When your business model ceases to work well, don’t just forget it, do something about it.
Business Model fundamentals
It takes an exceptional business model to work forever. If it’s broken and not working well all day every day, and beyond repair, dispose of it and remove the mind traffic and frustrations.
Whatever the size or shape of your business we believe there are fundamentals that should be incorporated into your Business Model.
- Align your business plan and talent strategy. Ensure every aspect of your talent strategy directly contributes to your overall business plan. Creating value for customers. Change anything that doesn’t.
- Marketing is still critical to business success. Have your model identify exactly how potential customers will find you because you will enhance the customer experience.
- Knowledge management will impact the success of your Business Model. Look for ways to take advantage of ‘big data’ and the information and knowledge your business contains.
- Facing the future. Look at where your business is heading not where you’ve been. Keep questioning whether your Business Model will give you what you need when you need it.
- Will your Business Model take into account globalisation and the need to withstand any global and technology pressures? Pressures like intensifying competitive activity.
- Pay particular attention to pivotal roles and partnerships. They can contribute to profitable growth and sustainability of the model. This should involve outsourcing your non-core activities.
- Innovation will be a key to many businesses surviving because we no live in a more competitive world. If you maintain the status quo, you will never grow. Make your Business model flexible enough to incorporate new initiatives.
- Focus on the outcomes. Make measurements, benchmarking and analytics part of your Business Model.
“Your business plan won’t survive in the cold hard light of day if your business model is not sound and fit for purpose”. Peter Sergeant
Business Model structures are becoming more virtual
The virtual business phenomenon is transforming the way millions of Business Models operate. Some business owners are outsourcing nearly everything, by utilising cloud technology. Does your business model take into account outsourcing possibilities? They are including people and partnerships in their Business Models who may be anywhere in the world. Great Business Models are also needed to cost effectively and quickly start-up new ventures.
With ‘Generation Y’s and Millennials coming into the business world, hierarchies are starting to disappear. They expect to work in communities of mutual interest and passion, not structured hierarchies.
They want and indeed expect flexibility in their working arrangements, along with a nice working environment. Also, more and more businesses are becoming home-based.
Consequently, people management strategies will have to change. They need to look more like Facebook and less like the pyramid structures you might have been used to.
Your value chain should be part of the business model
Broadly speaking, this chain has two parts.
- Part one includes all the activities associated with making something. Designing it, purchasing raw materials, manufacturing, and so on.
- Part two includes all the activities associated with selling something. Finding and reaching customers, transacting a sale, distributing the product or delivering the service.
A new business model’s plot may turn on designing a new product for an unmet need, as it did with the traveller’s check. Or it may turn on a process innovation, a better way of making or selling or distributing an already proven product or service.
Mobility combined with cloud computing is enabling businesses to adapt to rapidly changing markets. All businesses, non-profits and communities need to move quickly to capitalise on cloud computing which is the biggest innovation. It is currently causing the biggest disruptions to old Business Models or ways of doing business. One important consideration is to keep your business model flexible.
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I find creating a new business model is a lot like writing a new story. At some level, all new stories are variations on old ones.
It means a reworking of the universal themes underlying your current operations. Similarly, all new business models are variations on the generic value chain that supports all businesses.