BizMorph

The Business Life Cycle in a Flat World

The following is a talk I gave at the inaugural breakast  of the Independent Entrepreneurs Council , co sponsored by Empire State Science and Technology.  It discusses the transformation going on in the  Western New York  economy from one based on a few large manufacturing firms to a myriad of smaller firms in  service, agriculture, medicine etc.

Download IECOct10.ppt

The Bizmorph Butterfly

Why Business Metamorphosis? 

People often ask why we call our company Business Metamorphosis? A metamorphosis is a transformation, and we at BML we are about business transformation. But that isn’t the reason for our name. This little story tells where the name came from..

 

The  graphic that we use to symbolize our business originated in a dream that I had many years ago long before I left Kodak and founded BML. In my dream a caterpillar gorged itself on leaves until it was so big that it burst. But when it exploded the disgorged contents weren’t digested leaves, they were a flock of beautiful butterflies.  

In this visual metaphor, the caterpillar represented giant corporations like the three that then dominated our community. These companies   were then getting bigger and bigger by devouring all the local economic resources as other behemoths  were doing  all across the United States. 

This kind of growth is not sustainable, and today we see the effects of the Caterpillar explosion as one big company after another sheds  the assets they accumulated in their glory days or  ships the jobs that they  then created to countries where labor is cheap. 

What will support those workers who no longer toil inside the caterpillar? In my metaphor, those workers create a legion of small businesses to rebuild the economic life of the community. 

But creating all those new businesses and making them prosper is by no means an easy task. Most of the former inmates of the caterpillars gut need lots of training and lots of help. Fortunately the resources are available. Finding them, and at a price that the startups can afford is the challenge. 

At BML our mission is to help those small  companies create the economy of the future. To replace the Caterpillar economy with the  Butterfly economy. We help small companies  to 1)Find Opportunities 2) Organize and Manage them, 3) Exploit them and 4) Protect them.

 Call us. We’re there to help. Find out how to contact us at www.bmlcc.net

The Business Life Cycle

I have been drawing this chart Business Life Cycle on napkins for long enough so I decided to create a published version and share it with my clients and alliance partners.

Rows and Columns

Stages in the life of a business can be compared to stages in the life of a person. From gestation through birth , childhood, adolescence and old age , businesses have similar stages of growth. The
BLC chart consists of eight parallel bands divided into 10 columns, each numbered column  corresponding to a phase in business life.

Phases 2.1-2.3 correspond to the Gestation period for a person is what takes place in an Innovation Hub. In contrast Business Incubators begin when the plan for a business is well established (no earlier than phase 2.3) and usually fit best in the Post Launch/Pre-Profit phases 4.1-4.3. Growing and Mature businesses at their own locations are in phases 4.3-4.5. 

Product Rows

Along with the 8 rows: Revenue; Investment; Profitability; Innovation Activities; Investors; Siteing and Analogy, there are 5 rows below the chart which identify the Business Metamorphosis products most appropriate at that stage of business life. Color codes in the bands indicate positive (Green) or negative (Red) cash positions. 

Innovation Hubs

The chart is based partly on my experience as a member of an innovation hub. Innovation Hubs are something new. There are about 12 hubs in the nation, mostly in large corporations. Hubs fill the gap between government and university research which mostly develop new technologies and new product incubators which commercialize new products based on those technologies. 

Hubs are about streamlining the processes which turn new technologies into new products. To learn more about hubs checkout the book list for “Radical Innovation” a study of the hub process by the Lally School of Business at Rensselaer Polytechnic Institute. 

The Surrounding Squares

Surrounding the chart are 26 squares of Mini –Ads from various vendors who supply services needed by businesses at these life stages. (To see these squares you will need to get the FREE, PDF version or order one of the printed versions of the chart).

Injectors

There are also 2 “Injectors” on the Grey band below the Analogy row. These indicate that a business can be started at a later stage by A) Buying a Franchise and B) Buying an operating business. These “injectors” allow you to skip the earlier stages of business growth at a cost in capital and flexibility.

Get your own copy:

You can get a FREE , PDF version of the chart on my website.  Or we can mail you a 12x18 sharply printed version for a nominal price

Launching a New Business

How do you know if your new business is ready to launch? 

How do you know when  you are ready to launch your business? You will know if you can answer three questions with VERIFYABLE assumptions. Verifyable means not wishful thinking and not listening to the first answers you get to the questions and assuming they are right because you hope they are.

The Three Questions–

Are aligned with the three circles (Technology, Marketing and Business)  that we use at my company (www.businessmetamorphosis.com)  to determine the state of maturity of a business concept are:
 

1. Will it Work? -  The Technology question
2. Will it Sell?   The Marketing question
3. Will it Make Money?  – The Business/Financial question

Answering the Three Questions

1.  The first question is answered with at least a working prototype- preferably a engineering model coupled with  a defensible manufacturing plan.
2. The second question is best answered with a successful marketing trial
3. The third question with a business plan containing those VERIFYABLE assumptions. 

There are some classic examples to cite where these questions appear to have been answered but they are not— 

Chinese Toothbrushes

First  is the “Chinese Toothbrush” business model which goes something like this:
There are 1.2Billion Chinese. If I can sell only 10% of them a toothbrush for $1.00 that is $120 Million in revenue- A tidy sum—Surly a VC will loan money to a business based  on this model (you will actually be  laughed out of the  office)- 

Why? This model contains many hidden , unverified assumptions. In fact the only thing verifiable is the number of Chinese. Included in the unverified assumptions are:

• The  Chinese use toothbrushes
• No one in China makes toothbrushes (or I can lure the Chinese away from them)
• I can make, market and distribute toothbrushes to the Chinese at a cost will allow me to make a profit at the $1.00 selling price.
• I can convince the Chinese to switch to my toothbrushes (at an advertising cost that doesn’t break me)  etc.

Fast Ferrys

 In my own hometown we now have a sad example of a business plan gone awry because of unverified assumptions. The” Fast Ferry” that was supposed to connect  Rochester and Torontoand usher in a new era of Economic connection failed question three. 

The Ferry passed question one . It worked (after it hit a dock and its engines were fixed), It passed question Two.  It sold ( after the ticket taking and marketing were substantially improved). It didn’t however make money. Despite its heavy rider ship. 

Among the unverified assumptions: The Ferry will be allowed to carry trucks (blocked by Homeland Security). There will be no Fee for pilot age ( The fee was thousands of dollars/day), The Canadian and US customs will not charge a fee ( a substantial fee was charged). Incidentally, these assumptions were checked but not verified. 

Summary

So---. Answer all 3 questions with VERIFIED assumptions and you will be much better off than if you trust to fate.