ROUNDMAP™ Full Stack

 To understand what elements and aspects the ROUNDMAP™ mapping system actually contains, we’ve created what we call the ROUNDMAP™ Stack:

While the Integrated Customer Lifecycle™, at the bottom of the stack, is all about lateral/horizontal integration, driven by cross-functional collaboration, the other layers of the stack, from the Experience Matrix™ up to the Business Model Matrix™ integrate through vertical alignment.

This theory is based on what we perceive as correlating attributes between aspects of each of the layers, that need to be aligned to optimize the operation.

This has led to a strategy-execution arrangement, known as the ROUNDMAP™ Full Stack:

Case study IBM

Before 1974 IBM had a product-centric business model. Its goal was to grow market share, based on a wide portfolio of IT-related products. Big blue was a household name and marketing was all about the brand experience. From 1976 onwards, while facing increased competition, the firm shifted its business operations by focusing on higher-value, more profitable markets. Its shift began by being perceived as customer intimate, followed by a full shift towards a customer-centric business. In 1994 the firm reported the largest operating loss ever recorded in corporate history: Customer Centricity should never be applied without a companion business model. However, the company recovered miraculously by using its in-depth customer insights to shift once more: to a resource-centric operation, utilizing a vast team of multi-vendor system integrators (acquired from PwC’s consultancy branch). Seeing these people in action was all it takes for customers. Today, IBM is about to make another shift, now that system integrators are no longer in high demand: it is shifting (clockwise) towards a network-centric operation, based on Watson and IBM Cloud.

https://roundmap.com/roundmap-full-stack/

Experience Matrix™

 

Experience Design is widely recognized to be critical to the customer development process. Not just in our digital age, but even long before bits-and-bytes driven firms grabbed control of the helm from their brick-and-mortar predecessors.

Global research by Avaya (2014/2015) indicated that “Eighty-one percent of those who have seen a significant increase in profits have a CEM (Customer Experience Management) program in place, compared to those who have seen profits remain static (46%) or suffered a decrease in profits (35%).” and “Companies see the biggest improvements in customer satisfaction, loyalty, retention and repeat purchasing, which the survey finds is largely attributed to the fact that 88% of customers would rather spend their money with companies that make it easy for them to buy.”

In contrast “a staggering, 81%/82% (2014/2015) of organizations have seen their CEM initiatives fail in the last three years.” According to business decision-makers, “the top reason for CEM failure is project-misalignment with customer preferences, indicating communication barriers within organizations themselves.”

If anything, the ROUNDMAP™ is designed to increase the effectiveness of cross-silo collaboration. However, it is also important to mention that the scope of the third sector, Delivery, is much wider than offering customer support and customer service.

As indicated by the Avaya-research, “companies do not typically associate functions like finance, R&D, IT and operations as dealing with customers. This could be a blind spot in the way they approach and plan CEM initiatives given that people across all departments within the company have direct or indirect contact with customers and prospects and not just the roles typically seen as customer-facing.”

This made us create the ROUNDMAP’s Experience Matrix™:

The Experience Matrix™ contains four elementary experiences:

1. Brand Experience or BX (product-driven)
2. Customer Experience or CX (lifetime-driven)
3. User Experience or UX (service-driven)
4. Shared Experience or SX (meaning-driven)

Similar to how we’ve mapped four value disciplines to four elementary business models in the Business Model Matrix™, we have also mapped experience design to the business model.

For instance, a product-centric business model should focus on BX-design, while a resource-centric business model profits most from UX-design. Coca-Cola is a product-centric business, with a product-leadership value position, driven by brand experiences. Greenwheels, on the other hand, is a resource-centric business, driven by user experiences.

In fact, the choices regarding business model, strategic advantage, value position, and experience design together are what sets the firm’s value proposition apart: from similar offerings or experiences.

Similar to how value disciplines are to be perceived, experience designers should keep a threshold, indicating that while experience design requires a certain priority in line with the business model and value position, it should not neglect the basics of the other experience design functions.

ROUNDMAP™ Full Stack

The Experience Matrix™ and the Value Position Matrix™ are both part of the ROUNDMAP™ Full Stack:

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Cover Image by Daria Nepriakhina from Pixabay

https://cutt.ly/x7G1qT7

Primary Business Models

 The Primary Business Models, identified by Edwin Korver, each has a distinct dynamic. Complementary to Don Peppers’ graphical representation of Product and Customer Centricity (the AS-A-PRODUCT business models to the left), we added two new graphs to complete the series.

