The Coming Dominance Of Small Business.

/0 Comments/in /by

Anyone can create value with anyone else from anywhere: value is freely created. That’s the new feature of the emerging digital age of business. Digital technologies have been around for a while, but the digital business economy is just getting going.

More significantly, tomorrow’s structure of business promises to be much different than today’s. The path forward to a new, high-productivity future in the digital age is more likely to be paved by micro-startups than tech giants.

But the new structural patterns in business are not confined to technology industries. One example that comes to mind is the craft beer industry. Growing from a minuscule level of commercial significance in its industry in the last century, craft beer now represents about 25% of beer revenues in the US. Moreover, this new segment has introduced dynamic innovation in recipes, flavors, label design, bottle style, and usage occasions (like beer flights on brewery visits). Craft beers command higher unit prices and higher unit dollar profits. The big brewers are scrambling to keep up.

Size and scale are not the economic variables that matter for craft brewing. And industry dominance by a few mega brewers turns out not to be the natural structure for the beer industry. Creativity and innovation are what count, rather than manufacturing scale. In fact, according to Beverage Daily, “small is the new big” in brewing. 

Recipes are free – they come from the imagination. Raw materials are low cost. Brewing equipment can be purchased at low cost, borrowed, rented or made. There’s a flourishing online community of enthusiasts and experts and mentors to help with everything from P&L structure to sourcing. Entry to the industry is open. It’s easy to be a micro startup in brewing.

The trend in favor of micro startups is even more marked, of course, in digital technology industries. When production capital is code, which, like beer recipes, is a creative product that can be made from the imagination, then the “manufacture” of digital products is open to all.

More broadly, there is a raft of reasons for a surge in small business in the economy, in all industries.

A new relationship between people and capital.

In the traditional left-leaning depictions of capitalism, there are two separate groups: capitalists and the rest of us. Capitalists are privileged and endowed owners of production capital and financial capital, and the rest of us work for them. We can’t cross the divide from worker to capitalist. Nothing is further from the truth in 2022. Capital is now highly distributed and available and accessible for all. What used to be fixed capital is now rentable via the cloud – Amazon Web Services being the most notable example. No need to own servers and infrastructure. Entrepreneurs don’t need real estate or a storefront. Nor do they need a factory when they can 3D-print products, or rent factory time. Product designers are available for projects or by-the-hour through high-trust apps and services. 

It’s a similar world in financial capital. Lending platforms, angel investor networks, fintech apps and crowdsourcing are all available to channel investor money to promising startup ideas. The new relationship between people and capital operates in financial capital equally as well as it does in production capital, distribution capital and human capital.

Tho power of networks.

One of the great breakthroughs of the digital age is that anyone can connect to anyone else, and to any other resource. There’s no need to build a big firm; just assemble all the components required for one via digital interconnection. Entire supply webs from component manufacture to assembly to shipping to retailing and home delivery, plus the requisite financial services such as insurance, can be woven together digitally without any requirement for infrastructure ownership. There are expert, experienced organizers and integrators and managers for hire. Digital reporting facilitates real-time monitoring and control. 

Micro-specialization. 

Because all the support services are available and on-call, the startup entrepreneur is able to focus tightly and entirely on their one unique value-creation contribution. Peter Thiel in the book Zero To One, a foundational text for high tech startups, recommended that every business seek to be a monopoly, i.e. so highly differentiated that no competitor could match or replicate or under-price their product or service. 

Ever since 1776, when Adam Smith wrote about the division of labor in a pin factory that raised output by 1000%, business has understood that specialization can drive local productivity. Now, in the digitally networked economy, micro specializations can be interconnected for unprecedented multiples of global productive capacity. The individual nodes in this network, entrepreneurial businesses, seek more and more highly focused specializations to maintain and reinforce their differentiation, their pricing power, and their brand uniqueness.

What kind of businesses can sustain such productive specialization? Small businesses.

Knowledge availability.

Peter Drucker famously stated that business is knowledge applied to knowledge by knowledge workers. In the digital world, knowledge is freely available and shared at speed, and as new knowledge is created by A.I. or machine learning or experimentation, it is instantly distributed. Entrepreneurs who need knowledge can find it, or can locate someone with the requisite knowledge who knows how to apply it and how to combine it with others’ knowledge in some new combination that represents an innovation. 

Knowledge becomes a universal resource and less easy for big corporations to claim for their own.

