The bullseye framework: a perfect business model canvas teammate

New research has uncovered a business strategy framework that complements the business model canvas in a number of important ways

When Michael Marks co-founded Katerra, a digital construction materials and hardware supplier platform, it was hailed as a transformational step-change for the US$10 trillion construction industry in 2015. Mr Marks certainly brought all the right credentials to the job of leading Katerra. As the former interim CEO of Tesla and CEO of electronic components and devices manufacturer Flextronics, Mr Marks led an aggressive expansion strategy at Flextronics and grew revenues from US$100 million to over US$14 billion over 13 years, primarily by acquiring companies and vertically integrating the heavily fragmented electronics supply chain.

With an eye firmly on replicating this success in the construction industry, Katerra went to market with a business plan based on a similar value proposition canvas. This attracted US$2 billion in funding from investors who bought into the idea that this business strategy would generate impressive revenue streams through economies of scale, an improved customer journey and a new type of relationship with stakeholders through the supply chain.

But it was not meant to be. While Katerra’s business case ticked many due diligence boxes for investors and its business model canvas template looked solid, insurmountable problems led to the collapse and eventual bankruptcy of the firm in 2021. Chief among these was the fundamental oversight that buildings are not as consistently repetitive in their construction as mass-produced electronics, as well as an overambitious and unfocused expansion strategy, misunderstood customer needs (which led to troubled customer relationships with its customer base) and overspending without demonstrable returns on investment.

Beyond the business model canvas: screening new business models

The notion of the business model (such as captured in the business model canvas, advocated for by many including Alexander Osterwalder and Yves Pigneur) as a means of achieving business success is nothing new. The rise of firms such as Airbnb, Uber and Netflix has generated interest in more innovative business models. The success of such firms’ business models has often come down to certain key activities, such as the ability to improve the customer experience by delivering ordinary things (such as beds, car rides/ride-hailing, and movies) to targeted customer demographics through novel distribution channels underpinned by new developments in technology.

However, business model innovation, or the process of designing new business models, is a complex and multifaceted activity. Business model design teams frequently brainstorm long lists of potential ideas and are then left with the challenge of culling the list to a manageable set to pursue further.

With this in mind, UNSW Business School researchers set about developing a process by which potential business models could be rigorously evaluated. Drawing from strategy, business model, entrepreneurship and innovation literature, the researchers developed a screening framework that facilitates the practical evaluation of business models.

Many academics and practitioners argue that new business model ideas seldom perfectly fit the market realities, according to the research paper, Business model idea screening: Advancing toward the Bullseye, which was co-authored by George Shinkle, Professor in the School of Management & Governance, Patrick Sharry, Adjunct Associate Professor, Jeffrey Tobias, Adjunct Professor, Angel Sharma and Dwiardi Vergiawan, PhD candidates in strategic management, and Mélodie Cartel, lecturer in the School of Management and Governance. The researchers suggested these new ideas undergo “validation” through in-situ testing, often necessitating pivoting (changing designs) due to unpredictable unknowns that often emerge in exposure to real-world conditions. The researchers explain: “However, the question we ask is more pre-emptive: How can business model design teams credibly screen the stronger business model ideas from the weaker ones – especially when they ideate a long list?”

Learn more: The Bullseye Business Model Assessment Framework

A business model framework that aids the business model canvas

“Our research question arose out of the Executive-MBA classroom where participants study many types of organisations in business, not-for-profit, and government,” says study co-author Dr Cartel. In the participants’ work to innovate business models, she observed that the question of how to separate weak from strong ideas frequently arose.

“This is because the teams typically generated many ideas, and they wanted a credible way to filter the ideas. Interestingly, this classroom issue is also a challenge for business model design teams in organisations where the pace of business model transformation is accelerating and we expect that managers will appreciate a tool to help increase the odds of success,” she says.

A diverse team of two academics, two PhD students and two strategy consultants (who are adjunct faculty of UNSW) were brought together, and Dr Cartel said this gave the research activity breadth and depth – which resulted in a much more comprehensive outcome that was useful in business, not-for-profit, and government organisations.

The outcome was a business model assessment framework nicknamed “Bullseye”, because it allows executives to narrow down a broad range of ideas to find the ones closest to the sweet spot, according to research co-author, Mr Sharma. “In a game of darts, the bullseye often attracts a maximum number of points, so it is normal for each player to attempt to get the bullseye,” he said. “We take this gamification approach and encourage executives to implement our framework to quickly be very close to their organisational goal or the bullseye.”

