Business Model Growth Deployed
Incredible Result: “Our Leadership Team is never satisfied with just doing a great job of managing what we’ve got. They are constantly eliminating old opportunities we shouldn’t be doing anymore and creating new opportunities we should start doing.”
Avoidable Train Wreck: External forces (competitors, insurgents, economy, technology, government) start to beat you.
Main Play: The “We Refuse To Be Netflixed” Initiative
What This Is: This program, taught to your Profit Strategy Team, shows how to set up your Business Model Tool Room with the leading tools for designing rapid-response pivots and shifts to your Business Model. This is deployed to keep your Company in a distinct, leading, highly profitable Business Model, with a recognized competitive advantage, a unique value proposition, and a growing, long term, profitable outlook.
“The ponies kicked out part of the fence in the north pasture last night”, said my Dad. “Go get Ferd, will you Nick, and get it fixed. Everything you need is in the Tool Room.”
Ahh. The “Tool Room”. To an eight year old farm boy, the Tool Room was a dream come true. While companies like Amazon, Apple, Disney, Lockheed, Google, Hewlett-Packard and Mattel famously were started in garages, the Tool Room was my second home growing up. It was where I learned how to create, where I learned how to visualize possibilities, and where I learned how to put things together to come up with something completely new.
Working on your Business Model, just like working to build, fix and develop critical components on a farm, is a heck of a lot more productive if you have the right tools and you have been taught how to use them.
Leadership Balance
So, how do we take command of our Business Model rather than let it take command of us? In order for organizations to endure over time, leaders need to balance three critical activities with regard to their Business Models. These are:
• Preserve • Eliminate • Create
Every organization, through its leaders, needs to manage (or preserve) its existing Business Model, thoughtfully shut down or outsource (eliminate) certain parts of its Business Model which are no longer its sweet spot, and build (create) new aspects of its Business Model (or entirely new Business Models), if the organization wants to endure over time. (See The CEO’s Role In Business Model Reinvention, Harvard Business Review, Jan. 2011).
In other words, the organization’s Dynamic Leadership Core needs to take command, and be in command, of its Business Model – which itself will be in command of the present and future success of your organization in the business ecosystem.
And, to do so, we, as leaders in our organizations, need the right tools to be able to do this.
The reality is that every Business Model has a limited life. Organizations which are high, long term performers are already working on the creation of their new or revised Business Model before the time that their existing Business Model starts to stall.
Being willing to embark on a process of preservation, elimination and creation takes a willingness to explore new ideas and entertain creative activity and innovative thought. “The best way to have a good idea is to have lots of them,” according to Mihaly Csikszentmihalyi, the author of Creativity: Flow and the Psychology of Discovery and Invention. According the Csikszentmihalyi, the requirements for creativity are self-confidence and persistence.
Yet, many organizations get stuck into old, tired systems and old, tired thinking which prevent the development of new ideas.
For example, why didn’t Microsoft create Google. Why didn’t Blockbuster Video create Netflix? Why didn’t AT&T create Skype? Why did Xerox essentially give the “mouse” and “windows” to Apple?
It’s important that the leaders within any organization understand that new ideas might not necessarily have the proof which they would like to see. A demand for too much proof that a new idea will work can have the effect of inadvertently stifling innovation.
A good example of the willingness to make a logical leap is that made by Mike Lazaridis, the founder of Blackberry. The question he faced was how tiny could keyboards get. He had to make a leap of logic that people would be willing to type with only their thumbs.
Chad Hurley, one of the co-founders of YouTube had this to say about the process of creativity: “It’s not about being smarter. It’s not about being necessarily more talented. I think anyone that is going to be successful, it’s about continuing to try being creative, and having unique insights. It’s really just the small subtle things that I think make the biggest difference. And not being afraid to try.” (Fast Company Magazine, August 8, 2013).
Many don’t make the changes or adjustments. Many do. In a survey of 1,500 CEOs by IBM’s Institute for Business Value in 2010, IBM found that “CEOs are breaking with traditional strategy-planning cycles in favor of continuous, rapid-fire shifts and adjustments to their Business Models.” (Bloomberg Businessweek, May 18, 2010).
