The disruptive threats facing businesses today may be driven by any of the tremendous shifts in demographics, technology, the workforce, the economy, natural resources, and countless other changes affecting how we live and how society functions.
Addressing these shifts by deploying advanced technologies, hiring millennial employees, launching into a new market, or investing in an innovation lab may only turn out to be bandages on festering wounds, if the impacts that matter to your business model are not identified and acted upon in ways that deliver value and create new sources of leverage.
Imagine drawing a business model visual on a wall-sized panel, not as a financial model only, but as an implementation path reflecting many levers and interconnected ranks. Some levers and cranks are controllable. Others only change as a result of impacts several times removed. Some may jam unexpectedly or even crack with no warning.
For leaders, the nirvana state is to foresee and influence the movement and condition of any lever or crank. Doing so demands having a complete end-to-end view of how the business operates – not how it should operate, but what is actually going on as people, policies, and processes come into play. This view starts with having a vision and strategy for serving a market, and continues on to executing plans and achieving results.
To set up the possibilities for finding critical impacts and levers in your business model, start by addressing these six points:
- Know your purpose. How will your brand solve problems for the people you want to serve? What do you stand for that matters to users of your products and services, and that will inspire their commitment to you based on what you are able to do for them?
- Validate that there is a scale user group. How big is the audience you want to serve – those you can reach, who have the means to buy your offering, and whose needs you can satisfy so well that you can earn and sustain a relationship with them? Avoid the misplaced comfort offered by spreadsheets loaded with numerical estimates, which may appear more certain than they really are simply because that’s the nature of “data”.
- Be ready to ask questions, explore and experiment. The era of projecting a year’s worth of performance 18 months in advance, and then carefully managing month by month with relative certainty, is long over. Organizations with cultures of discovery and rapid, iterative experimentation are better positioned now to manage unpredictable risks and grab unforeseeable opportunities. Plans are dynamic. They embrace ambiguity versus trying to eliminate it.
- Confirm revenue realities and investment assumptions. Have a “green light moment” to check for the user insights and performance in alpha and beta trials that support scale assumptions. Are the sources of revenue that drive your business model supported by real evidence of user engagement and buyer support? Or are they mathematical projections that require better substantiation? Can your organization execute at the quality standards upon which your rollout financials depend?
- Look at the resources required. A division president coming in to an organization undergoing transformation once remarked, “Around here it is very easy to start doing new things, but it is almost impossible to stop anything.” I’ve not met too many executives these days looking forward to increasing expenses. Be resourceful to create the resources. That does not mean being a cheapskate. It means aligning resources to purpose, and choosing the best combination of priorities based on the impact delivered for the effort required.
- Translate the plans into reality. This means not just financial statements, which ideally are the happy by-product of organization design, policies, processes and infrastructure updated – transformed if necessary – to deliver on all stakeholder expectations embedded in your evolving business model.
Business model design should capture how the business operates. No concept will become a business without a business model – even if that means, in its early forms, the business model is hypothetical and qualitative. Great ideas, even those that users love, cannot create value by themselves. That’s why being able to articulate the business model in actionable specifics is so essential and worthy of leaders’ focus as a priority.
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