Six important business model questions every leader must ask

Why a business model matters

Honestly, do you have a good understanding of your business model ? Does it fit the strategic aspirations you have concerning operational excellence, market growth, organization resiliency, competitive advantage and sustainability targets? Which initiatives and capabilities do you prioritize accordingly in order to improve ? How do you build a solid business transformation road map?

If you have insights of your business model it can help you to:

1. Uncover weak parts in your business model and act accordingly with the appropriate business initiatives and capabilities
2. Compare results of different business models, e.g., diverse business units, or compare yourself with “best in class” performer
3. Use it for annual progress reporting by keeping track of business model performance

What is a business model ?

If you are not familiar with a business model; it is the "invisible mechanism" that describes the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The business model acts as the blueprint of the business and a road map for its success (or failure). It is the only documentation that makes clear:

• The business concept; the market opportunity the business capitalizes on
• The target market the business caters to
• The problems the business intends to solve
• The solution the business offers and how it creates customer value
• How the business gets its customers
• The operating model the business follows
• How the business makes money and what are the costs incurred

Here are the important six questions to ask yourself:

1. Do you create significant value for customers because you perform and configure activities in disruptively innovative ways?
2. Is your cost structure conventional or disruptive and do you have strong margins from low costs and high prices?
3. Do you own key resources that are difficult or impossible to copy that which give you a significant competitive advantage and how easy or difficult is it for your customers to leave or switch to another company?
4. Do you have large-scale and, ideally, direct access to our end-customer?
5. How rapidly and how easily can you grow your business model without substantial additional resources and activities?
6. How large and attractive is the untapped market potential you are going after and do you use strong revenue streams and pricing mechanisms to monetize the value you create for customers?

If you are in AEC (Architecture, Engineering & Construction) or discrete manufacturing and would you like to get more insights in your business model, receive an one pager (see picture below) with your actual business model health with suggested business initiatives and capabilities, please take this 10 min survey.

Follow this link to access the survey (Google forms) Business Model Assessment Information you provide will be treated according EU GDPR compliance

?References

1.      Building Invincible Companies, Strategyzer, www.strategyzer.com