Your Business Model May Need Revamping

Have you been spinning your wheels trying to figure out how to create more value or how to transform your organization?  Did your company fail to deliver on last year's goals and objectives?  You may need take a step back and re-evaluate your business model. 

I often find that companies that are stagnant are laser focused on what they perceive as the problem area in the business and fail to take a step back and look at the bigger picture.  Sales are a great example.  A company who isn't hitting their sales targets tends to spend money on training, hiring new team members, and developing new marketing materials.  Yet, it may not be their sales team at all.  It could be that the value proposition has changed or that there is a need to re-examine customer segments or key partnerships. 

Since your business model describes the rationale of how your organization creates, delivers and captures value it just makes sense to revisit the model and envision what it needs to look like to be a dominant player in your industry.  With the rise of start-ups who are challenging the old guard, established companies need to ensure their models aren't outdated and re-design them to support their future enterprise.   

The Business Model Canvas is the tool that I recommend my clients use to re-evaluate their 9 building blocks.  This model is a game changer and has typically been used by startups to scale up quickly allowing them to establish, test and prove a business model before launching.  However, it is also an effective tool for established companies who are ripe for disruption or are trying to remain relevant in their industry. 

Below are the nine building blocks within the canvas and some questions that will allow you to assess and design the future model that is needed to grow your enterprise:   

1. Customer Segments - Who you serve.  Who is the value being created for?  How many customer segments are there?  Who are your most important customers?
2. Value Proposition - Problems you are solving and the needs you are satisfying.  What needs are you satisfying for each customer segment?  Is your value quantitative or qualitative?
3. Channels - How you communicate and reach customer segments to deliver your value proposition.  How do your customers want to be communicated with?  Which channels are working best and are most cost efficient?  How will you integrate the different channels?
4. Customer Relationship - Types of relationships established with each customer segment.  What type of relationship does each customer segment expect?  Which are established?  How are they integrated with the rest of the business model building blocks?
5. Revenue Streams - These are a result of the value proposition.  What are your customers willing to pay?  How do they pay?  How would they prefer to pay?  How much revenue is generated from each customer segment and what does it contribute to the overall revenue?
6. Key Resources - The assets required to offer and deliver what is required to make the business model work.  Who are your distribution channels?  Are they intellectual, human, financial, physical??
7. Key Activities - The most important things that need to be done to make the business model work.  What activities are required to deliver your value proposition, maintain customer relationships and ensure distribution channels?
8. Key Partnerships - Your network of suppliers and partners to make the business model work.  Who are your key partners?  What key resources do they provide?  Could they provide more resources?  What key activities are they performing and is their more activity required to produce more value from the partnership?
9. Cost Structure - All costs incurred to operate the business model.  What are the most important costs to support the business model?  Which key activities and resources are most expensive?  Are these costs value-driven?  What are the economies of scale or scope?

You can download your copy of the business model canvas here. If you are a non-profit, you can use the non-profit business model canvas.

As you examine each component of the business reflect on the current state and the future state of your organization.  Once you have determined the future state and proven the model you will be able to produce a solid strategic plan that supports your updated business model.

You can click here to read more about the Business Model Canvas and Business Model Generation by Alexander Osterwalder & Yves Pigneur or feel free to contact me if you would prefer to talk live about how the business model canvas can help you scale up and remain relevant in today's economy.