Technological modeling is a discipline which provides 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 businessmodel. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
Continuous Innovation As The Basis Of Technological Modeling
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).
The premise of technological modeling, according to FourWeekMBA, is to have a built-in continuous innovation approach, part of the company’s core businessmodel. This is critical to keep improving day after day the experience and develop incremental products that meet and surpass customers’ expectations.
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.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.
Barrelling Things Out With Tech Bets
Digital transformation enables existing businesses to leverage digital technologies for business model innovation. The process of digital transformation is not just about new distribution channels. It starts by better serving key customers, and it completes by developing a new business mindset required to succeed in the digital era.
On the other side of the barbell, there are investments in technologies and products that have the potential to take a leap forward and potentially make the current business model irrelevant. And yet, those are the bets that will make the company survive in the long-run.
Balancing Things Out With A Long-Term Unbalanced Approach
In short, a technological model can be used as a framework to manage tech investments for companies. Technology is a value proposition enhance, and as such, it can make a business more relevant and make a whole business model irrelevant in the long-term.
FourWeekMBA proposes a barbell approach to technological modeling. On the one side, the company keeps tweaking its business model with a continuous innovation approach. And on the other side, it invests in technological innovation that instead can make the business leap forward and also potentially make the whole current business model irrelevant in the long-term.
Key Highlights of Technological Modeling:
Continuous Innovation: Technological modeling emphasizes the importance of continuous innovation as a core part of a company’s businessmodel. This approach focuses on improving products and services to exceed customer expectations and involves a continuous feedback loop.
Four Types of Innovations: The four main types of innovations based on problem and domain definitions are: basic research (undefined problem and domain), breakthrough innovation (defined problem and undefined domain), sustaining innovation (both problem and domain defined), and disruptive innovation (defined domain and undefined problem).
Customer-Centric Approach: Continuous innovation requires products and services to be designed and delivered based on customers’ problems rather than solely on technical solutions favored by the founders. Understanding key customers is a crucial step in driving business model innovation.
Digital Transformation: Technological modeling leverages digital transformation to enhance business model innovation by adopting digital technologies and better serving key customers.
Barbell Strategy: The technological modeling approach suggests a “barbell” strategy, where a company balances its investments between continuous innovation for incremental improvements and bets on technological breakthroughs that can potentially make the current business model irrelevant.
Long-Term Outlook: Technological modeling takes a long-term unbalanced approach by investing in breakthrough technologies that can lead to significant advancements and secure the company’s survival in the future.
Technology as a Value Proposition: Technology is seen as an enabler of value proposition enhancement. It can make a business more relevant, but it can also render the entire business model obsolete in the long run.
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 an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.
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 businessmodel. 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.
A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid 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.
