Unsustainable Business Models: They Skip the “Search” Phase

In this blog post on Strategyzer, Nabila Amarsy outlines the 3 essential requirements to make a business venture successful:

• The Right Value Proposition
• The Right Business Model
• Flawless Execution

This might seem like common sense, but Amarsy goes on to define what she calls the “search” phase of developing a business idea and how its absence lies at the root of many unsuccessful business ventures. The “search” phase takes place in conjunction with the first 2 requirements outlined above, and basically means “producing market evidence that an idea is going to work”. This phase can be viewed as a loop (refer to the picture above) that occurs until enough research, prototyping, and testing has been done to conclude that the idea will work. Skipping the “search” phase is referred to as premature scaling, and Amarsy claims it can kill any business. Flawless execution can then only be successfully achieved after appropriately exiting the “search” phase.

What do you guys think about this? Should Christenson (and others) have included this in his article “Reinventing the Business Model”? Do you think many people just assume their idea is great because they themselves (and maybe a select inner grouping of people) think so? And what of the companies that skip this phase but are still successful (such as large corporations that invest heavily in R&D, which Amarsy points out is not synonymous with “searching”)? Are they just lucky? And how much time should be invested into the “search” phase? Finally, this idea is very appropriate for our capstone project. How many teams think they successfully conducted a “search” phase that enabled them to conclude their idea was worth pursuing?

————————————————————————————————————————————————————

“We’re a classic MBA case study in how not to introduce a product. First we created a marvelous technological achievement. Then we asked how to make money on it.”

–Iridium Interim CEO John A. Richardson, August 1999