYER’S MODEL





3P-‐BUSINESS MODEL NETWORK: Local Industry Factors of a Business Model Crash Profitably Create, Deliver, and Share Happiness

On Tools for The Business Model Premortem Game

TRADE-‐OFF MAP: Tools for the Business Model Premortem Game

LEAN STARTUP METHOD

Ideal Final Result (IFR): Insanely Great Experience (Happiness) or Ideal Business Planning and Management

Low (1)

High (10)

Low (1)

High (10)

(+): DE

LIGHT

: Re

ward (Pay-‐off)

Big Urgent Market Problem (BUMP): ………………………………………………………………………………………………………………………… Job To Get Done (Market/Goal/Mo(va(on): ………………………………………………….………………………………………………………….

SIX SIGMA METHOD LEAN STARTUP-‐SIX SIGMA GAME

(Business Model Premortem Story)

AGILE DEVELOPMENT

(-‐): PAIN: Cost (Time)

WATERFALL PLANNING

Guy Kawasaki on the Premortem Technique

“A premortem is the best way that I know

to increase the probability of a project's success. It means you tell the team

to assume that the project failed and then come up with the reasons why it failed.

Then you eliminate as many of those reasons as possible.”

Daniel Kahneman, 2002 Nobel Prize Winner in Economics, on the Premortem Technique

“The premortem is a great idea. I menYoned it at Davos—giving full credit to Gary—and

the chairman of a large corporaYon said it was worth coming to Davos for.

The beauty of the premortem is that it is very easy to do.

My guess is that, in general, doing a premortem on a plan that is about to be adopted

won’t cause it to be abandoned. But it will probably be tweaked in ways that

everybody will recognize as beneficial. So the premortem is a low-‐cost, high-‐payoff kind of thing.”

Business Model Premortem Game “Playing Dead in Business and Life”

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