Strategy: from ideas to value propositions to business models

Ideas are easy. Ideas are free, they’re everywhere. The hard thing is turning ideas into value propositions that customers want, and business models that can scale.

How many projects do I need to invest in to create the next growth engine?

It turns out, you’d actually need to invest in 250 projects. You start with small bets first, and then gradually you filter out those ideas that don’t work, not based on a beautiful powerpoint presentation but based on evidence from the market. And gradually you’ll get to those that win. So the big lesson here is that you can’t pick the winners. You need to invest in “the losers”.

Where do I take this data from? … If you look at early stage venture investment, which is a great proxy, 65 percent of all ideas fail. 25 percent return a little bit of capital, so you invest 100 you may get 500 back. So where do the outliers come from? It’s from a small number … it’s basically four out of a thousand, or one out of 250 [that provide massive returns].

So if you want growth to happen, you need to create the playground, the boundaries, for these ideas to emerge. You need to allow people to experiment and have projects in parallel, so that you can win. That’s what strategy is about: creating the conditions for ideas to emerge. It’s not “hey this is a good idea, we make a big bet, and we execute.”

There are only a few companies in the world that have created these conditions, and it’s not a miracle or a coincidence that Amazon has grown so quickly, because when you have a leader who says “Amazon is the best place in the world to fail” and he admits that “invention and failure are inseperable twins,” you have a completely different culture for those ideas to emerge.

Alex OsterwalderGlobal Peter Drucker Forum 2018

The new possible

My sister (let’s call her Sharky) bought me a book for Christmas.

Sharky lives in Argentina.

She bought the book from a shop in the UK.

I’m on holiday in a remote part of Indonesia.

She bought the book, told me about it, and I was reading it, in less than ten minutes.

This is the new reality – actually, not even that new anymore. Any information product (book, film, music, software, design) can go anywhere, in effectively no time.

The new possible consists of the things that this reality enables – not just instant access to information products, but information to go into products (3d printing designs, specifications) or for the delivery of products and services (your exact requirements or preferences, your real-time location, your purchase history, your credit rating).

What becomes possible in your field when the information is so relevant and so available, when the transaction becomes so fast, so frictionless?

AirBnB, and Uber are cannonical examples of the new possible, to which I’d add the fact that this year, Sharky bought me a Christmas present.

Deep literacy: Kevin Kelly on more than reading

… producing books with ease on Gutenberg’s press did not fully unleash text. Real literacy also required a long list of innovations and techniques that permitted ordinary readers and writers to manipulate text in ways that made it useful. For instance, quotation symbols make it simple to indicate where one has borrowed text from another writer. We don’t have a parallel notation in film yet, but we need one.

Once you have a large text document, you need a table of contents to find your way through it. That requires page numbers. Somebody invented them in the 13th century. Where is the equivalent in video?

Longer texts require an alphabetic index, devised by the Greeks and later developed for libraries of books. Someday soon with AI we’ll have a way to index the full content of a film.

Footnotes, invented in about the 12th century, allow tangential information to be displayed outside the linear argument of the main text. And that would be useful in video as well.

And bibliographic citations (invented in the 13th century) enable scholars and skeptics to systematically consult sources that influence or clarify the content. Imagine a video with citations. These days, of courses we have hyperlinks, which connect one piece of text to another, and tags, which categorise using a selected word or phrase for later viewing.

All these inventions (and more) permit any literate person to cut and paste ideas, annotate them with her own thoughts, link them to related ideas, search through vast libraries of work, browse subjects quickly, resequence texts, refind material, remix ideas, quote experts, and sample bits of beloved artists.

These tools, more than reading, are the foundations of literacy.

Kevin KellyThe Inevitable

On making stuff: that Steve Jobs quote

When you grow up you tend to get told the world is the way it is and your life is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family life, have fun, save a little money.

That’s a very limited life. Life can be much broader once you discover one simple fact, and that is – everything around you that you call life, was made up by people that were no smarter than you. And you can change it, you can influence it, you can build your own things that other people can use.

I think that’s very important and however you learn that, once you learn it, you’ll want to change life and make it better, cause it’s kind of messed up, in a lot of ways. Once you learn that, you’ll never be the same again.

Steve Jobs

Anything yet: never a better time

When should you start?

The internet feels saturated with apps, platforms, devices, and more than enough content to demand our attention for the next million years. Even if you could manage to squeeze in another tiny innovation, who would notice it among our miraculous abundance?

But, but… here is the thing. In terms of the internet, nothing has happened yet! The internet is still at the beginning of its beginning. It is only becoming. If we could climb into a time machine and journey 30 years into the future, and from that point look back to today, we’d realize that most of the greatest products running the lives of citizens in 2050 were not invented until after 2016. People in the future will look at their holodecks and wearable virtual reality contact lenses and downloadable avatars and AI interfaces and say, “Oh, you didn’t really have the internet” – or whatever they’ll call it – “back then.”

And they’d be right. Because from our perspective now, the greatest online things of the first half of this century are all before us. All this miraculous inventions are waiting for that crazy, no-on-told-me-it-was-impossible visionary to start grabbing the low-hanging fruit – the equivalent of the dot-com names of 1984.

