The Hook Model is a framework designed by Nir Eyal, author of the book “Hooked,” which consists of four elements: trigger, action, reward, and investment. This is a process of gamification that helps startups create habit-forming products.
Background story
As I dive into the startup world, I find out about a staggering truth. It isn’t a fight about power, prestige, or money. Instead, another currency that, as we progress, becomes more and more scarce is at the center of this battle. It is all about people’s attention.
That attention gets triggered and channeled by a set of hooks, that make the users wanting more in this fight over people’s attention.
The boundary between product development and people’s manipulation is thin. Thus, my dilemma is how to make sure we’re building an ethical product? Before finding the answer, let me give you a quick introduction to the Hook Model.
The Hook Model
Source: NirandFar.com
Instead of relying on expensive marketing, habit-forming companies link their services to the users’ daily routines and emotions. ― Nir Eyal, Hooked: How to Build Habit-Forming Products
For anyone running a startup, the Hook Model is one of those frameworks you must keep on top of your mind. A four-step framework, from the trigger to investment and back to trigger. The user builds a habit that makes her wanting more and more of that product.
A trigger is “the spark plug in the Hook Model.” Usually, an external trigger (e.g., a push notification from your phone) connects with an internal trigger (boredom) to bridge the gap between the user and the product. Once triggered into the model, the user is incentivized to act (open your phone when seeing the push notification from Facebook).
The core of making a product habit-forming is its variable reward. In short, our brain expects a reward, and it prepares for it. Yet after meeting the expected reward if the user finds an additional unexpected reward it gets almost hooked.
Before the user leaves, it is time to ask for investment regarding time, data, effort, social capital, or money.
Big companies all over the world; from Facebook to LinkedIn, hooked us, and we can’t live without their services.
Therefore the model is so powerful that it brings up a few questions on what is the proper way of using it.
Indeed, with such a robust framework, how do we make sure to use it for good? Nir Eyal proposes the drug dealer test.
Ethics: A Problem as Old as Humankind
Bad people…are in conflict with themselves; they desire one thing and will another, like the incontinent who choose harmful pleasures instead of what they themselves believe to be good. ― Aristotle, Nicomachean Ethics
Ethics is not an easy issue. Deriving from the Greek ἦθος, meaning habit, custom. Ethics is an attempt to discern between good and evil, right or wrong. In other words, to define what are the absolute human values that should be part of anyone’s life.
Per se, this approach is utopian and doomed to failure. Things are often shaded. They’re neither right nor wrong on their own. Instead, based on context, perspective, and cultural norms, most human behaviors are goal-driven.
Also, ethics is the byproduct of human cultural evolution. What was right in the past it is considered unjust nowadays.
We have reasons to believe that what we deem right today will be regarded as wrong tomorrow. How do we solve this impasse?
Rather than focusing on theoretical differences and definitions, we could use a much simpler approach.
For instance, in the startup world, we could define ethics as a process. That process leverages unconscious clues and hooks. But it also should bring towards conscious behaviors.
The final aim is to improve the user’s mental well-being. In short, those hooks should be accompanied by a strong ethical understanding.
In this respect, Nir Eyal proposes an interesting framework.
Ethical Manipulation: The Drug Dealer Test
Source: NirandFar.com
As Nir Eyal explains the first rule of drug dealing is “never get high on your own supply.” If you want to build an ethical product, you have to break this rule!
Indeed, the Manipulation Matrix is a two questions quadrant to assess whether the product you’re building is ethnically manipulative. The first question is, “Do you believe that the product or service you’re working on is materially improving people’s lives?”
The answer is either “Yes” or “No.”
Yes classifies you as a peddler. No, classifies you as a dealer.
The second question is, “am I the user?”
“Yes,” puts you in the facilitator quadrant.
“No” makes you the entertainer.
According to Nir Eyal, the companies that are successful at building ethical habit-forming products are those whose founders turned out to be also facilitators.
Of course, as those companies scaled up, it’s hard to keep this distinction in mind, but it’s a good place to start to understand how to counterbalance a powerful framework like the Hook Model, with ethical checks and balances.
Business modelinnovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.
The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovation management model based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.
According to how well defined is the problem and how well defined the domain, we have four main types of innovations: basic research (problem and domain or not well defined); breakthrough innovation (domain is not well defined, the problem is well defined); sustaining innovation (both problem and domain are well defined); and disruptive innovation (domain is well defined, the problem is not well defined).
That is a process that requires a continuous feedback loop to develop a valuable product and build a viable businessmodel. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.
Disruptive innovation as a term was first described by Clayton M. Christensen, an American academic and business consultant whom The Economist called “the most influential management thinker of his time.” Disruptive innovation describes the process by which a product or service takes hold at the bottom of a market and eventually displaces established competitors, products, firms, or alliances.
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
Sociologist E.M Rogers developed the Diffusion of Innovation Theory in 1962 with the premise that with enough time, tech products are adopted by wider society as a whole. People adopting those technologies are divided according to their psychologic profiles in five groups: innovators, early adopters, early majority, late majority, and laggards.
In the TED talk entitled “creative problem-solving in the face of extreme limits” Navi Radjou defined frugal innovation as “the ability to create more economic and social value using fewer resources. Frugal innovation is not about making do; it’s about making things better.” Indian people call it Jugaad, a Hindi word that means finding inexpensive solutions based on existing scarce resources to solve problems smartly.
A consumer brand company like Procter & Gamble (P&G) defines “Constructive Disruption” as: a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. According to P&G, it moves around four pillars: lean innovation, brand building, supply chain, and digitalization & data analytics.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.
Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.
Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.
The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
Source: NirandFar.com 