Technologies 

Technologies are evolving at speed. Small business entrepreneurs don’t need to invent technology or even originate new uses; they just need to keep up with the evolution. The cloud, IoT, data science and advanced analytics, and robotics are just a few examples of a broad array of evolving technologies. Participation in the technology ecosystem keeps entrepreneurs on a leading edge of innovation without needing to be inventors. Entrepreneurial firms can move quickly and compete effectively by treating technology as a flow that carries them along rather than an investment that locks them in.

This, then, is the future for small business: get smaller, all the way to micro. Integrate with evolving tech ecosystems for momentum. Network with other specialists to form powerful business systems. Get infrastructure capital from the cloud and the internet, and financial capital from the fintech universe. The future structure of business is small and networked, not big and dominant.

Creativity Is Protest.

/0 Comments/in /by

Where does creativity come from? Ex nihilo – from nothing. Neurons in your brain somehow reassemble themselves into a new pattern, following a new path to a different arrangement. You recognize the pattern as different than those that have gone before. Presto! You are creative! Everyone can be creative. Everyone is creative.

Next up is the way in which you apply your creativity. In business, we usually associate it with newness and novelty: invention, innovation, improved products and services, better communications, greater efficiency, emergent ways to generate value, grow business and widen margins and make customers feel better. Creativity is a pathway forward, a way to open new doors, see new vistas, and open up new possibilities.

Creativity also does the opposite. It reveals how the old ways of doing things were inadequate, or at minimum how they can be improved or replaced. The opening of new doors is the closure of old ones. Creativity abandons error and leaves it behind. Creativity is the history of civilization, continuous movement in the direction of betterment. Sure, there are times when we can observe steps backwards, but creativity always makes us aware of them and relentlessly pushes in the other direction.

Creativity, therefore, is a form of non-compliance – non-compliance with erroneous beliefs, with bad policies, with lies and misinformation, with science that is non-scientific, with statistical analysis that draws the wrong conclusions and finds causation where there is none, and with bureaucratic regulations that limit choices. It’s non-compliance with the refusal to change, with the failure to adopt, with the reluctance to explore.

Creativity, then, is protest. It criticizes, not by pointing out the weakness and error of the status quo, but by imagining the future where the status quo is replaced. Imagination is the superpower of creativity. With imagination, we are able to conjure up future possibilities – counter-factual by definition, since they don’t currently exist – and examine them in our mind, size them and add shape and structure and color. We can connect and integrate our imagined possibilities with others, or with existing structures and institutions and contexts, and ascertain how the interface and interconnections might work. We can build a new machine in our imaginations and rotate it and view it from different angles and under different conditions. If we decide it’s better than what we’ve got now, then we are protesting the present, saying it’s not good enough, it won’t do.

In business, this is innovation. In research, it’s discovery. In the arts, it’s expression. Creativity is exciting and energizing. Creativity is the way forward.

But in politics and government, it’s unacceptable protest. The revelation that there can be a better way is not permitted. Creative people are to be suspected. They may even be terrorists, unleashing the terror of novelty and expanded boundaries and new frontiers. In politics, creativity is terrible knowledge: the knowledge that the current state of things is inadequate, moving in the wrong direction and condemned to inevitable ongoing decay.

What is bitcoin? Pure creativity – ex nihilo – and a protest against the institutional abuse of money and against central bank policies of continuous debasement of fiat currencies. What is e-commerce? Creativity – and a protest against inefficient brick-and-mortar retailing, poor in-store service, out of stocks, and mis-sizing. What is free entrepreneurial software? Creativity, and a protest against expensive, uncustomized, enterprise technology. What is cloud computing? Creativity, and a protest against inflexible server tech. Creativity is always a protest.

When we are faced with the rigidity of bureaucracy and government regulation, the answer is creativity. Not rioting in the street or burning down buildings or invading the Capitol. Not even voting – that doesn’t change anything. The right approach is creativity – asking what could be different, exploring how things can be different, trying out new ideas locally or in your community or in your church or your YouTube discussion group. Look at parallels in other industries and institutions. What rigidities did people face and what were the creative ideas that got around them? How did they grow and flourish? What did it take? What experiments were conducted?

A beautiful aspect of protest in the form of creativity is that it’s not a lonely fight against the majority. Because every creative protest is an exchange. Bitcoin is an exchange, otherwise it’s not an alternative money. E-commerce is exchange, otherwise it dies or never takes off. Free software is a valid alternative only if someone produces and someone else uses. Cloud computing needs a server bank in place and someone with a device to interact with it. Exchange requires two mutually aligned parties, the willing seller and the willing buyer. If you view your own creativity as protest, you’ll test your own validity and the validity of your ideas through exchange – who agrees, who understands, who supports, who adds new value by building more upon your foundation?

