Managing your business model?

Is managing the business model relevant to you as a manager?  Yes, if your responsibilities include the delivery of value to customers because you will be more effective if you clearly understand how your organisation adds value and how it makes money or attracts funding.

The financial shocks since 2008 and the impact on consumers and businesses have and are changing the way that all organisations operate and this process is unlikely to slow down in the foreseeable future.  At a basic level, your ability to survive as a manager may well be linked to how well you understand your business model and how well you manage it to produce real results for your organisation.  So what do you need to consider doing?

First of all, what is a business model?  What a business model is is described amply at http://en.wikipedia.org/wiki/Business_model  A way of developing a business model is at http://www.businessmodelgeneration.com/canvas  The canvas requires you to make decisions about customer value, customer segments, channels to market, revenue streams, costs, partners, key activities and so on.

What are the benefits of working through the business model canvas?

  1. You are forced into looking at your organisation from many different standpoints simultaneously – customer value is linked with channels of communication and channels of communication are linked to your cost base for example.  You see the whole not just the individual parts which should help you to see the relevance of different activities.
  2. If you are inclined to change a part of the business model the canvas invites you see what the knock on effects might be on the other parts of your model, for example, your business partners.  Unintended consequences are, therefore, likely to be reduced.
  3. The business canvas model is very customer focused as customer value lies at its heart.  Whether you are serving external or internal customers or a wide range of stakeholders, a focus on customer value is likely to improve decision making about the use of scarce resources.
  4. We all have blind spots and no manager can be perfect.  The canvas is a useful tool to use to help you identify any blind spots you may have or flaws in your systems thinking.  This alone could save you a lot of trouble.
  5. It raises important and relevant questions that you really should be able to answer.  What customers are willing to pay for is particularly taxing in the present economic climate.
  6. My personal experience is that it leads naturally to action, for example, finding out what customers are paying for at present.

Like all management concepts, the business model canvas is only useful to the extent that it leads you to do something different or do something that you may have overlooked.  In the last analysis, if you are managing the delivery of value actively and are clear about how you manage the delivery of value you are much more likely to survive and prosper.

I raise money for the Alzheimer’s Society in the UK – a small donation at http://www.virginmoneygiving.com/everyonedeservesgoodmanagement would be most appreciated.

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