"Without deviation from the norm, progress is not possible."
Entrepreneurs face a daunting challenge in turning a solution to a compelling problem into a viable business. Recent research into multi-sided platforms and collective action has highlighted an approach that may enable entrepreneurs to lower the risk of a new venture and increase revenue by delivering value to all stakeholders in a collective, not just to the company itself. However, the shift in thinking required to apply this new approach is a challenge of its own.
In this article, we provide an overview of both the new and traditional approaches to development and commercialization. Next, we describe a problem for which we are currently developing a business opportunity to solve: helping parents provide adequate and appropriate support to children with attention deficit hyperactivity disorder (ADHD) or autism. We then use this problem as a case study to illustrate how the implementation of a facial emotion recognition software application might be substantially different depending on the development and commercialization approach used. Finally, we describe the key lessons learned and next steps in developing this business opportunity.
In the September 2010 issue of the OSBR, Tony Bailetti described a new model of development and commercialization, which he labelled Model C. The Model C approach is in stark contrast to the traditional standalone approach (or Model A), which “pushes a supplier’s products, services, and solutions to customers, either directly or through intermediaries.” The Model C approach encourages companies to interact with multiple stakeholders to rapidly co-create products and services. The focus of Model C is to, “create new things that deliver value to customers and to all the organizations that contribute to the company’s development and commercialization initiatives.” This approach can be very effective, particularly if used to harness the power of collective action. Collectives are groups of people and organizations brought together to achieve a common goal; they “harness diversity to produce significant system-level outcomes” (Bailetti, 2011).
Bailetti’s key criticism of the traditional Model A approach is that the required development and commercialization process is too time consuming and expensive to lead to long-term success in today’s environment. While he argues that the Model C approach is an entrepreneur’s best bet for generating revenue in the short and long term, this new approach requires a new way of thinking. In this article, we use a case study of the author’s business opportunity to illustrate how the Model A and Model C approaches lead to different implementations of the same solution. In the following section, we describe the problem to be solved.
Case Study: ADHD and Autism
The inability to interpret facial and tonal emotion lies at the core of several disorders affecting children, including ADHD and autism. Children affected by this problem - known as facial affect recognition disorder - face a number of significant challenges that may be unrelated to their intellect, but affect their ability to interact effectively with their peers. These children thus react differently to social situations. They may be aggressive, argumentative, susceptible to meltdowns, and generally challenging to interact with. These behaviours may lead them to be ignored by their peers or bullied. In the case of ADHD, research has shown that these children have higher rates of substance abuse in their teen years compared to other children.
ADHD affects 3 – 5% of children, while autism and related disorders affect 0.1 – 0.2% of all individuals. In addition to these numbers, we must also consider the impacts on the parents and caregivers of children affected by these disorders.
When a diagnosis of ADHD or autism is reached, parents seek solutions to help their child. They are surprised to find that the existing treatment options are heavily focused on medications, with behavioural therapy playing an important, but poorly supported, role. Parents also report that the health care system is severely backed up, with long wait times for clinics and other treatment services. When spots become available, regular visits put added pressure on the time and monetary budgets of families, particularly if they live in rural locations. Despite best efforts, schools are unable to offer much beyond independent learning plans. Together, these factors leave parents in a difficult situation; they are desperate to help their children, but face a stressful challenge and struggle to provide adequate and appropriate support.
Parents often turn to a limited selection of tools designed to help children develop facial emotion recognition and social skills. These tools include posters, flash cards, books, animated computer games, puppets, and role-playing scenarios. However, evaluating the child’s progress with these tools is difficult and subjective; parents often cannot identify which specific areas are showing improvement and which ones need to greater attention.
Proposed Solution and Competing Implementation Approaches
To solve the problem outlined above, we propose the development of a software application that will deliver facial emotion recognition training using tablet computers.
The most obvious business model for this solution would be to develop the application and then sell it to parents directly or through an app store. Ideally, one or more healthcare providers would be hired as consultants to provide advice on the features, including perhaps reporting functions for parents to track their child’s progress. This implementation would be a typical outcome of the traditional standalone approach (Model A). However, for the solution described here, the Model A approach minimizes the value of the application because it only addresses the facial emotion recognition aspects of the problem. As a small company operating under this approach, any attempt to try to do more than build and sell the application might be interpreted as taking the focus away from the core of the business. Selling applications is a viable business strategy, but it is likely difficult to sustain success in the long run.
