Innovation is your business model, not your app

By Editor January 17, 2013
Adam Lavine, FunMobility

Adam Lavine, FunMobilityBy Adam Lavine, FunMobility co-founder and CEO

Many first-time entrepreneurs confuse features with business innovation. It’s easy to think that an innovative piece of technology will make you successful in business. “This was really hard to build,” thinks Johnny Startup, “So it must be worth a lot of money.”

The sad reality is that there’s often little correlation between technical innovation and market value. This is not to say that innovative technical development isn’t important—it is. But to assume that just because your offering is loaded with innovative features you’ll be successful can be life-threatening to a startup. Lots of companies that have spawned an Instagram competitor with tons of complex photo or video filters have learned this the hard way. R&D can be a resource black hole that will happily devour your time, money and energy without delivering business value in return.

To truly create a business of lasting value, you must apply innovation to your business model, not just your technical offering. This means innovation and synergy across your product, marketing, distribution, operations—essentially your use of capital. Fitting together these pieces in unique and compelling ways will give you a better shot at creating long-term value for your stakeholders: shareholders, employees and yourself. And the less time you spend developing the technology at the core so you can test the assumptions of that business model, the better off your stakeholders will be.

Why Do We Exist?

In Patrick Leonconi’s must-read ‘The Advantage’ he says businesses have to answer a simple question: ‘Why Do We Exist?’  This is related to Simon Sineak’s ‘Start with Why’ approach, and all boils down to figuring out how you make the world a better place. You do this by solving somebody’s real-world problem. That ‘somebody’ is your customer and the ‘problem’ you’re solving is your unique value proposition. Ideally, this is a big problem, so they will pay you lots of money to solve it. This is much easier if you are a B2B company—then you just have to figure out how you either make or save your customer money. If you are a B2C company it gets more challenging, because you are dealing with nuances of value, convenience, taste and perception. Either way—figure it out. If you can’t succinctly explain why you exist, then you’re probably not solving any meaningful problems.

Be a Purple Cow

Once you’ve tackled your reason for being, then you need to figure out how you reach your customer with your product or service. This involves thinking through marketing, distribution and pricing. First marketing: how do you want people to perceive your offering? Ideally it’s something distinct that pops. Marketing guru Seth Godin calls this the ‘Purple Cow’ effect—a product or service that appears so different it stands out from all the other black and white cows. This is all about positioning your product in your prospect’s mind so they have a clear understanding of what you’re selling and why they would want it. If you don’t have ultra-crisp positioning, then your prospect will make up their own mind as to what your product is. People like to categorize products and services, so make sure you put it in the right category with proper positioning and clear, benefit-driven marketing.

Create Distribution

Distribution is key. Crappy products with great distribution will often beat the inverse. Launching your cereal-rating app on the app store is not distribution. Putting a QR code on the back of every Rice Krispies box is more like it. Distribution means creating selling relationships with other businesses that are incented to sell your product or service, or creating demand yourself in cost-effective ways. You need to pick the right method of distribution for your product. Bic pens are distributed through pharmacies and supermarkets near cash registers as impulse buys. Mont Blanc pens are sold by jewelers and high-end stationary stores as status and gift items. Finding the right match of distribution to your type of product or service will help you maximize the selling potential of your offering.

Be a Business, Not a Hobby

All of this boils down to having a clear, defensible business model. If you don’t have a clear model, then what you’re doing is a hobby, not a business. Nothing wrong with that, but don’t expect investors to fund your hobby. On the other hand, if you can come up and clearly communicate innovative ways to build, market, and distribute products that generate more than they cost to build, you have a solid chance at attracting investment dollars.

Anybody can come up with an idea. That’s the easy part. Creating an innovative business model, and attracting and managing the team and money to make it a reality is the tough part. It’s also the fun part—there’s nothing better than making your vision into a reality, and generating value for everyone involved.

Good luck!

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Adam leads the charge at FunMobility ( to enable next-generation mobile relationship management products and services. Adam has bootstrapped FunMobility with minimal funding through many periods of change and growth, building solutions for customers including Disney, Little League, Universal, Chiquita, Nickelodeon, Verizon, AT&T, T-Mobile, and many more. Adam is a passionate student of technology, business and the arts, as well as being involved in various charitable causes.