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понедельник, 17 апреля 2023 г.

What Is A Business Model Essence And Why It Matters

 


 By 

A Business Model Essence, according to FourWeekMBA, is a way to find the critical characteristics of any business to have a clear understanding of that business in a few sentences. That can be used to analyze existing businesses. Or to draft your Business Model and keep a strategic and execution focus on the key elements to be implemented in the short-medium term.

What is and why a Business Model Essence is important

Not all businesses are born equal. We can categorize them based on several characteristics, and based on the level of granularity, we can find more or fewer differences.

A solo business isn’t as complex as a ten-person business, which in turn isn’t as complex as a hundred-person business. And the matter is complexity isn’t a simple game.

It works on exponential grounds. A group of ten people isn’t the same creature compared to a group of a hundred people. In short, in business, we have a problem with scaling due to the dynamics of complex systems.

Therefore, the system that I’m using here tries to reduce complexity by trying to find the essence of any business, which per se is a herculean task.

That essence might be useful for several reasons. For instance, as FourWeekMBA is followed by business students, professors, executives and entrepreneurs, each of those people will use a business model essence with a different aim in mind.

At the core, a business model essence wants to be a snapshot, yet it is essential not to take it too seriously otherwise, the risk is to make it become a cartoon.

A student or a professor of business will use it to summarize what she thinks a business is made of. An entrepreneur might use it to focus on how to grow their own business or how to compete with existing organizations in a specific industry.

Business models and their essence are made of assumptions. Assumptions need to be tested in the real world. And this is the whole point of business strategy.

A triad to find the business model essence of any company

Having specified the limitations of this approach, we can now turn to it and see what elements allow us to extract a business model essence.

In particular, I argue that there are three key elements any business will need to master to generate a successful business model:

  • Core product or service: the whole process of finding product/market fit is about “being in a good market with a product that can satisfy that market” (quote by Marc Andreessen). You can have the best distribution strategy or sales team in the world, but without a product or service that the market needs (unless you have unlimited investors’ money), your company will go bankrupt.
  • Core distribution strategy: while the product and the service matter. Once you do have a good product or service, the remaining success of the organization’s growth is a distribution strategy that allows an organization to grow over time.
  • Core monetization strategy: what’s the part of the business that makes more money at higher margins? And who’s the customer (not the user) of a service/product? Thinking about the core monetization strategy emphasizes the customer rather than the user.

I use the term “core” as many companies (especially large ones) have a business model that is made of many products or services, delivered through several distribution channels, and where each of those might have a separate monetization strategy.

For the matter of finding the essence, we’ll look at the core product/service, distribution channel, and monetization strategy, as this is a good starting point to have a snapshot of a company.

Once we have figured out the essence of that company, we can understand what’s next and how the resources that are getting unlocked by their main products, distribution channels, and monetization strategies are getting used to create new ones!

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What is Core in your Business Model?

Focusing on what a business does best, is often argued the easiest and most efficient way for companies to grow and be profitable. In the 1980s Tom Peters and Robert Waterman referred to this as "sticking to your knitting" in their classic book In Search of Excellence,a decade later Gary Hamel and C.K. Prahalad described the concept as focusing on "core competencies" in the Harvard Business Review article The Core Competence of the Corporation.

The core is not only unique competences
For me working primarily in intellectual asset and intellectual property management, the core is very often a set of innovations, unique technology, patents or developed software. But the core in a business model can equally be a unique way of delivering services, a unique position within a network of actors, a strong relationship with a certain kind of customer, strong strategic alliances, a unique recipe, a low cost operation, an established brand etc.

Increasing levels of collaboration
The trends in many industries are that markets show high dynamics in rapid development of new products, rapid commoditization of products and high price erosion. This puts pressure on the companies to open up processes and collaborate with external actors to shorten time to market, get a lead time over competitors and obtain higher margins in early phase markets. So with the increased pressure on the companies and the possibility to use external assets and capabilities, what elements of the business model should you focus on? What elements are core in your business model?

Questions to find the core
Identifying what is core and what is not, is a great starting point for business model innovation. To identify what is core in your business model a systematic way to start is to map out the different components of the business model, using the business model canvas, listing the different parts in Excel or just drawing boxes on a whiteboard and for each of the components ask:

In relation to what others could provide, how unique is:
Also:
  • How important is each of the elements for your business and the positioning in your value network?
  • How important is it for your overall business model, does it reinforce other parts or is it a weak link?
  • How difficult is it for others to imitate?
  • What future opportunities would you lose or gain if someone else provided it?
  • What are the risks of letting someone else provide it?