In contrast, following the Model C approach to this problem results in a very different implementation and business model. When viewing this solution through a model C lens, we must consider that this solution adds value to the child, parent, healthcare provider, and technology providers. Acting as a collective, these groups can co-create a significantly more valuable solution to improve the lives of children with ADHD and autism. Considering the interests of other participant’s products and services creates opportunities to develop an integrated solution. For example, we can interact with parents, healthcare providers, and technology providers to add data-capture capabilities that will track the child’s progress, analyze the data, and send reports to a designated healthcare provider. In turn, the healthcare provider could use the application to view reports and discuss the results with the parents using integrated teleconferencing features.
The Model C solution goes beyond just adding value to the parents in the form of time saved and additional information about their child’s progress; it also adds value to the healthcare providers who save time and gain a new support service and it adds value to the solutions technology providers can offer to healthcare staff and consumers. For the technology startup, this equates to earlier commercialization, lower initial costs, and a greater number of revenue opportunities. Below, we further describe the value propositions to each member of the collective, including also researchers and change agents:
1. Children: For the child, the solution provides a fun and exciting game that they look forward to playing by themselves. They find they are allowed more time on the computer, without a lot of negotiations with their parents. Their social life improves along with their relationships with their parents, even if they are unaware of the cause.
2. Parents: Parents finally get a solution that their child can work on independently. It is convenient and affordable. Because of the teleconferencing service, they no longer need to drive all over the city for meetings with healthcare providers. They can monitor their child’s progress and any improvements they make. Their stress levels decrease because they now have an effective solution that is based on their needs.
3. Healthcare providers: Healthcare providers now have the ability to offer new services that complement their existing ones. They save time because their efforts spent developing the application now scale to the benefit of other users. They have a way to measure the progress of the child through the automatic data capture, analysis, and reporting capabilities. In addition to this, they no longer have to spend their time generating progress reports. They can now focus their time on working with the child to improve those aspects of social skills that are deficient. They also benefit from positive interactions with parents who are now less stressed about their child’s condition.
4. Technology providers: This solution leverages several existing technologies and open source platforms. Providers will be able to increase their revenues and exposure in new market segments.
5. Researchers: With input from researchers into the development of the application, it can become a means to gather data and test theories of facial emotion recognition. Incorporating their findings and feedback into the product will be of significant value to the future users of the application.
6. Change agents: Opinion leaders act as agents of change. These individuals are key influencers who help change social norms and accelerate change (Valente and Pumpuang, 2007). In this case, opinion leaders influence new service offerings and technology implementations. As members of the collective, they are able to perform their role more effectively. Providing them with the necessary education and training and converting them to champions will go a long way to increasing the adoption of this product. This is significantly more effective than client testimonials.
Lessons Learned and Next Steps
Identifying the problem described in this case study was an iterative process that started with a hunch, and then involved a close examination of all possible stakeholders and the key issues that affected each of them. The challenge was to figure out if this was a problem for one person or for many. Examination of the research relating to different aspects of this problem confirmed that this was indeed a solution for many, globally.
Having an understanding of the pain points for the various stakeholders was crucial to the development of an effective theoretical solution. There were many solutions possible, but being able to tie the solution together to address the pain points of many stakeholders and change the whole system as a whole made for a compelling solution.
As a business opportunity, this solution is in its very early stages. The next step is to take this idea and quickly validate it with minimal cost. A prototype is scheduled to be built in collaboration with representatives of key stakeholder groups. The decision of whether or not to proceed with this opportunity will be based on feedback on the prototype.
Children that have ADHD or autism no longer have to be bullied or isolated by their peers. This solution addresses the core of the problem and gives them the tools necessary to socialize effectively with their peers. It gives them an activity to do independently while reducing the stress of their parents by eliminating the need to take time off work to travel. Healthcare providers and other stakeholders also benefit by offering new and more effective solutions. By applying the Model C approach to this problem, a more compelling solution is achieved.