13.1 - CREATING LEVERAGE

Leverage greatly determines the growth potential of a business model. Prior to the Business Model Matrix™ business literature recognized two levers: Share of Market (blue) and Share of Wallet (green). We pride ourselves to have completed the set with two additional types of leverage: Share of Utilization (yellow) and Share of Transaction (red).

It is important to emphasize that these levers aren’t particularly ‘new’, however, they gained traction due to the rise of digital technology which took away most of the physical barriers that previously limited the growth potential of the underlying business models.

13.2 - DRIVING GROWTH

A product-centric business model is based on generating customer demand driven by product development in order to profit from so-called economies of scale ─ in general, these types of companies looking to increase and defend their Share of Market.

A customer-centric business model, on the other hand, is driven by customer development. Your objective is to fulfill more of the needs of a select group of customers that are more likely to spend more and thereby allow you to increase your Share in their Wallet.

The leverage of a resource-centric business model, Share of Utilization, comes from an ROI on deployable resources. For instance, if you deploy a car in a car-sharing concept, your objective is to increase the utilization of the car, limited by its maximum capacity (Car2Go).

If you offer a ride-sharing platform ─ which is a network-centric business model ─ your objective is to bring together as many riders and ride-hailers together into one ‘space’ to increase the likelihood of a ride to occur from which you can obtain a Share of Transaction (Uber).

"The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man."

~ George Bernard Shaw, Man and Superman (1903)​

https://cutt.ly/d3MPUZ6

ROUNDMAP™ Universe

 ROUNDMAP™ Customer 360 consists on two dimensions, on the one hand a vertical perspective, consisting of the Business Model Matrix™, the Value Position Matrix™, and the Experience Matrix™, and on the other hand a lateral perspective, taken from the Integrated Customer Lifecycle™.

To perceive the two dimensions as part of one framework might be difficult to grasp, so we’ve created an additional illustration to explain the interrelationships.

In the figure above the Integrated Customer Lifecycle™ is represented by a color-coded horizontal ellipse, indicating the customer’s journey, i.e., crossing four silos, or four phases of a customer’s lifecycle: marketing, sales, delivery, and success. Strategy is executed cross-structure, usually top-down, while customer intelligence is captured cross-market, usually bottom-up.

Business Side

Before a customer can be served, we’ll need a business model explaining how we are going to create, deliver and capture value.

Next, we’ll need to look at how external parties will perceive us. This will determine our (relative) value position.

 

Now that we know how we are going to create value, and how we are (hopefully) being perceived in terms of value position, we’ll need to focus on the experiences we want our visitors/customers to have, Experience design and the Customer Lifecycle are strongly interwoven.

 

Market Side

 

As we execute our strategy of obtaining a piece of the market at a profit, some customers can be converted immediately, others have to be pursuaded over a period of time. We’ll need to track their behavior and learn about their intent, to transform them to satisfied customers. Any feedback from them, registrered in various databases, has to be unified and used to create more personalized experiences and more relevant value.

EDWIN KORVER

Architect of ROUNDMAP™ - Advancing Grandmastership of Business™ ✪ Business Model Matrix™ ✪ Polymath ✪ Generalist ✪ Systems Thinker ✪ Board Member, CEO CROSS-SILO BV

https://bit.ly/3Uogty0

Business Model Matrix™

 

We’ve just looked at the overall composition of the ROUNDMAP. After having created the Customer Carousel™, we found that the traits of two known business models ─ Product Centricity and Customer Centricity ─ correlated with marketing and sales, respectively. This opened up a whole new way of perceiving business models.

12.1 - NEW BUSINESS MODELS

Prior to the ROUNDMAP™, there were two known business models: Product Centricity and Customer Centricity. Product Centricity matured during the industrial age, during which the scientific management movement thrust worker productivity while cutting down on costs through economies of scale, accelerating practices that sought to increase market share.

In 1996, Don Peppers and Martha Rogers published the book ‘The One to One Future‘, a radical rethinking of marketing. The authors suggested to ─ instead of marketing standardized products to the largest group of people possible ─ focus on the needs of a select group of customers and try and fulfill more of their needs. This later became known as Customer Centricity.

By pairing Product Centricity to an emphasis on Marketing (persuasion at scale) and Customer Centricity to a focus on Sales (persuasion at scope), we wondered if the remaining departments/stages of the Customer Carousel™ ─ Delivery and Success ─ could also be matched to (yet unknown) business models?

By adding an extra dimension ─ ‘serviced used’ versus ‘products sold’ next to the ‘scale’ versus ‘scope’ dimensions ─ we were indeed able to describe and pair two new business models, Resource Centricity and Network Centricity, thereby giving birth to the Business Model Matrix™.