Identifying and using what is core

When starting to analyze what is really core in your business model you often find opportunities for business model innovation. Perhaps it’s not what you deliver but how you deliver it, that makes people buy? - Perhaps you should deliver something else as well given your good way of delivering things? - Perhaps it’s not the gadget you sell but the software interface that people like? - Could other gadget manufacturers need your better software interfaces? - Perhaps the reason someone wants to collaborate with you is because your customer relationship and contracts with a governmental organization? - Could other companies be interested to get access to the same organization?

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четверг, 15 октября 2020 г.

Employee Recognition – Designed to Drive Company Values

 

by Ann Lyons


What values do you wish your employees to live and present to others? Are those values clear and apparent throughout your organisation?

One of the easiest ways to demonstrate company values to your employees is to implement an employee recognition programme. Simply put, employees are encouraged to thank and recognise their colleagues for behaviours and actions that support company core values and company objectives.

But what are core values? For Eric Douglas, it is clear: “They should be honest and authentic statements of what’s essential to the organization’s success”.  Eric Douglas 2015: Why core values matter and how to instil themDouglas goes on to explain that your core values need to be linked to specific behaviours. For example: “customer service can be tied to how quickly employees respond to complaints or requests for information”.

So how can you reinforce company values with an employee recognition programme? How do you Mind the Gap between what should be happening in respect of recognition, and what is happening on the ground? Employee rewards alone will not drive core values and behaviours. Organisations need a strategic, highly-engaging recognition programme to go to work for them.

 

Here are 10 top features of a successful employee recognition programme:

  1. The system should make it easy for managers and peers to give and receive instant recognition. This will be helped by making your company’s recognition programme accessible via an app and on multiple operating systems – a basic requirement today.
  1. The system should be highly engaging for users. Consider how we communicate today using social media: you could communicate values to your workforce and leverage company activities using an interesting and intuitive social recognition platform.
  1. The system should help you to get to know your colleagues. Giving employees the option to upload a photo and include some basic information on their personal profile helps them to identify colleagues and supports their on-boarding process.
  1. The system should automatically link recognition to core values and behaviours that support company goals. A system that facilitates endorsements and comments from peers or managers further enhance the recognition experience.
  1. The system should encourage a daily sense of recognition with emphasis on all employees being recognised, across the entire organisation. Employees and/or managers may be assigned a monthly allocation of points to give to their colleagues and/or team members.
  1. The system should support the clear visibility of all recognised employees while also facilitating private recognition messages. Transparency around the recognition that is received is important for fairness and demonstrates that all employees are living company values.
  1. The system should aim to offer rewards and be flexible enough to include products, services and experiences that matter to your employees. Rewards are always attractive but avoid making them an entitlement and use a system that will help manage your budget.
  1. The system should allow real-time reporting of employee engagement levels. This will allow you to measure participation across the organisation and modify your recognition strategy accordingly. Without this, it is difficult to measure ROI.
  1. The system should be fully supported locally. The recognition provider should ensure that your programme is customised to your requirements and provide on-going support. They should offer guidance to get the best use out of the system.
  1. The system should incorporate recognition best practice. Using a proven system supports senior management and HR. It will have a greater chance of delivering quality employee recognition to increase employee engagement.

 

Take Away

Employee recognition has changed dramatically over the years. Senior management now understands that employee recognition plays an important part in attracting, retaining and engaging employees. It is a good decision to invest in a recognition system – but choose wisely and mind the recognition gap!


https://bit.ly/3dvuRA3

воскресенье, 4 декабря 2016 г.

Want Better Answers? Try Better Questions

In order to grow your business, you need to have a strong definition of your identity and goals. Norm Levy explains why you need to take the time to ask yourself simple yet crucial questions like “why does my company exist?” or “what are our most important goals?”

