UUUSE, THE ZOMBIE HUNTER
The UUUSE Framework helps exit invalidated businesses and double down on good ones.
Once a company develops a system for incubating new ventures it must make tough decisions about when to expand, exit, or pivot in the face of validation or invalidation. In the absence of well-established exit/pivot/expand criteria, companies find themselves fueling ‘zombie ventures’ - businesses which were clearly invalidated but weren’t systematically wound down. In the pre-revenue stages of a new product these optimization systems are especially important and challenging.
I’ve developed and refined a portfolio optimization system that enables companies to make smart, objective go/no-go decisions across a portfolio of businesses at every maturity level; from early stage venture to large, mature business unit. With this system, a smaller proportion of innovation initiatives achieve their validation targets, but those that ‘graduate’ to the next level typically receive an investment increase of about 10X.
In one client this system helped triple revenue from alternative business models for three consecutive years three years.
The USE3 framework is a customer/market-centric framework for determining whether to continue funding a new venture. In this framework, a new venture progresses through the following stages:
How to use uuuse
USEFUL - Does the venture solve a meaningful problem for a viable addressable market?
USABLE - Once you test an MVP with problem owners is its value clear and intuitive to the user?
USED - Is there demand from the people or companies you test it with to become a beta-client? Is the solution stable and valuable in beta?
SCALABLE - Can you expand beyond your first mover customers and double or triple sales year-on-year?
EXITABLE - When the venture achieves a scale that starts to affect corporate earnings where should it live? As an autonomous business unit, a spin off, or serve as the engine of transformation across other businesses?
This is the spine of the model, but it must be customized for each company with clear, quantifiable hurdle rates at each stage of maturity. As a I stated earlier when a venture graduates from one level to the next its funding typically increases considerably. I suggest that no more than 10% of candidates at each stage of maturity should graduate.
The hardest part of the USE3 framework is not the model itself, but the political transformation it requires from the companies that adopt it. The reason USE3 is politically hard is because it usually takes power away from executives who used to make investment decisions based on gut feel. It takes tremendous discipline to not get pulled back into a model in which the most powerful person in the company gets to decide what succeeds and fails.
