What is the Business Idea?
Richard Norman has thoroughly examined a concept that later became known as the "Business Idea". Norman's model seems simple, but it may not be so natural for an entrepreneur to think of a company in these terms. The Business Idea is defined as a system of coherences necessary for the company to acquire competitive advantages within a market. Consistency is the fundamental attribute of the feasibility of the business project and must be analyzed with respect to its components:
- product system
- market segment
- internal resources
For example: What do you want to sell? Who do you want to sell to? How do you want to produce it?
The product system
The product system is what specifies the business idea and defines the company's offer to the identified market segment, the technical feasibility, the degree of innovation (eg in terms of quality, technologies).
The market segment (and/or market niche)
The market segment consists of the target customers the business idea is addressed to: the needs it wants to satisfy, the groups of potential customers, the differential benefits (with respect to the offer already present in the market) that the business idea could produce for these customers, the actual competitors.
The Organizational Structure
The entrepreneurial idea must be developed on the basis of the system of resources and skills that the entrepreneur can dispose of: the material resources he has available (plants, machinery, equipment, etc.) - the sources of capital and the possibility of accessing to external financial resources - the skills of the entrepreneurial team, necessary to put into practice the entrepreneurial idea - the relational abilities, towards suppliers, customers and other stakeholders - the internal resources able to generate value, that is, that allow to exploit opportunities of rare marketable products that cannot be organized, that is, whose potential can be exploited in organizational terms.
These are tangible and intangible resources, tacit and explicit knowledge, individual and collective ones. Therefore, in order that a company (in particular a startup) succeeds in dominating a market, all the elements of the "business idea" must be coherent with each other and the product system must offer competitive advantages over the competition. Therefore, the organizational structure must be characterized by distinctive competences, capable of supporting these advantages.