Knowing a Winning Business Idea When You See One

            The article “Knowing a Winning Business Idea When You See One” by W. Chan Kim and Renee Mauborgne details ways companies can reduce uncertainty when assessing innovations and the commercial viability of new business ideas. Kim and Mauborgne describe three tools that business managers can use to evaluate the potential of new business ideas, over and above, develop coherent approaches for becoming successful at business innovation. The three tools proposed by the authors are the buyer utility map, the price corridor of the mass, and the business model guide. This paper will provide a critique of the article and assess both its strengths and shortcomings.

The article, which is geared towards business executives and entrepreneurs, presents its arguments in a rather convincing manner. It theorizes that creating exception utility requires that organizations first identify the array of utility propositions that their business idea can provide (Kabukin, 2014). With the help of the proposed buyer utility map, both company executives and entrepreneurs can objectively determine how any new idea creates a unique utility proposition from current products. The map is founded on the six stages of the buyer experience cycle (purchase, delivery, use, supplements, maintenance, and disposal) as well as the six utility levers (environmental friendliness, fun and image, risk, convenience, simplicity, and customer productivity). It can therefore help identify thirty-six business utilities that a business idea can extend and take advantage of.

Using various examples, Kim and Mauborgne assert that the uniqueness and feasibility of a business idea are dependent on its capacity to “create new expectations for a familiar experience” (employing a new utility lever at the same stage), “extending a familiar utility to different parts of the customer’s product or service experience” (employing the same utility in a different stage), or coming up with an entirely novel utility proposition (employing a new utility lever in a different stage) (Kim & Mauborgne, 2000). However, the commercial viability of any unique business idea is also dependent on the company’s ability to set a strategic price that cannot be imitated by rival businesses, especially if there are no legal or resource protection avenues. The authors propose the price corridor of the mass to find the right price for the new product or service. This tool is dependent on the business idea’s legal and resource protection and involves two steps.

The first step entails identifying all products and services, either inside or outside the industry’s boundaries, directly or indirectly competing with the business idea in terms of form, function, and objective. Business managers must thoroughly assess all existing products and services that, while different from their business idea, share the same functions or those that do not share the same form and function as the proposed business idea but have the same objectives. Kim and Mauborgne suggest that plotting the price and volume of all the alternatives will allow business managers to locate the largest groups of prospective customers and identify the prices they are willing to pay for current products or services (the price corridor) (Kim & Mauborgne, 2000). The second step involves identifying a level within the price corridor where the business idea will be insulated from rivals with imitation products or services.

The third tool suggested by the authors involves building a profitable business model by identifying the cost target and suitable partners to fill any capability gaps. Novel businesses base their cost targets on the market-set strategic price and question industry assumptions about materials, manufacturing, and design to arrive at competitive cost innovations. Moreover, the source for partners to help with specific activities such as production or distribution that would otherwise impede rapid and strategic growth. Kim and Mauborgne admit that all three tools may not be enough for a business to provide a product or service at the desired strategic price (Kabukin, 2014). In such instances, the company needs to develop a new pricing model that will guarantee sustainable profits. Still, even the most viable and unique business idea threatens the status quo and is likely to be opposed by the business employee, partners, and the general public. In addition to applying the three tools outline by the authors, businesses must champion their new ideas among the three groups through appropriate change management strategies.

Overall, the article does an excellent job of answering the central problem facing all startups: will the new business idea become a commercial success? The tools provided by the authors can establish if a business idea offers a unique utility proposition, if it is competitively priced, and if it is founded on a profitable pricing model that would guarantee its commercial viability in a competitive business environment (W Chan Kim & Renee Mauborgne, 2017). More importantly, the guidelines provided by Kim and Mauborgne allow business managers and entrepreneurs to identify uncontested market spaces and capture niche markets. Instead of chasing customers with similar products and relying on the cost advantage to beat the competition, the authors provide three tools, especially the buyer utility map, which can help identify new business opportunities and align the whole company’s strategy in pursuit of differentiation, which is more sustainable and profitable than price innovativeness.

“Knowing a Winning Business Idea When You See One” provides concrete steps on how startups can focus on value innovations to become commercially successful companies. The viability and success of any new business idea are dependent on its disruptiveness and the value it creates more than any promotional strategy. While the article presents this integral concept exceptionally and commendably identifies resistance to change as a primary obstacle, it fails to highlight other risks involved. These include the difficulty of developing a unique utility proposition and implementing the correct strategy or the disadvantages of being too different and too new. Even though the buyer utility map is a valuable tool in identifying uncontested market spaces, it is not easy to develop a practical and viable idea that can create new demand (W Chan Kim & Renee Mauborgne, 2017). Besides, there are several disadvantages to arriving too early in any market: sometimes the world is not ready to appreciate the new idea. Most investors, company executives, or employees may not have the same forbearance, mainly when the primary focus should be devoting resources to initiatives showing meaningful progress.

Even though product differentiation and capturing new market niches are fraught with risks and uncertainty, it is the only way companies can cut above the rest and achieve commercial success. The article by Kim and Mauborgne effectively illustrates how business managers and entrepreneurs can manipulate the six utility levers and the six stages of the buyer experience cycle to differentiate their ideas in a market flooded with similar products and achieve commercial success. However, the article would have been more informative if it also highlighted the challenges of developing a unique utility proposition and implementing the correct strategy or the disadvantages of being too different and too new.

References

Kabukin, D. (2014). Reviewing the blue ocean strategy is the blue ocean strategy valid and reliable? In University of Twente (pp. 1–94). https://essay.utwente.nl/65556/1/Kabukin%20Dmitrij_MA_Management%26Governance.pdf

Kim, W. C., & Mauborgne, R. (2000, September 1). Knowing a winning business idea when you see one. Harvard Business Review. https://hbr.org/2000/09/knowing-a-winning-business-idea-when-you-see-one

Kim, W. C., & Mauborgne, R. A. (2017). Blue ocean leadership (Harvard Business Review Classics). Harvard Business Review Press.

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