ladies and gentlemen, what's your business model? Part #3

Following up on 'what's your business model? #2':

When talking to potential partners and customers I'm asked about our specific 'pricing model' and our 'path to market' - typical Business Model issues.

To that I answer, straight-faced:

"We are extreme business-modelling. We'll have the answers when the time is right."

And then I turn the question to "what do you think is the right price?" and "how could this product add value to your company?".

Those of you who are geeks probably know the concept of 'extreme programming', a methodology, a set of values to steer a program development process. Perhaps useful for more than programming?

A few important aspects of extreme programming, eh, extreme business-modelling:

• Write a user story. Explore the value for the customer!
• [Extreme business-planning specific: Acid test your pricing and margins. If you could easily deliver at half the price of the competition, you may be good. If you're pretty sure you can deliver at 1/10th you'll have the leeway to play really loose :)]
• The customer (even the potential one) is always available. Involve the customer, use him, make him a part of the process.
• Pair programming and collective code ownership. Involve the customer again, let him have ownership to your product!
• Make frequent small releases. Test one thing at a time, don't get stuck with a half-baked and untested complete plan.
• Iterate and integrate often. Test and try, go back make better, test and try again, go back...
• Leave optimisation till last. When it gels, shape the last parts, refine when the basics are right!

Funny thing, even the potential customers likes it.

Comments

[Sam]

you'll have real fun with the 'make frequent small releases' part if you use it in setting a price. Once you sold it to someone for a low price it will make the round and everyone else will either complain why they paid so much, or want it that cheap too.

Sam

[sig]

Good point Sam, nevertheless:

'Extreme business-modelling' requires a tad common sense, but hey, I take that for granted :-)

That said, I think you could actually 'get away with murder' in the beginning. "First customer(s) were beta testers", "product was not finished yet" or "we had no time for support" may work - and be true as well!

You may even stick to the flexible model if you want!

Check out Easyjet or even the big airlines these days. No way will you ever sit next to somebody who paid exactly the same as you!

[Ric]

Sig:

"We are extreme business-modelling. We'll have the answers when the time is right."

You may get a lot of push-back with that approach, but I suspect that those who can't get it are probably not going to be the customers you want. Those 'concrete-bound' organisations that want all the questions answered upfront aren't going to like the answers, and will not be able to cope with the flexibility required to prosper in this new world - but we already knew that!

[sig]

Ric, and that way you have a perfect 'filter' up front!

The product, the service, the company culture - all have to be aligned - and that applies of course more than anything to the Business Plan. So if you're different (and who's not in the beginning?) why use a blueprint for anything?

Did I mention the customer? Align him too - filter out the unaligned :-)