Abstract
From the title and cover, Models of Opportunity might appear to be a book about business models and entrepreneurial opportunities. Instead, the primary thesis of the book is that the narrative is an overlooked yet useful tool for entrepreneurs and entrepreneurial managers. In Models of Opportunity, business models become the vehicle for making the case for the importance of narratives as a business tool.
George and Bock appropriately assert that the business model remains an amorphous topic in academic research and practice. To define the business model, the authors report on a study in which they analyzed responses submitted by 200 managers of British and Indian firms to an open-ended question, “What is a business model?” They conclude that the business model links firms to opportunities and that the business model “designs organization structure to enact an opportunity” (p. 41). Business models do not address how firms compete against each other—this, they write, is the domain of strategy, and they are in good company in taking this view.
While scholars of organization theory and strategy will not see managing the fit between firms and opportunity as a novel concept, the authors are correct that applied textbooks and degree programs in entrepreneurship often overlook the explicit alignment of firm structure to opportunity in favor of other topics such as product validation, team building, and resource acquisition. Hence the emphasis they place on this issue is likely to be an important message for the intended audience of the book.
The core ideas of Models of Opportunity are six insights that the authors present as a framework to enable entrepreneurs to “bring to life the most interesting and implausible opportunities” (p. 13). The first, “Design the organization to realize the opportunity,” is a reminder to readers of the importance of designing structures of organizations to enhance a firm’s ability to capitalize on an opportunity. With the second insight, “Appreciate the imperfections inherent in opportunities,” the authors convey a view that the amount of information available about feasible business models and attainable means of exploitation is not the same for all opportunities. George and Bock advise that entrepreneurs should be willing to pursue opportunities that are more ambiguous if they wish to achieve unexpected outcomes.
The third insight of the book, “Remodel the organization for coherence,” stresses the importance of building an actionable alignment between organization structures and opportunity through the use of narratives. One might ask what narratives have to do with business models and why the creation of narratives is presented as the means for entrepreneurs to enable action on the part of important constituents, such as employees, investors, and presumably customers. If you read between the lines, the answer is that the pursuit of uncertain opportunities requires motivating individuals such as employees and investors to act in specific ways at times when little information is available to know exactly what should be done. This uncertainty fosters situations and organization structures that are riddled with incompatible, unstable, and conflicting elements. While some may think that the best way forward in this type of situation is to use managerial processes that explicitly identify and expunge inconsistences in business models and organization structures, George and Bock imply that this is likely to be a futile effort, in large part because a lag will exist between what is learned from new information generated about specific opportunities and changes that can be made to organizations. While their insight is probably more relevant for students and managers of mature organizations than of de novo startups, I suspect those more interested in de novo startups will also find merit in this thesis.
The fourth insight, “Build bridges to span opportunities,” emphasizes the benefits to entrepreneurs of changing the opportunities they are pursuing in response to unexpected changes in the landscape. Though this is somewhat similar in concept to the pivot described by Ries (2011), George and Bock’s concept is different in two ways. First, George and Bock’s framework is more reactive to changes in the environment, while Ries’s framework provides a set of decision tools for entrepreneurs to navigate uncertain landscapes proactively. Second, George and Bock’s framework makes salient some of the challenges that exist in changing an established organization so that it can effectively pursue a new opportunity. With a focus on customers and products, Ries (2011), in contrast, glosses over the management of organizational change.
The fifth insight, “Inspire the narrative to shape opportunities,” is treated in an in-depth discussion about how entrepreneurs use narratives to effect change. Here, the authors develop the concept of “storytelling loops,” which they represent as an ordered process that starts with entrepreneurs developing narratives to evaluators that, if successful, they will use to influence the shape and goals of their organization and, ultimately, industry narratives.
In discussing the sixth and final insight, “Innovative entrepreneurs embrace unexpected opportunities,” the authors step beyond narratives to describe some actions that they view as useful in enabling entrepreneurs to build companies based on unexpected opportunities. These actions range from advising entrepreneurs to cautiously step away from standard management decision models to enable innovation, to considering simple solutions that can yield big outcomes.
As I highlighted above, perhaps the most significant insight of the book is that the narrative is a tool that entrepreneurs can use to enable action in ambiguous environments. The authors essentially present the narrative as an unconstrained tool, however, not discussing any limitations that the narrative might have in achieving desired goals. But the power of narratives as a management tool is unlikely to be limitless. For narratives to be an actionable tool, entrepreneurs need to understand when they are likely to be effective or ineffective. One limitation might be the skills and properties of the narrator. The authors touch on charisma as an important attribute of the narrator, but overall the properties of narrators that lead them to be effective or ineffective at narration are unexplored.
Other limitations on the effectiveness of narratives might be the nature of the ideas that entrepreneurs pursue and the objective reality of the contexts in which they operate. To entrepreneurship scholars, the characteristics of opportunities are likely to be important factors that might influence the usefulness of narratives (Eckhardt and Shane, 2003). Although George and Bock use the term opportunity extensively throughout the book, the authors never clearly define it (though they come close on page 10), and hence they don’t fully explain how opportunities both enable and constrain the power of narratives. Perhaps the importance of the limitations on the power of narratives is best illustrated by the scientific hoax of the Piltdown Man. George and Bock invoke the hoax to illustrate how Charles Dawson constructed a narrative to mislead the scientific community for 40 years. What the authors overlook in this example is that the false narrative ultimately didn’t survive when confronted with robust evidence that conflicted with it. In the case of entrepreneurship, the proverbial economic landscape is littered with accounts of failed entrepreneurs who spun narratives about business ideas that ultimately didn’t survive contact with the objective realities of technology and markets. The lack of clarity on what opportunity is, and how it relates to the effectiveness of narratives, represents a missed opportunity to integrate the book cleanly into the academic literature in a way that would have also provided powerful insights for practicing entrepreneurs on how to use narratives effectively. Hence the tie between narratives and opportunity remains a fruitful opportunity for further scholarship.
Some of the best works on business models are conceptual and case-based books that have been written by experienced entrepreneurs. These books include The Lean Startup, Business Model Generation, Getting to Plan B, and The Four Steps to the Epiphany. The contribution of Models of Opportunity to this literature is the importance of narratives. George and Bock’s emphasis on the importance of communication and the management of narrative is likely to resonate well with those immersed in practice and matches my own experiences from working with numerous startups.