By: Norm Levy


Answers to the future growth of your business depend on your ability to ask the right questions. These are the fundamental questions that underlie the core of your intention.
Why does your business exist?  This question reveals your true purpose.  It is the most powerful question, and all other questions revolve around this nucleus.
Howard Behar, former president of Starbucks, authored It’s Not About the Coffee and expressed “when organizations are clear about their purpose, they find the energy and passion to do great things.”  This enabled his team to carry out the essence of their mission, “to inspire and nurture the human spirit.” The result: a place where people love to meet.
Go beyond just products and profits in expressing your purpose.  What is your company’s unique value contribution to the world?
Which business are you really in?  This question implies a choice among alternatives.  Choosing wisely depends on the linkage you make to your core ideology.
For example, Steve Jobs’ core ideology at Apple is the intersection of technology and the arts.  This strategic context led to iPods, iPhones and iPads.  Each became blockbuster post-PC successes.
In exploring alternative choices you have for your business, identify which central theme will remain a predominant driver of your decisions.  This answer may lead to a fresh examination of opportunities to pursue.

Who are you?  This question focuses on your people and brand.  Building great brands begins with your own expression of what you stand for, reinforced by the perspective of your customers.
For example, Disney spans amusement parks, movies, video games, music, cruises, and TV.   Their brand focuses on one central theme successfully carried out by employees: making people happy.
How do you describe who you are?  How does the marketplace describe who you are?  Decide which aspects of your identity will remain constant and which aspects will evolve over time?
Where is your business headed?  This question addresses your vision and future market position.
For example, Coca Cola’s vision is “to have a Coke within arm’s reach of everyone on the planet.”  While perhaps not achievable, this image leads one to explore many possibilities.
Ten years from now, where could your business be positioned?  Engage your executive team in “painting the canvass” of your future.  With this end in mind, work backwards to determine what it takes to get there.
What are your company’s most important goals?  This question demands measurable results over a set timeframe.
As humans, we are energized by a compelling goal.  President Kennedy’s goal to land a man on the moon and return safely by the end of the 1960s moved an entire nation to action.  His goal was simply stated and compelling.
What single goal, with a metric and timeframe, is moving your entire company to action?
How will you achieve your goals?  This question deals with a process or methodology.
For example, GE holds an international reputation for nurturing extraordinary leadership talent in their many businesses.  Their leadership development processes include extensive leadership training, constant executive reviews of leadership, top brass getting to know the families of upcoming leaders, 360 leadership assessment surveys, and a culture that revolves around leadership.
How do your business processes directly support your goals?  Which areas need to be strengthened or eliminated?
When will you take steps to address critical issues facing your business?  This question addresses the timing of taking action. Create a storyboard so that you know how each action step will lead to your desired outcome.
For example, in order for the Washington Business Alliance – a non-profit comprised of CEOs – to address critical issues in Washington State, their first action step is to demonstrate deep understanding of the issues.   This leads to the other four elements of their work: collaboration, innovation, advocacy and achievement.
What is the sequence of steps your team must take in order to address the critical issues in your business?
Conclusion: These powerful questions serve as the core elements of inquiry that combine to form strategy.  They reveal the fundamental dimensions of intention: purpose, choice, people, position, goals, process and action. If you routinely use The Seven Questions® as a model, you’ll discover better answers for growing your business.

Stress-Test Your Strategy: The 7 Questions to Ask




An economic downturn can quickly expose the shortcomings of your business strategy. But can you identify its weak points in good times as well? And can you focus on those weak points that really matter?
A stress test—an assessment of how a system functions under severe or unexpected pressure—can help you home in on the most important issues to address, whatever the economic climate. By asking tough questions about your business, you can identify confusion, inefficiency, and weaknesses in your strategy and its implementation.
As Peter Drucker once warned, “The most serious mistakes are not being made as a result of wrong answers. The truly dangerous thing is asking the wrong questions.” For the past 25 years I have researched the drivers of successful strategy execution in a variety of companies and industries. Through this work I have identified seven questions that all executives should ask—and be able to answer. Master this list, and you will keep the fundamentals of your strategy execution on track.
The questions may seem obvious, but the choices they represent can be tough, and their full implications are not always immediately clear. The first two questions compel you to set strict priorities. The next two assess your ability to focus on those priorities by designating critical performance variables and constraints. Questions five and six investigate whether you are using techniques that will enhance creative tension and commitment. The final question deals with your ability to adapt your strategy over time.
Let’s take a look at each question, so that you can see how you—and your strategy—measure up.

1: Who Is Your Primary Customer?

Choosing a primary customer is a make-or-break decision. Why? Because it should determine how you allocate resources. The idea is simple: Allocate all possible resources to meet and exceed your primary customer’s needs.