Please be creative. Make the world better. Protest what’s unacceptable by imagining what’s better. Share with others. When you find some that agree, you have a movement. Let’s get to it.

Customers Are Your Firm’s Capital. Invest In Them.

/0 Comments/in /by

In a book titled “Who Do You Want Your Customers To Become?”, Michael Schrage identifies customers as a firm’s human capital. The purpose of a firm, in his construct, is to design future customers: to anticipate how they will behave and think and feel when they adopt and use the firm’s new product or service.

This view has a lot of merits. It’s future-oriented as all entrepreneurial perspectives must be: what sort of future can I imagine and how can I bring it about? It’s based on customer primacy, recognizing that it is future users of the firm’s innovation who will be decisive in success or failure. It recognizes that value lies in customer experience and that there is a lot of uncertainty in predicting future value because the customer doesn’t know what that experience is going to feel like.

Can a firm design this future experience, as Michael Schrage suggests they do? It’s unlikely. Why? Because the experience is entirely subjective. The evaluation of it is in the consumer’s mind. And since it’s a future experience, and hasn’t yet occurred, then the feeling of it is impossible to frame.

However, there is a wonderful nugget of new understanding in the concept of customers as capital. In traditional economics, businesses invest in their own capital base in order to generate a future revenue stream. Investment in manufacturing capital enables the production of goods to sell and thereby generate sales revenue. Investment in people and their skills and technology to support them enables the delivery of services that generate customer revenue. Capital generates revenue flows. Interestingly, the revenue flows back to the capital owner from the customer. Do we have the picture the right way round? This kind of capital isn’t generating revenue flows, it’s attracting them from customers. Should customers think about investing in customers rather than in their own capital?

Capital increases capacity to produce and perform. When Apple puts an iPhone in the possession of a customer, it is enabling that customer to become more productive – to send e-mails more easily and frequently, to gather information faster, to make or view videos conveniently, to listen to music, to buy and sell through e-commerce, and a whole host of capabilities. Many of these new and enhanced capabilities will directly benefit Apple of course – using paid services, buying accessories, using the Apple Pay system, and generally expanding Apple’s ecosystem and network. Google search technology makes customers into better searchers, using the system more frequently, making it more intelligent, providing feedback.

Amazon Web Services rents or leases its own capital to customers in the form of cloud storage and cloud-based computing and additional digital services. The customers control that capital for the duration of the lease period. They are capitalized by AWS. They are more capable than they were before – they can produce more, and contribute more to both the amazon ecosystem and the economy as a whole. AWS is investing in making its customers better users of AWS by providing them with capital. When the capital is in the customer’s domain, the revenue flows back to AWS.

In the second sense of capital, Apple, Google and Amazon are investing in enhancing their customers’ human capital value. They become more skillful, have access to more knowledge, can make network connections more fluidly, and can work faster and with more convenience and remotely. At this new higher level of human capital value, they are more valuable customers. Customer loyalty is an old-fashioned way to think. Customer enablement is closer to the case. And every time Apple sends a software update over the network, or Google adds some code or some new links to its search algorithm, or AWS adds a new service to its suite, they add even more to the capitalization of their customers. More enabled equals more valuable.

How can your business invest in making its customers more capable by putting capital in their hands or putting it under their control? If you are a supplier of products to the building trade, can you provide them with ordering software or search software or payment systems software to make them more capable and more efficient? If you are a direct primary care physician, can you provide your patients with more access to knowledge or more connections on their network or some other knowledge capital that will make them smarter and better patients? If you are a trucking company can you provide warehouses with better tracking data so that the bay is more likely to be open when you arrive, saving both you and the customer precious turnaround time? These are not investments in your own capital, they’re investments in customer capital – in customers as capital.

The other side of the coin is that customer dissatisfaction that results from poor service or unkept promises is a wasting of your capital. Destroying your own capital is no recipe for success. Customer churn is like burning down your office building or your factory. Do everything you can to make sure it doesn’t happen to you.

Considering your customers as capital will change the way you think of investing and allocating resources.

Do We Need The Contra-Capitalist Big Corporations?

/0 Comments/in /by

Big tech. Big pharma. Big food. Big banks. Big oil. We’ve got questions about all of them. Big tech is surveilling us and stealing our privacy. Big pharma is exploiting us and poisoning us. Big food is compromising our health and fitness. Big banks are destabilizing boom-and-bust machines. Big oil is destroying the planet.