12.2 - BUSINESS MODEL MATRIX™

Business Model Matrix™ provides a single framework of four Primary Business Models, ranging from Product Centricity to Network Centricity. Whether you want to leverage your ROI from a Share of Market or a Share of Transaction (Facebook/Uber), or otherwise, is part of your strategic heading, while an additional choice of value disciplines offers further means of differentiation.

How to chose between primary business models?

12.3 - PRIOR TO THE MATRIX

Previously, a business was either focused on growing market share (product-centric) or gaining a larger share in the customer’s wallet (customer-centric). But these two models did not account for the rise of the platform economy, servitization or the sharing economy. The framework was incomplete. After matching Marketing to Product Centricity and Sales to Customer Centricity, we were able to identify Delivery with what we call Resource Centricity and Success with what we refer to as Network Centricity. This then became the Business Model Matrix™.

"In the age of the customer, executives don’t decide how customer-centric their companies are — customers do."

~ Kate Leggett, Analyst at Forrester​

While creating the Integrated Customer Lifecycle™, interconnecting all front-line departments, we found remarkable similarities between a focus on sales and the traits of Customer Centricity. Similarly, a focus on marketing pointed to Product Centricity. We started to wonder: Could we match other business models to the two remaining functional sections of the Integrated Customer Lifecycle™, and if so, what does it mean?

Definitions:

• Investopedia: A business model is a company’s plan for making a profit. It identifies the products or services the business will sell, the target market it has identified, and the expenses it anticipates.
• Wikipedia: A business model describes the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.”

Now let’s have a look at the Business Model Matrix™:

4 Primary Business Models

KNOWN BUSINESS MODELS

To understand why we mapped Product Centricity (blue) and Customer Centricity (green) the way we did,  you’ll need to understand the differences between the two.

Don Peppers, author and co-founder of Peppers & Rogers Group, created a simple graph to explain the differences, inspiring us to create the following image:

Don Peppers also came up with two descriptions:

“Product-centric competition is based on having a product that meets a certain customer need, and then trying to find as many customers as possible who want to have that need met. Success is measured by the number of customers reached. In competitive terms, this would represent a share of market.”

“Customer-centric competition starts with an individual customer and tries to meet as many of that customer’s needs as possible – across all the company’s divisions and business units, and through time. In competitive terms, this would represent a share of customer.“

EXPLOITATIVE

In the Business Model Matrix™ we used the term ‘Exploitative’ to capture the traits of Product Centricity, which is ─ as suggested by the vertical axis ─ a growth-driven business model used to exploit the full market potential (addressable market). This objective can (only) be achieved at scale through extensive marketing campaigns.

Examples: the majority of businesses operate in a product-centric mode.

EXPLORATIVE

Customer Centricity on the other hand is ‘Explorative’ by nature: it is an in-depth business model, exploring the scope of individual customer needs. It is NOT about pleasing your customers. Contrary to the marketing process, which addresses problems experienced by suspected customers in the market at large, the sales process is about offering a solution, building individual relationships, and helping lead customers to make informed decisions. Account-based marketing, or account management as we used to call it, is the best way to explore customer needs. In competitive terms, this model represents a share of wallet.

Examples: Intuit, IBM, Amazon, Capital One, and Harrah’s.

Both these business models are AS-A-PRODUCT models, meaning, it is about getting a customer to buy a product or service by which they obtain some form of ownership or possession over it.

UNKNOWN (NEW) BUSINESS MODELS

As you can see, both of these two business models match the right-hand side of the Business Model Matrix™ and, therefore, match the acquisition-side of the ROUNDMAP™.

However, as it becomes harder and more expensive to acquire new customers, leadership is shifting attention to customer retention. At the same time, digitalization is pushing competition from AS-A-PRODUCT to AS-A-SERVICE business models.

As it turned out, there was no framework ─ to my knowledge ─ to describe both these known and new business models. So I decided to study each of them, especially the ones that are often referred to by popular terms such as Sharing Economy, Resource Economy, Servitization, Uberization, and Network Economy.

This then got me thinking: Could I match these ‘new’ business models to the left-hand side, the retention-side of the ROUNDMAP. As it turned out, I could.

I found two destinct AS-A-SERVICE models: a growth-driven one, which I named Network Centricity, and an in-depth one, which I named Resource Cntricity. This allowed me to map these two new models along the same vertical axis as the known business models.

However, I needed to make another distinction ─ on the horizontal axis ─ to turn it into a favorable two-by-two matrix. By adding ‘Percentage of Services Used’ (l) versus ‘Number of Products Sold’ (r) the Business Model Matrix™ came to be.