The “We Refuse To Be Netflixed” Initiative
But how are Family Business Pioneers making these “rapid-fire shifts” and are they being effective? Fortunately there are “tools” which we can use to be productive in preserving, eliminating and creating
Business Models. These tools, when discussing creativity and innovation, are in the form of the right key
questions. These are the principal key questions we are using in our Profit Strategy programs, in each case using these through the lens of the Business Model Canvas (in combination with the deployment of OKRs to maximize execution, alignment and engagement):
Preserve
What – What business are we really in?
Why – Why does (or will) our Business Model (still) work (if it does)?
How – How does our Business Model profitably create, deliver and capture unique value? Grade – How well does our Business Model work?
Challenge – How can we use the Business Model Canvas to challenge our ideas?
SMART – How can we overcome the five main barriers to consumer purchasing: Skill, Money, Access, Result and Time?
Intelligence – What strategies or tactics of my competitors should be used or improved to change my Business Model?
LockIn – How can we lock in our customers, partners and employees? Advantage – What is or could be our competitive advantage?
TROT – What is the predictable Threat, Result & Opportunity of a specific Trend?
Eliminate
BlueOcean – Which factors could or should be added (that the industry has never offered), increased (well above industry standard), reduced (well below industry standard) or eliminated (that the industry takes for granted)?
SWOT – What are my Strengths, Weaknesses, Opportunities and Threats?
Unbundle – Should we unbundle one or more business functions or features from our Company?
Create
Transference – What feature existing in another field or industry could be profitably transferred to our business? Fusion – How can we fuse together two or more product features, services or partners?
ValueProp – How can our existing or new value proposition better relieve a customer’s pains, create gains or accomplish specific jobs?
BlankSlate – What would be the ideal situation if we were starting from scratch on a blank slate? Ideation – What if … ?
Freemium – How can we profit more with free products or services?
PESTLE – How will recent or upcoming Political, Economic, Social, Technological, Legal and Environmental trends or issues result in new opportunities or threats?
CherryPick – What profitable segment from a diverse organization can we pick off for our Company?
Collaboration – How can we create and capture more value by systematically collaborating with outside partners?
TRIZ – How can we change the quality, dimensions, content, purpose, user, location, price, experience, volume, or timing of our product, service, processes or organization?
The Impact of Business Model Strategy On Your M & A Program
Every business we work with has some system for achieving organic growth from within. Many also have a well-designed system for seeking and evaluating businesses to acquire and for deciding what part of their Company they may want to sell off – in each case to better achieve their growth objectives.
The “New M&A Playbook” (Clayton M. Christensen, etal) points out how companies are closely looking at their own business model and the target’s business model in deciding what to buy or sell. Our firm has worked with business leaders on the purchase and sale of hundreds of businesses throughout the world. This business model analysis is something we see is being carefully deployed with the Business Pioneers we work with in making these types of M&A decisions.
“Find Your Tool Room”
The Corona Beer advertising campaign famously urges us to “Find Your Beach”. To protect and advance our companies we each need to “Find Your Tool Room”.
As an eight year old, my tool room was literally the tool room on our family farm. Today it is wherever my mind can be the clearest to be the most creative. This may be while playing games with my grandchildren, hiking through Superior National Forest near our cabin, riding horses on our family farm, just driving my Ford Explorer along the highway, or walking along “my beach” in Siesta Key in Florida.
The point is that for all of us and for everyone in our Dynamic Leadership Cores, our creative abilities usually flow better outside of the regular office – provided we are willing to commit to the excitement of always trying to come up with that improvement or breakthrough which will enhance our organization and the lives of those who depend on us.
Whether you call it your garage or lab or tool room, one of the keys to lasting success is to dedicate a team and a space to Business Model Research, Development and Testing. The willingness and guts to decide to commit to this process of reinvention (at the Business Model Command level) may seem to be difficult. Perhaps it will feel uncomfortable. But it doesn’t need to be, and it is necessary if your organization is going to achieve lasting success.
As the Harvard Business Review has found, “High performers are well on their way to new business success by the time their existing businesses start to stall. The high performers in our study had typically started the reinvention process well before their current businesses had begun to slow.” (Reinvent Your Business Before It’s Too Late, Harvard Business Review, Jan. 2011).
We are using these Business Model tools described above to work with companies and organizations to show them how to do exactly this.
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