Do we need them? In the past, they were necessary to tackle problems of scale – the accumulation and control of sufficient capital to undertake massive industrial-era projects like building railroads or oil fields or pipelines or energy grids or fleets of ocean-going ships, or airplanes, or supplying every household in America with 1.88 vehicles.

These achievements – and many, many more – have delivered tremendous benefits and improvements in productivity and in the quality of life. They’ve opened up the globe to trade and eliminated most poverty. They were part of what Professor Deirdre McCloskey calls The Great Enrichment, the flowering of opportunity and economic growth since the 19th century that is unparalleled in human history.

But capital accumulation is not needed in the same way in the digital age as in the Industrial age. To a large degree, scale can be downloaded from the internet and capital can be controlled by renting it by the minute. Amazon Web Services (AWS) is the epitome of capital rental. Companies don’t need their own server farms and specialized software to run their digital operations – they rent from AWS. Their storefronts and fulfillment and customer service run on AWS. According to Wikipedia, as of 2021, AWS comprises over 200 products and services including computing, storage, networking, database, analytics, application services, deployment, management, machine learning, mobile, developer tools, RobOps and tools for the Internet of Things. 

As an even more specific example of distributed control over capital, consider AWS Ground Station.

Do you need satellite capability to collect data? Check the website:

AWS Ground Station is a fully managed service that lets you control satellite communications, process data, and scale your operations without having to worry about building or managing your own ground station infrastructure. 

…..you can use Amazon S3 to store the downloaded data, Amazon Kinesis Data Streams for managing data ingestion from satellites, and Amazon SageMaker for building custom machine learning applications that apply to your data sets. You can save up to 80% on the cost of your ground station operations by paying only for the actual antenna time used, and relying on the global footprint of ground stations to download data when and where you need it. There are no long-term commitments, and you gain the ability to rapidly scale your satellite communications on-demand when your business needs it.

This is the new age: capital on demand. Who needs big corporations?

This realization frees some brain capacity to think about some of the bad things that come with big corporations. There are plenty.

Bureaucracy

We want our corporations to create value, and to improve people’s lives through innovation and service. Parts of them do. But those parts are surrounded by, and sometimes suffocated by, bureaucracy. Bureaucracy was developed by corporations not for purposes of innovation, but for the opposite. It’s an engine of control, to limit the autonomy and creativity of people who work in the corporation, and to impose rules, guidelines, methods, and processes. Compliance is a big word for corporate bureaucracies. 

Loss of speed

Big corporations are structured. They have hierarchies and layers, divisions, functional departments, regions, and subsidiaries. Structure is the enemy of speed. When any individual or team has to seek approval, ask for funding, submit for compliance and check for authority before acting, time is used and wasted. Speed of action and speed of responsiveness to marketplace and competitive changes are imperative in the digital era. Losing speed is losing productivity. It’s a loss imposed on the firm and the economy. 

Regulation

Big corporations attract regulation, and in many cases initiate it. It’s called crony capitalism. By agreeing with government how to regulate their industry, they achieve three things: (1) a known environment in which to operate (the opposite of systems innovation); (2) employment for an expanding bureaucracy (big banks, for example, have huge compliance bureaucracies); and, consequently, (3) competitive insulation, since smaller entities can’t afford to divert resources into their own compliance bureaucracies. 

Regulation, of course, is a huge drain on productivity and a huge barrier to innovation. It’s one of the major ways government undermines the economy, and big corporations are complicit.

Financial engineering

The creation, maintenance, and profitability of big corporations often have more to do with financial engineering than serving customers and innovating. This term includes all activities that appear to strengthen financial reporting on paper without improving customer value. Stock buybacks are a perfect example. There is no customer purpose in stock buybacks. The activity is purely for changing proforma “per share” ratios. The same is often true for M&A – most acquisitions do not improve customer value because they are not executed with customers in mind.

Generally, the financial engineering mentality of today’s big corporation is not customer-favorable.

Defensiveness

Once corporations get big, they have something to defend: their size (investors insist they must grow), their revenues (the topline, as it is called, must slope upwards), their market share (they must not “lose” share), and their influence (more lobbyists). Their focus is diverted from innovation and improved customer service to maintenance and “sustainability”. Defensiveness does not generate growth.

