Seizing the White Space for Innovation

Seizing the White Space for InnovationA while ago I received Seizing the White Space by Mark W. Johnson in the mail. Seizing the White Space is an approachable 200 pages, and is an easy, and pleasant read.

Mark W. Johnson is chairman of Innosight, a strategic innovation consulting and investing company.

The book is focused on business model innovation and introducing a simple framework for thinking about potential business model innovations and evaluating the positives and negatives of a potential business model. The book first defines ‘white space’ with the following two-by-two matrix:

White Space Four Box

After reading the book I was left with two questions that I would love your feedback on. If business is about margin and profit maximization:

  1. Are companies typically better served by moving into white space areas or by licensing their IP to someone for whom the activity is core (or pursuing some other type of external collaboration)?
  2. Why do many organizations think that they have to develop an opportunity or otherwise hide it away?

One of Mark Johnson’s initial points is that we lack a shared vocabulary for discussing and comparing business models. As a solution Mark offers up his four-box business model framework:

Four Box Business Model Framework

Looking briefly at the four elements from the four box business model, they are as follows:

Customer Value Proposition (CVP) – An offering that helps customers more effectively, reliably, conveniently, or affordably solve an important problem (or satisfy a job-to-be-done) at a given price.

Profit Formula – The economic blueprint that defines how the company will create value for itself and its shareholders. It specifies the assets and fixed cost structure, as well as the margins and velocity required to cover them.

Key Resources – The unique people, technology, products, facilities, equipment, funding, and brand required to deliver the value proposition to customers.

Key Processes – The means by which a company delivers on the customer value proposition in a sustainable, repeatable, scalable, and manageable way.

The book talks a bit about non-consumption as a source of opportunities and how there are often four main barriers to non-consumption:

  1. Wealth
  2. Skills
  3. Access
  4. Time

In addition to showing how you should try and pursue business model innovation, the book also tries to share some cautionary tales of how not to do it, including visible cases like Delta’s Song effort, and lesser-known cases like SAP’s Pandesic effort.

There is also a great quote in the book from A.G. Lafley that I’d like to share:

“Innovation is risky but it’s not random. Innovators have a disciplined invention process. They may not be able to articulate it, and sometimes the Eureka! moment happens in the shower, but it stems from a disciplined process.” – A.G. Lafley

Finally, as intrapreneurs seek to solve customer jobs-to-be-done along functional, emotional, or social aspects, management needs to remember that business model innovation projects require an incubation period before accleration can occur. This incubation period may need to be several years. So, if your organization is serious about business model innovation, is it willing to make the kind of financial and time commitment to launch a business model innovation and work on getting the business model right and seeing if it will scale by testing it in the marketplace?

Taken all together I found “Seizing the White Space” to present a clear approach to evaluating not only potential new business models, but for evaluating your current business model as well.

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Braden KelleyBraden Kelley is a popular innovation speaker, embeds innovation across the organization with innovation training, and builds B2B pull marketing strategies that drive increased revenue, visibility and inbound sales leads. He is currently advising an early-stage fashion startup making jewelry for your hair and is the author of Stoking Your Innovation Bonfire from John Wiley & Sons. He tweets from @innovate.

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No Comments

  1. Duane Grove on July 14, 2012 at 10:11 am

    In answer to your first question, my own years of experience have shown that organizations so invested in their core rarely have the agility to move quickly enough with a white space idea to capitalize on it. The inertia of the organization keeps pulling the new idea back into the way the core functions and its values. Therefore by the time there is sufficient commitment to move, it’s usually too late. I encourage clients to consider either licensing or strategic partnering if the idea has great potential but high probability that it will languish in the current environment. Too many companies are just sitting on patents and other IP they can’t seem to capitalize on.

    That gets to your second question. The traditional model of IP says if you have a great idea, protect it with all the means you have at your disposal. This is why in fact far too many organizations fail to capitalize on open innovation where a good idea could become a truly great one. The fear is that exposing an idea will mean you no longer control it. This may be true, but as I tell clients, if they aren’t agile enough to move from idea to results in time to hit the market window, then they’re better off turning the effort over to someone who is, and working out an equitable compensation for it.

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