Use the Question Framework Exercise to discover new business models and better ways to create value for your customers.
Let’s face it, most businesses are pretty underwhelming. They offer similar goods at about the same price points, generally with lousy service. For every Apple, there are dozens of other companies competing on price. For every, Zappos, there are countless competitors basically doing the same as everyone else. Creativity and innovation are the only ways to stand out above the competition. That generally means radically reinventing your business model.
The Question Framework Exercise
Here is my Question Framework for developing new business opportunities. It is best done with a diverse team of people but it can be valuable for individuals as well.
Don’t dismiss any ideas. The entire point is to examine the furthest extremes to see if there is any value at that edges. That is how breakthroughs are achieved. You can’t incrementally improve your way to a new business model. That is exactly the reason small and nimble startups are devastating old industries. Blockbuster didn’t create Netflicks and Microsoft didn’t create Google. They couldn’t have. It would have required a radically different way of thinking.
The Question Framework Exercise can help you discover radical and compelling business models. Doing what everyone else is doing is the road to declining profit margins and intense competition.
Get out some flip charts or paper the walls of a room and write the following questions at the top of each section:
Who? What? Where? Why? When? How? How much? How many?
Many people are visual learners so I find it helpful to draw simple icons for each major idea. For example, a stick man with a question mark can be used for “Who?” “What?” might be a box with a question mark, etc.
Don’ t be afraid to jump around and add ideas where every they fit. Keep it very unstructured in the beginning.
In this example, I used a cafe owner.
Who buys? – Students doing homework, business people meeting or using the Internet, commuters getting coffee on the way to work. etc.
From here you can start experimenting.
- Students – Does it make sense to create a social venue for concerts, art exhibitions, etc.
- Business people – could this be a shared office space? Maybe they want private offices or conference rooms.
- Commuters – Could you sell a full breakfast? Do you need a drive through window to speed up the sales process? Should you be at a gas station or near a busy intersection because commuters are stopping there anyway?
- Coffee connoisseurs – Should you focus on premium coffees?
- Who delivers? – students, housewives, perhaps you could partner with another deliver service to jointly distribute.
- Who makes it? – Bikini clad servers, coffee experts, vending machines?
- Who is the most profitable segment?
- Who is the least profitable?
As you can see above, what you sell is directly related to who is buying. For all the charts, you can put your main customer segments down the left side (students, business people, connoisseurs, commuters, etc.)
What do you sell? Are you selling coffee or a comfortable place for people to meet?
- Coffee – Could you offer more variety? Higher quality? A variety of roasts? More ethically sourced coffee?
- Meeting Space – Should you have more comfortable chairs? Should you have private meeting rooms? Should the atmosphere be lively or quiet?
- Convenience – Are several small kiosks better than a larger cafe?
- Coffee Culture – Should you market high-end coffee makers and espresso machines.
What complimentary products and services could you offer for each of the segment you identified in the “Who?” section.
- Students – Copy and printing services. Designer T-Shirts,
- Business People – Networking groups, office space, answering service.
- Commuters – dry cleaning drop off service
- Connoisseurs – gourmet beans, high-end espresso machines
What would change in your business if you simplified your product offering?
- For example, only 3 or 4 espresso products with one or two pastries.
- Maybe you could offer better quality products at a lower price.
- Maybe this would make the ordering process more streamlined so customers would get served faster.
What if you greatly expanded your offering?
- 100 different coffee beans.
- Maybe you would attract the aficionados.
- Maybe customers would buy in much larger quantities.
Again, as you start hashing out these questions you will notice overlap. Where you sell will depend on the segments you discovered in the “Who?” section.
Where do you sell?
- Are you selling premium coffees that people take home?
- Maybe it could be an Internet focused business?
- Maybe you could have a monthly coffee subscription?
- Should you be located in a trendy coffee district or near busy thoroughfares?
- Should you set up near a university?
- Should you be in a high end furniture district?
- Should you deliver coffee directly to offices?
- Should you do catering services for meetings?
Why would customers choose your company?
- Are you socially conscious?
- Do you have the best coffee?
- Are you the cheapest?
- Do you have the best selection?
- Is the atmosphere of the cafe important?
- Are you active in the community?
- Loyalty programs?
- Innovative marketing?
When do customers buy?
- In the morning?
- During working hours?
- On the weekend?
- After school?
How do customers buy?
- Drive through windows?
How is the coffee made?
- Automated vending machines?
- Expert barristas?
How is the coffee sourced?
- Purchased directly from growers.
- Investing in developing countries.
How is the coffee roasted?
- Onsite so that there is always a roasting aroma.
- Does this add to the experience of the cafe?
- Should you be very expensive to convey exclusivity and high quality?
- What if you doubled your prices? What would you have to change to keep customers? Would you be more profitable?
- Could you offer the coffee for free, in exchange for advertising on cups or the up sell of other products?
- Could free coffee be the loss leader for other products?
- Could the coffee be an inexpensive sampler to get consumers to buy beans?
- Are you selling one cup of coffee at a time or are you focusing on large conferences and events where you sell hundreds?
- Could you have a buyers club for beans where you can offer discounts if enough people agreed to purchase at the same time?
- How many locations? Should you have kiosks on both sides of a street to make it easy for commuters to quickly stop by?
- How would the business change if you had no staff? (vending machines)
- What if you tripled the staff and increased the quality?
- What if you had ten times the volume in one location? What would you have to do differently?
These questions and answers are just a starting point. A good group of people can come up with many more opportunities in a short time. Don’t dismiss outrageous ideas because that is where the real breakthroughs are discovered.
Other companies have succeeded by asking questions like:
- What if we didn’t use the hub and spoke model for airlines?
- What if we gave our product away for free and made it up with advertising?
- What if we stopped using gasoline powered cars?
- What if we don’t need to physically attend a university to learn?
- What if we didn’t rent an office space any longer?
- What if workers could work any hours they wanted?
- What if our employees were all over the world and never met?
Question your assumptions and you will find new opportunities. It is important to learn from the past, but don’t let the old way of doing things constrain your possibilities.
If you need help discovering new business models, I can help. Email me at (john (at) ideaeconomy (dot) net.
Dan Roam’s book The Back of the Napkin offers some great techniques for both visually representing ideas and questioning assumptions.
Download the Business Model Canvas for a different look at the same types of questions from Business Model Generation.