Before Orville and Wilbur Wright successfully flew the first airplane at Kitty Hawk, North Carolina in 1903, people had been trying to fly by mimicking birds. Some documented attempts a thousand years earlier consisted of little more than gluing feathers on one’s arms and flapping furiously. More sophisticated forays strapped curved wings made from springs and feather-covered whalebones onto the body. The most advanced efforts were mechanical contraptions with flapping appendages, like Leonardo da Vinci’s “ornithopter.” 

We know today that every one of these attempts to fly like a bird was doomed to fail from the start, no matter how many experiments were attempted. That’s because the core logic behind shared by all of these flying solutions was flawed. Physics tells us there is no credible way that flapping wings can generate enough lift to overcome the force of gravity exerted on a human body.

Numerous disruptive industries today appear to be futilely flapping their wings in an effort to make a business model fly, from app-based food delivery (e.g., Deliveroo, DoorDash, Uber Eats), peer-to-peer car sharing (e.g., Turo, DriveNow, car2go), online women’s designer clothing rental and personal shopping (e.g., Rent the Runway, Le Tote, Stitch Fix), to buy-now-pay-later consumer financing (e.g., Klarna, Affirm, GreenSky, and Afterpay). In each one, dozens of startups have relentlessly experimented for a decade or more in search of profitability, only to come up short. 

Having guided over two dozen new corporate ventures and startups, we believe the source of the problem is the same one that sunk early attempts at human flight: they all rest on flawed core business archetypes.  

Just as all fix-winged aircraft share the same core aeronautical archetype, all the companies that make up an industry share the same core business archetype (CBA). The CBA is a high-level pattern common to every company’s business model in an industry. The pattern contains the basic commercial logic by which a functionality is made available to customers. It defines the basic shape of the product; the basic way it’s made, sold, and paid for; and the basic margin and cost structures. 

Each individual company’s profitability in an industry depends on its business model—how it chooses to deploy the core business archetype to outcompete others. The CBA, however, constrains the absolute performance potential of every business model. It sets a ceiling on how much value can be created for and extracted from the customer, and a floor on the cost structure.

When a CBA is flawed, the cost floor sits at or above the customer value ceiling. So, in the best-case scenario, there’s a very narrow path to profitability, where only the most optimized business model will work. At worst, there simply is no way to get a functionality to a customer in a way they want, at a price they’ll pay, and at a unit cost required for profitability, no matter how much the business model is optimized. It’s trying to fly by flapping wings. 

To avoid wasting time and money building and testing minimum viable products and business models with limited or potentially zero prospects of success, innovators need to start the venture creation process by first innovating a robust CBA—one that creates a wide path for profitability for the business model. 

In this section, we explain the relationship between the core business archetype and the core business model, and the science behind innovating robust CBAs. As part of the process, we introduce a tool called the Core Business Archetype Guide. It’s been developed and refined over the past decade, and applied to more than two-dozen new ventures at global corporations including Pearson, Barclays, BMW, and Mars, as well as several startups.