Business Models fundamentals
When Business Models, like old machinery, cease to work well, don’t just forget them, do something about it. Business Models are not about magic or luck. Even old models can be made more useful.
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. Remove the clutter, mind traffic and frustrations.
Whatever the size or shape of your business we believe there are fundamentals which should be in your Business Model.
Here are some fundamentals to consider
- Align your business plan and talent strategy. Ensure every aspect of your talent strategy directly contributes to your overall business plan. You are 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.
- You are facing the future. Look at where your business is heading not where you’ve been. Keep questioning whether your Business Models will give you what you need when you need it.
- Will your Business Models 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. It should involve outsourcing your non-core activities.
- Innovation will be critical to many businesses surviving. Because we now live in a more competitive world. If you maintain the status quo, you will never grow. Make your Business Models flexible enough to incorporate new initiatives.
- Focus on the outcomes. Make measurements, benchmarking and analytics part of your Business Models.
Business Models 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.
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 authorities.
They want and indeed expect flexibility in their working arrangements, along with a friendly 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 used.
Your value chain should be part of your Business Models
The chain has two parts.
- Includes all the activities associated with making something and designing it, purchasing raw materials, manufacturing, and so on.
- Includes all the activities associated with selling something and finding and reaching customers, transacting a sale, distributing the product or delivering the services.
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 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 companies, non-profits and communities need to move quickly to capitalise on cloud computing which is the most significant innovation. It is currently causing the most significant disruptions to old Business Models. One important consideration is to keep your business model flexible in ways of doing business.
It means a reworking of the universal themes underlying your current operations. All new business models are variations on the generic value chain which supports all businesses.
“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
“Startups don’t fail because they lack a product; they fail because they lack customers and a profitable business model”. Steve Blank