Because here is another thing the graybeards in 2050 will tell you – Can you imagine how awesome it would be to be an innovator in 2016? It was a wide-open frontier! You could pick almost any category and add some AI to it, put it in the cloud. Few devices had more than one or two sensors in them, unlike the hundreds now. Expectations and barriers were low. It was easy to be the first. And then they would sigh, “Oh, if only we realized how possible everything was back then!”

So, the truth: Right now, today, in 2016 is the best time to start up. There has never been a better day in the whole of history to invent something. There has never been a better time with more opportunities, more openings, lower barriers, higher benefit/risk ratios, better returns, greater upside than now. Right now, this minute. This is moment that folks in the future will look back at and say, “Oh, to have been alive and well back then!”

The last 30 years has created a marvelous starting point, a solid platform to build truly great things. But what’s coming will be different, beyond, and other. The things we will make will be constantly, relentlessly becoming something else. And the coolest stuff of all has not been invented yet.

Today truly is a wide-open frontier. We are all becoming. It is the best time ever in human history to begin.

You are not too late.

Kevin Kelly – The Inevitable – from chapter 1: Becoming

Further reading:

GNU-GPL – a base of code

Richard Stallman famously wrote the GNU GPL, which is a license based on copy-left, not copyright. His position is the freedom to work with computers and work with software and work with software is hindered by copyright.

That in fact these are useful tools, and there are people who want to make useful tools and remix the useful tools of people who came before. Everything you use in the internet – that website that you visited that’s running on Apache, that email protocol, you’re able to do it because so many other entities were able to share these ideas.

So the way copy-left works is that if you use software that has a GPL license to make your software work better, it infects your software, and you also have to use the GPL license.

So if it works right, it will eat the world. So as the core of software in GNU gets bigger and deeper, it becomes more and more irresistible to use it. But as you use it the software you add to it also becomes part of that corpus.

And if enough people contribute to it, what we’ll end up with is an open, inspectable, improvable base of code that gives us a toolset for weaving together the culture we want to be part of.

Seth Godin Akimbo, November 21 2018 – Intellectual Property

An open, inspectable, improvable base of code.

For software.

For tools for making software.

How about for educational outcomes? For assessments?

For a set of tools and resources for running an organisation?

Stan Lee (1922-2018) – What If?

The exact cover of the Marvel What If that Dave’s brother kept in a plastic folder


Stan Lee was brilliant and prolific.

We know him for Spiderman, the X-men, the Avengers, the Fantastic Four, Black Panther… for being the driving force behind Marvel Comics, now a multi-billion dollar, multi-media juggernaut.

It’s less well known that he started in the comics industry in 1939, aged seventeen, as a general dogsbody, lunch-fetcher and inkwell filler at Timely Comics (which would eventually become Marvel).

Lee must have had something about him – he became editor at 19 – but here’s the thing: he slogged it out writing comics – westerns, crime stories, horror and superhero work – for twenty two years without really hitting the big time. They say he chose Stan Lee as a pen name because he was worried he’d be embarrassed by his work in comics if he ever wrote the Great American Novel.

By the early 60s Lee was fed up, and ready to quit. The Fantastic Four was a last throw of the dice on his wife’s suggestion that he try writing the comics he wanted to write. There was nothing to lose.

He was forty-one years old.

The rest is history.

What if Stan Lee had never written the fantastic four?

Some takeaways:

Bootstrapping the non-profit organisation Rule 9

This is the ninth post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Rule 9: Become ever more professional

Professionals do it right, they make it work, and they don’t take it personally.

Seth Godin

Of course your non-profit organisation should be professional.

You need to: 

  • Show up – be there for the people you seek to serve
  • Show up – it takes time to get good at what you do
  • Show up – you need to go deep in the context that you’re serving, know your clients and their context really, really well. Few people do this
  • Show up – for your clients and your team, especially when you don’t feel like it today
  • Keep your promises
  • Do good work that no-one else can do (if only because no-one else will)
  • Make it work – which might mean going beyond your technical contribution and paying attention to the necessary ‘wrapper
  • Understand the full stack of skills that make your organisation’s work possible, and get a working knowledge of as many of them as you can
  • Specialise
  • Find partners, colleagues, friends who complement your skills and personality
  • Learn to get help, delegate
  • Do you work in the right way – find lasting solutions that don’t sacrifice things that are important to you on the way
  • Stay client-focused – there might be a ‘show’, and you might even have a big role, but it isn’t about you
  • Stay honest – the professional pushes back against donors with ideas that won’t work, or won’t help even if they do work, or that aren’t really about the clients (see Rule 1)
  • Stay honest – be clear about what you do and don’t, explain what’s not working, own your mistakes
  • Find the right price for your work – a price that enables you to do it sustainably and with space for human connection, ensuring of course that your work is worth more than people pay for it
  • Create more value than you capture
  • Communicate clearly – you have to take responsibility for knowing your audience, for being clear and convincing, for stopping from time to time to make sure you’re being understood
  • Build assets – deliberately do things that will make it easier tomorrow
  • Be there early
  • Start on time
  • Stop on time
  • Stopping on time means, with enough time to talk to people afterwards
  • Create boundaries that allow you to do good work, and to be generous
  • Be committed – overcome The Resistance (ala Pressfield)
  • Read and learn – all the time
  • Read within your field
  • Read outside your field
  • Read fiction, poetry – they’ll enrich what you do
  • Apply what you learn – try new things
  • Understand how new technologies have and are changing your work
  • Try to see the future
  • Think about what you do
  • Write about what you do
  • Connect with others that do what you do, or things like it
  • Be generous – share what you know

I’m stopping writing now, so that I can go and show up for some people by making pancakes.

