The NABC business model framework was developed at the Stanford Research Institute (SRI), and is credited as a major component of its successful turnaround through the development of impactful innovations.
Curt Carlson was CEO of SRI from 1998, when it was on the verge of bankruptcy, until 2014, after it had developed and sold multiple impactful technologies, with Siri being the most famous and ubiquitous. In his 2006 book, Innovation: The Five Disciplines for Creating What Customers Want, he introduced the NABC business model framework. NABC stands for the four components SRI found necessary to articulate a complete value proposition: Need, Approach, Benefits per cost, Competition. For each component the framework asks that you answer one question:
- Need: What is the important customer and market need?
- Approach: What is your approach for addressing this need?
- Benefits per cost: What are the benefits per costs of your approach?
- Competition: How do those benefits per costs compare with the competition and the alternatives?
Hunter Hastings conducted a great interview with Curt on the Economics for Business podcast. The show notes (at the previous link too) and the tool the E4B team developed are great references. A big value-add of that tool is that it helps you stay focused on the customer and the value you intend for them to realize from your innovation. Those additional prompts to stay focused on the customer help you avoid writing a value proposition too focused on yourself.
I have used the NABC approach multiple times and keep coming back to it because:
- It is short and simple enough that you can consider it as an “affordable investment” for every idea
- Its four simple questions can be quite piercing to your idea and force you to bring your thinking to “the next level”— especially with the guidance of the supplemental material from the E4B podcast
- Both as a standalone document and as a starting point for an oral presentation, your NABC write-up is a catalyst for action on your idea