A template for business success through 11 strategic lenses

There were three important findings in the research, which also have important implications for industry. The first finding, according to Dr Cartel, was that existing business model evaluation frameworks were insufficient for a critical audience, because they were targeted at a particular kind of business or because they were oversimplified and failed to incorporate critical building blocks of strategic success.

“Our second finding was that there is a very large number of ideas and criteria in the existing strategy, innovation, business model, and entrepreneurship literature that are complicated to assess,” said Dr Cartel, who explained that the third – and potentially most important – finding was that numerous ideas in the literature could be consolidated into eleven categories that adequately capture the core criteria of a successful business model.

“We call these strategic lenses, and they establish the dimensions of the Bullseye business model assessment framework,” she said.

Read more: What is the #1 missing link in business strategy implementation?

How the bullseye framework adds to the business model canvas

Mr Sharma explained that the bullseye framework will be helpful to many people, including senior executives, investors, entrepreneurs, consultants and startups, as well as teachers and students. “Not only can the framework be used to assess business model ideas; the lenses are also helpful when brainstorming new ideas – ideating business models,” he said.

To illustrate, the first strategic lens (industry attractiveness), for example, examines whether a business model addresses an attractive industry arena or customer segment for an organisation. Another important strategic lens (number seven) is feasibility and considering whether an organisation can gather or orchestrate the key resources, organise its activities, and attract key partners to build key partnerships in order to deliver on a unique value proposition. And on the intellectual property front, competitive advantage (the second strategic lens) plays a critical role in whether other organisations would find it difficult to implement the same business model or provide a substitute value proposition.

“As many organisations are changing or looking to change business models, our discussions indicated that many people want a sufficiently robust yet manageable way to screen business model ideas before moving to more expensive testing,” said Mr Sharma.

To illustrate the potential success of the Bullseye framework, Mr Sharma cited a real-world example in the form of a 102-year-old Australian company called Alvey Reels. This business was reliant on hand-made components in a fragile supply chain, and Mr Sharma said it could not cost-effectively convert to the Australian supply system, which favours automation (nor did they develop alternative ways of doing business). The business was struggling with its critical customer and supply chain touchpoints and a final nail in its cost structure coffin was the impact of covid-19, which led the business to close down in 2022.

“Had they followed the ideas in our Bullseye framework, they would have built in more ability to quickly change their business model and built in more capability to respond to potential disruptions,” said Mr Sharma.

“Many companies in the digital platform arena have failed, because they did not fully grasp the idea that if they could quickly and inexpensively launch and scale up, so can others by copying what was done. Our framework is more comprehensive and highlights the necessity of maintaining, not only creating, a competitive advantage, establishing resilience to disruption, and building in flexibility by promoting scenario thinking and learning.”

Bullseye framework applications and advice

Mr Sharry said the framework extends well beyond existing business plan tools (such as the business model canvas, or BMC) and helps executives to consider factors that are both internal and external to their organisations in ideating and assessing their business models. “The resulting framework allows executives not only to compare different ideas on the eleven dimensions but also to gauge areas in which each business model idea may be weaker or stronger,” he said.

The benefit of assessing the strengths and weaknesses of each business idea across eleven robust dimensions allows a much clearer understanding, especially when executives may not necessarily know which business idea to execute from a plethora of ideas that confront them. “Our framework will help managers move away from purely financial estimates to a more strategic assessment that is more comprehensive, parsimonious, and effective in moving the organisation to action,” he said.

The framework offers an effective way to pressure test or compare business model ideas, Mr Sharry explained. The paper provides several different ways to implement the framework in practice in addition to several practical hints – two of which are from the researchers’ experience in using the framework. “First, have a diverse team undertake the assessment and allow dissenting voices to be heard because it is the exceptional issue that often causes business model failure,” said Mr Sharry, who added that the second most important step is to use the detailed list of 37 sub-questions (see below) in the paper to further root out failure risks and opportunities.

The paper notes, for example, that there is often value in examining the results more closely so that the team can understand why a particular option might have ranked well in assessing different business models against the framework. “This discussion often provokes insightful discussions about key strategic objectives as well as clarifying views on opportunities and threats,” the researchers explained in the paper.

“We know from the studies of cognitive biases and heuristics that humans are better at making relative judgements rather than absolute judgements. This insight can be utilised by creating a scale on a whiteboard with the best option scored at 100 and the worst option scored as zero. The team can then judge visually where another option sits on the scale relative to these points," Mr Sharry concluded.

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Detailed questions for the 11 strategic lenses

Source: Business model idea screening: Advancing toward the Bullseye