Bootstrapping the non-profit organisation Rule 6: Scale is not a Reward (3)

This is the sixth-and-third post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

So what do finding the right size for your organisation and the Free Prize Inside approach to scale look like in practice?

Here are two examples from the charity I work for.

Scale and the right size

At the charity I work for, we produce graded reading books to support our literacy curriculum. These aren’t available elsewhere in Indonesia – especially not ones that can be tightly integrated with the curriculum – so we need to make them ourselves.

The catch is, that there’s an economy of scale to printing books. The cost-per-book of printing small runs of books costs more than three times as much as if you bulk print a thousand copies. In fact, a bulk-printed colour copy of a book costs less to print than a black and white photocopied version.

If we want to bring price down and quality up, we clearly need to print in bulk. The catch is, this takes a significant investment, and the only way to make it worth it is if we have thousands of teachers using our books – at which point they pay for themselves.

So a few years ago it became clear that if we wanted to serve more groups at a lower cost (which is a key factor in more groups being able to afford our program in the first place), we need to be big enough to make bulk-printing and storing thousands of reading books a realistic proposition.

Scale and the free prize

The best example of this that I’ve come across is how Amazon moved into web services and cloud computing with Amazon Web Services. In short, they built a huge amount of electronic infrastructure for their own use, then realise that they could share it with others.

Amazon gained a new revenue stream, and companies could run their online infrastructure on Amazon’s servers for a fraction of the cost of making their own. This created huge value for everyone (prizes all round!) – Amazon got richer, and a whole generation of companies (netflix, godaddy, airtable, hubspot, airbnb, coinbase,wetransfer, dropbox*) was able to offer services as if they were already big companies, and grow with their customer base, rather than needing a huge capital investment up front.

And look what it’s done for them:

(source: geekwire) – supposed to be an embed

*This is not to say that AWS is the most efficient way to do this – apparently dropbox is saving a fortune by migrating off AWS. But AWS allowed them to test and validate their business model before they spent huge amounts on hardware.

Scale, the free prize and the non-profit (1)

The free prize here came when at the same time as we were working out the above, we used the Business Model Canvas to study our (charitable) business model. It became clear that the books were an asset not just to us and our users, but to many other groups doing education work across Indonesia. They wanted books. We sorely needed an income stream.

By selling our books, our partners gained a useful resource to add value to their work, and we gained extra income for little additional effort. Prizes all round!


Scale, the free prize and the non-profit (2)

The other example of this is a work in process – we’re looking at sharing our curriculum and training materials online under a creative commons (open source) license.

This supports our core activity – equipping teachers to teach reading effectively – by allowing our users to review training sessions and check their technique. It might also come in handy for training future partners.

But it will also be a resource for anyone working in the same field as us – something that helps others that we can make available at no cost to ourselves. Free prize!

And of course, the free resources also help potential clients to hear about what we do, and perhaps makes them more likely to use or recommend our other services too.

Bootstrapping the non-profit organisation Rule 3: Serve Clients Eager to Pay for what you do (part 2 of 4)

This is the third-and-a-half in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Rule 3: Serve Clients Eager to Pay for what you do (part 2)

In a nutshell, Seth says that if someone isn’t eager to pay, they’re not your client. You get to pick. So work for people eager to pay.

Eager to pay and scaling the non-profit

This is where the bootstrapping mindset comes into its own in the world of non-profits and social programs. If you can find clients who are not only eager to “pay” time, attention and effort to user your product or service, but to actually pay money… you know you not only have a product that they think is valuable, but one that can cover some of its own costs – or better, cover all of its own costs. Or better, cover its own costs, with a little left over.

We’ve pretty much reached this point at the literacy non-profit I work for in Indonesia, and the potential is huge. Instead of looking at our bank balance and asking how many groups we can help, we’re looking at ourselves and asking how we can get better at what we do so that we can serve more groups – because the growth is paying for itself.

Our program is far from polished and perfect, but it seems to be working. In the old days we had a list of people waiting for our program – waiting for us to find the money to be able to train them. Now the people on the waiting list are finding their own money – and the wait is a lot shorter.

In fact, doing it this way has allowed us to serve more groups as a gift – not ‘for free’ but ‘at our expense, as a gift, because we love what you do’ – than we did back in the day when it was free.

Finding the clients who are eager to pay might well help you get your product or service to more of the people who are eager, but can’t.