The Intersection of Business Models and User-Centricity: Unleashing Growth Potential

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Aug 07, 2023

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The Intersection of Business Models and User-Centricity: Unleashing Growth Potential

Introduction:

In the ever-evolving landscape of business, companies are constantly seeking ways to expand their reach and drive growth. Two key strategies that have gained significant attention are transitioning from a SAAS business model to a marketplace and adopting a user-centric approach through dogfooding. While these concepts may seem disparate, they share common threads that can unlock new opportunities for businesses. This article explores the potential of sequencing business models and the transformative power of putting oneself in the user's shoes.

Sequencing Business Models: Can That SAAS Business Turn Into a Marketplace?

SAAS (Software as a Service) businesses have revolutionized how companies access and purchase software. By offering subscription-based services, SAAS companies like Slack, Adobe, and Atlassian have become integral to modern business operations. However, as these businesses mature, they face the challenge of sustaining growth. One solution lies in transforming into marketplaces.

A marketplace is a platform where sellers provide services to attract buyers, facilitating transactions and generating revenue through commissions or lead generation fees. For SAAS companies, transitioning into marketplaces presents an opportunity to aggregate buyers, aid in their discovery of services, and attract new suppliers. This vertical integration trend, exemplified by companies like Zillow, allows SAAS businesses to tap into new growth levers.

Founders, as the driving force behind these transitions, must navigate various challenges. Firstly, they need to change the incentive structure within the company to prioritize the new business model. This can involve making the entire company's growth revolve around the initiative or creating a separate team with dedicated goals and reporting lines. Secondly, founders must shepherd the right resources and change the company culture to align with the new business model. Often, this requires recruiting individuals passionate about the opportunity and experienced in consumer product development.

Furthermore, founders must confirm the existence of a demand side for the marketplace. Marketplaces can fail if there is no actual demand or if the SAAS customers' revenue model doesn't align with the marketplace concept. Understanding successful marketplaces and leveraging under-utilized fixed assets can guide founders in aligning their initiatives with established market dynamics.

Dogfooding: How Putting Yourself in the User's Shoes Changes the Way You See Your Product

Dogfooding, or using one's own product as a user would, has become an invaluable practice for enhancing product development and user experience. By immersing themselves in their product's everyday use, teams gain a deeper understanding of its strengths, weaknesses, and areas for improvement. This empathetic approach allows for a more holistic view of the product and fosters a user-centric mindset.

When companies get too close to their product, they may overlook issues that are obvious to new users. By periodically signing up for their own service with a fresh account, businesses can stay attuned to the user experience and continuously strive for improvement. This practice helps them identify pitfalls, challenges, and areas of complexity that may impede user adoption and satisfaction.

Customer empathy is at the core of dogfooding. It involves stepping outside of our own perspective and seeing the product through the eyes of the users. This is crucial in catering to a diverse user base with varying levels of technological proficiency and access. By acknowledging the global mindset and understanding that users may have different needs and limitations, businesses can create more inclusive and impactful products.

Conclusion:

Sequencing business models and adopting a user-centric approach through dogfooding are two powerful strategies that can propel businesses to new heights. To successfully transition from a SAAS business to a marketplace, founders must align incentives, shepherd the right resources, and validate the demand side. Meanwhile, embracing dogfooding allows companies to gain a fresh perspective on their products, identify blind spots, and cater to the diverse needs of their users.

Actionable Advice:

  • 1. Embrace a growth-oriented mindset: Founders should prioritize long-term growth potential over short-term optimizations. By dedicating resources and creating separate teams, businesses can focus on exploring new business models without neglecting the core offering.
  • 2. Foster a user-centric culture: To successfully implement a marketplace transition or enhance product development, businesses should recruit individuals with consumer product development backgrounds. These leaders can drive cultural change and bring a fresh perspective to the organization.
  • 3. Continuously empathize with users: Regularly sign up for your own service as a new user to stay in touch with the user experience. This practice enables businesses to identify and address issues that may hinder adoption and satisfaction, ensuring a user-centric approach.

By combining these strategies, businesses can unlock untapped potential, delight their users, and drive sustainable growth in an ever-evolving market.

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