Business model performance importance.

A good Business Model excites people.

Does everyone need a Business Model which works well all day, every day?

The Business Model must capitalise on the unique value your business, opportunity, project or social event provides. Does your model deliver valuable outcomes for prospective customers? Will it form lasting relationships and create advocates?  

Does it show how you will make the money you want? How will your model take advantage of the new digital technologies and communications available? The model should also differentiate your business in the marketplace. Even with social functions and events, you need to create an appropriate Business Model to generate better outcomes.

Today your Business Model needs to differentiate your business because it needs to be both creative and innovative in the face of adversity. While providing unlimited holidays for employees might not be part of its differentiation. It is one extreme example of applying creativity to the model.

More than ever before stakeholders are placing greater importance on social causes and a sense of purpose. The model should also be reflecting the aspects of globalisation, its competitiveness which affects the business, in addition to the technology which drives it.

The business model as a work of art

In The New, New Thing, Michael Lewis refers to the phrase business model as “a term of art.” And like art itself, it’s one of those things many people feel they can recognise when they see it (especially if it is smart or terrible), but can’t quite define it. 

That’s less surprising than it seems because how people interpret the term depends on how they’re using it. Michael Lewis, for example, offers up the simplest of definition, “All it meant was how you planned to make money”.

‘Business Model’ was one of the great buzzwords of the Internet boom, and was routinely used to glorify all manner of half-baked plans. A company didn’t need a strategy, or a distinctive competence, or even any customers.  A Web-based model was all it required while promising wild profits in some distant, ill-defined future.

Many people, investors, entrepreneurs, and executives alike, bought the fantasy and got burned. And as the inevitable played out, the concept of the business model fell out of fashion nearly as quickly as the .com boom itself.

A lot of capital was raised to fund flawed models and wasted, what a shame. The fault lies not with the concept of the business model, but with its distortion and misuse. A good business model remains essential to every successful projects and organisation.

Before you can apply the concept, a simple working definition is needed because it clears up the fuzziness associated with the term. Irrespective of whether it’s a start-up or well-established and regardless of the type of business or organisation, business models must be kept in line with current market and economic circumstances.

The business model also tells a story.

The word “model” conjures up images of whiteboards covered with mysterious mathematical formulas. Your models, though, should be anything but strange. They are, along with the stories at the heart of operations. Stories are needed which explain how your organisation works well through the good and the bad times.

A good Business Model answers Peter Drucker’s age-old questions: Who is the customer? And what does the customer value?

An entrepreneur destroys existing economic order by introducing new products and services, by creating new business models and by exploiting inputs

It also solves the fundamental problems every manager must ask. How do you make money in this business? What is the underlying logic? Can it explain how you can deliver value to customers at an appropriate cost, with profit to the shareholders?

Put quality time into how your business works.

Your decisions should align with your aspirations and be about choice, not chosen out of desperation. While the future is offering many exciting opportunities, the workplace and workforce are going to change pretty dramatically as we move into the very competitive global marketplace and times of adversity like prolonged droughts and the COVID-19 pandemic.

If people are working on projects they enjoy and are passionate about, they will be motivated by a well-conceived structure. A model which helps all stakeholders to cope with the competitive global marketplace driven by technology becomes essential.

Quotable Quotes

“You know your business model has broken when you’re customers stop showing up”. Peter Sergeant

“The reason why it is so difficult for existing businesses to capitalise on disruptive innovations is their processes and their business model, which made them effective in the past, leave them unable to compete in a new environment”. Peter Sergeant

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