Contra-capitalist

Big corporations are not anti-capitalist. But they often get capitalism a bad name. Robert Bradley Jr. created the term contra-capitalist when describing the corporate behavior of Enron (for whom he once worked). This company abandoned and subverted capitalist practices, often with the support of institutions like the Ex-Im Bank, and mostly stayed within the law. Freewheeling accounting practices, contorted debt structures, hyped projections, and hubristic imprudence all contributed to Bradley’s realization that his former employer practiced contra-capitalism. 

Do we need big corporations in the interconnected digital era of distributed control over capital? Not really. We should certainly never use big corporations as good examples of capitalism and free markets; they are far too often contra-capitalist.

Twice The Well-Being, Twice the Production, Twice The Love.

/0 Comments/in /by

The purpose of an economy is to facilitate the feeling of well-being for its participants. That’s different than the official version, of course, which is to grow GDP, a combination of government spending and consumer spending on produced goods and services. 

GDP is reported as an agglomeration of all kinds of constructed numbers. We’ll-being is not measurable but its qualitative dimensions can be drawn by gauging the sentiment of citizens. The sentiment gauges are currently registering some weakness.

Well-being is produced by the private sector of the economy. There’s a well-established, time-tested proven system for doing so. It starts with the evidence of negative well-being. People exhibit an unease, a vague feeling that things could be better than they are. This vague feeling is the genius of the consumer. The human drive for betterment, to trade current circumstances for a new set that might feel more pleasant or more satisfying, is the energy of innovation, technological progress, economic growth, and civilizational advance. It’s an amazing feat of imagination, being able to see, in the mind, a future that doesn’t already exist. A counterfactual, as the scientists sometimes put it. The consumer’s imagined counterfactuals create new possibilities. 

On the production side of the private sector, there exists the function of entrepreneurship. Entrepreneurship is an act of individuals, either solely or in groups and teams, often in the form of firms and business corporations. Firms sniff out consumer unease. It’s what they do. It’s their purpose. Informed by this discovery of unease, entrepreneurs get to work to relieve it. They do so via innovation, designing a new proposition they can share with the consumer: will this work for you? will this make you feel better? have you considered this? If they get any feedback (“Yes, I’ll buy it.” “No, that’s not good enough.”) it informs a continuous change and improvement process until the offering is right for the consumer. 

In economics, the experience the consumer feels is called value. We can call it well-being. The feeling that things are getting better, that there are new options and new choices, that someone is listening and responding. This feeling is produced by the entrepreneurship of the private sector.

The other part of the economy is government and what government subsidizes. Government does not produce anything. That’s not its purpose. It extracts from the production of the private economy, via taxation, via debt creation, via regulation (limiting choices for both entrepreneurial producers and their consumers), via the diversion of resources (employing people as bureaucrats who could be much more usefully productive in the private sector), and using technology and capital that could also be deployed usefully for private purposes. Government spending as a percentage of GDP is a proxy for the ratio of government extraction to total production, and that number in 2020 was 44%. 

Making things worse, the government monetizes its debt via the Federal Reserve, thereby increasing the money supply in the economy. This money is depreciating at a constant and rapid rate. Saifedean Ammous in The Fiat Standard smooths out his estimate of monetary inflation at 7% per annum, which is enough to halve the value of anyone’s dollar holdings in 10 years. So the value of savings in the private sector that could be re-invested in innovation and creating new capital – which is what produces more well-being for people – is halved every 10 years.

We can safely say, as an approximation, that the activities of government mean that production in the US economy is at half the level of its potential. Consequently, entrepreneurship is at half the level of its potential. This implies that the well-being achievable by people as a result of entrepreneurial production is at half the level it could be. We could see twice the level of well-being from twice the level of production were it not for government crowding out entrepreneurship. 

And since entrepreneurship is love in action, the level of love in society is halved. Entrepreneurs work on empathy – they’re like angels, understanding what people want, and what dissatisfactions are burdening them, and then working hard to help people shed those burdens. They love their customers, and seek to earn customers’ love in return. It might be called customer service, or customer loyalty, or customer satisfaction, but in reality, it’s love. The greater the level of entrepreneurship, the greater the love. 

So there is potential for twice the well-being, twice the production, and twice the love compared to what we experience today. If we can attract more people to entrepreneurship, and point more consumers to the enjoyment of entrepreneurial output, we’ll go a long way towards achieving the kind of society we’d all love.

The Starting Point For Business Is Choosing the Customers With Whom You Will Share The Value Generation Journey.

/0 Comments/in /by

How do businesses get started? Or innovation projects, or marketing campaigns, or any other type of commercial value generation?