REGENERATIVE

Resource Centricity is ‘Regenerative’ ─ it is about syndicating supply into a resource-based service-offering. An example of Resource Centricity is an airliner. The objective is to utilize each plane to its maximum capacity; it makes no sense to sell twice as much airflight tickets as there are seats available. Another example is a ride-sharing concept, like Greenwheels. Again, the objective is to maximize the use of each resource.

While car-sharing might appear ‘new’, it is not: we’ve shared resources (trains, airplanes, buildings, theatres, etc.) since the age of civilization, however, the internet and mobile technology in particular took away much of the physical restrictions.

Resource-centric competition is based on a service-driven resource that meets a certain customer’s need, and then trying to get as much of that resource utilized. Success is measured by the average percentage of the maximum capacity used over a period of time. In competitive terms this would represent a share of utilization.

DISTRIBUTIVE

Network Centricity, on the other hand, is about aggregating supply and demand in a marketplace, or ‘marketspace’ as it happens to be called in the digital world.

Modern examples of Network Centricity are Amazon’s Marketplace, eBay, and Facebook. It is where participants meet, often facilitated by a digital platform, to exchange value. However, we’ve seen these marketplaces appear throughout the ages, even along the ancient Silk Road. Again, digital took away many of the physical boundaries.

Network-centric competition is all about a hub where participant’s fulfill each others needs, and then trying to grow participation. Success is measured by the number of participants to the network, as well as the number of transactions between them. In competitive terms this would represent a share of transaction.

I guess you by now understand why we mapped these AS-A-SERVICE models as we did. Indeed, a resource-centric business model is a monitization of a service-offering, i.e., a focus on the delivery processes, while a network-centric business model exploits a company’s ability to pro-actively build lasting relationships, i.e., pointing to success.

ELEMENTAL BUSINESS MODELS

We found that it is now possible to describe any business model through the lens of the Business Model Matrix™. That’s why we refer to these four business models as the Elemental Business Models™. The figure below gives you a clockwise overview of the four models, their leverage and some of their traits.

We also created an insightful overview of how these business models regenerate(d) over time and a Strategic Playbook.

VALUE DISCIPLINES

You may be familiar with the three types of value position by Treacy & Wiersema. As it turned out, similar to the business models, I was able to map these value disciplines into the same 2×2 of the Business Model Matrix, but only after I added a fourth.

These value disciplines, as assumed by Treacy & Wiersema, are determine by the opinion of external parties of what the company is good at. To determine its value position, four rules have to be considered:

1. Try to be the best by excelling in one of the value disciplines.
2. Maintain threshold standards on other value disciplines.
3. Control the market by improving value year after year.
4. Support the value discipline you have opted for by delivering a well-chosen (operating) organizational model.

The three value disciplines are:

1. Product Leadership – strive for product development and product innovation – try to be better, smaller, faster, trendier, cheaper, etc.
2. Customer Intimacy – try and meet customer’s requirements and deliver mainly tailor-made work and one-on-one solutions – try to know everything there is to know about your customer.
3. Operational Excellence – aim to provide customers with high quality products or services at competitive prices and ease of purchase – reduce flaws, increase automation, and excel at service.

If you perceive these three value disciplines in sequence, you’ll begin to see that they follow the same pattern as the four Elemental Business Models. Remarkable, isn’t it.

FOURTH VALUE DISCIPLINE

But there is one missing. Treacy & Wiersema introduced their assumptions in 1993, before the Dotcom boom. One of the innovations that lead to the rise of e-commerce was the ability to show how much items were in stock. Prior to this, it was impossible to combine online catalogs with the actual status of an offline inventory. This led, combined with online payment processing, to large trading platforms like Amazon’s Marketplace and eBay.

When we needed to come up with a fourth value discipline, we therefore choose: Network Orchestration. We borrowed the idea from an article on Harvard Business Review, in which research, examining 40 years of financial data, showed that “Network Orchestrators outperform companies with other business models on several key dimensions.”

Although the authors suggested ‘Network Orchestrators’ to be a business model, we believe it is a value position, which can be applied by all four business models.

CONCLUSION

So, there you have it. Four Elemental Business Models™ and four value disciplines mapped in one matrix, the Business Model Matrix™, with which we believe you can plan and execute any business strategy. There is so much more to tell, so keep an eye on our newsitems to come, or assign to our newsletter so we can keep you posted.

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The Business Model Matrix™ is part of the ROUNDMAP™ Full Stack:

EDWIN KORVER

Architect of ROUNDMAP™ - Advancing Grandmastership of Business™ ✪ Business Model Matrix™ ✪ Polymath ✪ Generalist ✪ Systems Thinker ✪ Board Member, CEO CROSS-SILO BV

https://bit.ly/3w3OHwC