To take this one step further, organisations that have mastered disruption such as Netflix, Uber, Apple and Tesla have shown us that it is not enough to have a business model which operates within the boundaries of current limitations of technology and regulation, they require transitional business models in order to ‘get in the game’ early. This has enabled them to define the game.
In short, product lifecycles and design cycles are accelerating, inter-industry competition is increasing and there is increased disruption from new entrants with business models focussed on delivering superior customer experience.
Over the last few years, we have observed the five most common drivers of business model review with our clients to be:
Whilst the symptoms of these are broad and varied, the common link is that they are usually only tabled at times of periodic strategy review. Therefore, it makes sense to conduct a
business model review regularly as a part of the strategic planning process. If your organisation does not have a regular strategic planning process, then this is the first issue that
must be addressed.
Performing these types of ongoing reviews requires specific resource capability and capacity. It is the remit of the Strategy and Innovation teams to consistently monitor the KPIs that illuminate the need for such a review and then conduct the process with input from relevant stakeholders. The benefits of this approach include speed to recognise issues, with dedicated staff consistently reviewing, as well as deep knowledge of the business as they are tenured full-time employees.
Alternatively, having an external party conduct the process provides benefits such as an independent vantage point, deep experience in conducting the process with multiple organisations and industry types, and greater flexibility on costs due to temporary nature of contracting.
Although, there is a third option. In order to extract the benefits of each approach, it is important to partner with someone who will take your team on the journey. This way, the collective knowledge of the team is enhanced, the capability of permanent staff is improved and repeat instances of the process are better informed, more efficient and will ultimately have a greater impact on the business.
If choosing an external partner, then it is important that they are someone who:
It can be easy to dismiss rethinking your business model as something that big, innovative “tech” companies like Netflix, Tesla and Uber do, but in reality, it is essential that all businesses perform this activity on a consistent basis. I’m sure if Blockbuster had been conducting regular business model reviews, we would know the brand name for reasons other than an overly used case study of how businesses can lose it all.
The best way to ensure consistency of business model reviews is through inclusion in the strategic planning process. By doing this, it adds a level of consistency that is required to stay ahead of ever faster-moving business cycles and changing customer demands. It might also help you to recreate an entire industry.
If you would like to find out more about how Churchill Consulting’s Strategy and Planning team can assist your organisation, please visit our service line page and get in touch with one of the key team members to discuss.