The conventional belief is that the starting point is an idea. The idea of the iPhone or the Tesla or Lily’s stevia-sweetened chocolate bar. Ultimately, the idea will turn into a new product or service that “reveals to the market what the market did not realize was available” as economist Israel Kirzner phrased it.

But this conventional view is actually a misunderstanding of how business works. Business is an activity with a goal: to create and retain customers. The first step in the process is to imagine a future benefit – an experience that’s better than today’s for which a customer will happily pay. An experience is in the mind; the design of the experience is for someone. It’s for a customer. Hence the customer is the starting point.

Empathic Design.

To be successful requires the exercise of empathy. The customer’s experience is not the same as that of the individual or team that’s working on the innovation project or the marketing campaign. It’s subjective and individual, as is the concern with a current experience not being quite satisfactory enough. An innovator must “get inside the customer’s mind” in order to develop some understanding of what dissatisfaction feels like and what form future expectations of something better might take. Empathy enables the innovator to construct a mental model of how the customer’s mind works, how they think, how their preferences are arranged, how they feel about different choices – how they “tick”. To build such a mental model requires a focus on one customer – perhaps an ideal customer, but certainly a real person – in order to perfect it and make it accurate. Then it can be stretched and expanded to apply to a group or a market segment, recognizing that, in the process of expansion, the model becomes less and less accurate for any one single customer. That’s why businesses start with just one customer.

With a mental model in hand, the innovator advances through a design process – designing a future experience that will deliver a future benefit. It’s not all engineering, and it’s not entirely science; there’s a lot of art in it. Art is that part of design in which the designer proceeds on their own initiative without input from a buyer. Van Gogh didn’t seek instructions on what to paint and how to paint it. But there is a limit to how much art can go into your innovation. The customer has the final say, exercised through the action of buying or not buying.

Empathic Engineering.

This integration of art and engineering is why business analysts are beginning to explore design science. The design process is a series of steps aimed at producing something that can succeed in the market. The first design might be a sketch on the back of a napkin, the second one a memo, then a meeting to discuss the sketch and the memo, and then a team collaboration to develop specs and a prototype, with a design development path that accumulates more and more knowledge inputs until it produces a saleable product or service. The customer is involved at all times. They’re the point of departure – who are we designing for, what experience do they want – and involved at every step, until the ultimate one of a decision to purchase. Design is creative, and creative people can often come up with unprecedented designs – new knowledge that didn’t exist before. It becomes a science when each of the design steps can be tested.

Testing can be engineering or empathy. The engineering test is functional: does the design work, does it perform the task it’s supposed to, will it last or will it break, will it integrate well with the physical environment in which it’s going to be embedded? The empathy test is emotional: does it appeal to the customer, do they feel it can address their felt dissatisfaction with what’s available now, do they anticipate an experience they’ll enjoy and value? In the market, the emotional test is more important than the functional test. In design, it’s people first, things second.

The design process – from the sketch on the napkin to the first shipped product or first service – takes time. The value is realized at the end when the customer buys, but that is not the only point at which the customer is involved. It’s valid to think of the successive design stages as a journey – one on which a business invites the customer along, sharing every step, making joint choices and joint selections of features and design components, discussing and dialoguing, with a lot of “what do you think” and “what if we tried this approach”.

The Idea At The End.

The customer doesn’t know all the right answers. They don’t know the final destination in advance. They’re along for the ride so long as they are given input and so long as it is clearly their interest that is being pursued. Sometimes they need to be told what they can want, because they don’t know what’s possible; they don’t know what they can have in the future. The role of the business innovator is to reveal to them – all in good time – what they didn’t know was possible. The idea is at the end, not the beginning. The journey to get there is a shared mystery.

And there may be competing journey options. Other businesses may be offering a similar destination, a similar value, and a similar experience. It won’t be exactly the same so the customer must make a decision which journey they’ll ultimately complete. They’ll make comparisons, they’ll try to weigh the alternatives. Emotion will be the ultimate decider – the customer will feel like (rather than make a calculation) that one choice will lead to a better place than another.

Choosing the customer at the beginnig of the journey is the most critical decision a business team can make. They’re going to commit to traveling closely with that customer for an extended period of time. They’re going to listen calmly to every suggestion, every complaint, every expression of “that doesn’t quite do it for me” or “it’s not quite what I expected”. They’re going to led the customer lead them on twists and turns that might not ultimately lead to the right end-point.

You’d better love that customer. Choose wisely.