Thursday, December 6, 2018

Can you Articulate a Business Model as a Compelling Story

The business model is a living breathing thing and can be articulated as a compelling story.

The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit. To advocate a new business model, the business leaders need to tell a compelling vision-empowered story, to ensure that the business model makes sense and engages the people to implement it for achieving the business value effectively.

A business model covers 100% of the business, there are a couple of dozens of different components which can be woven into a compelling story: At a conceptual level, a business model includes all aspects of a company’s approach to developing a profitable offering and delivering it to its target customers. A review of the relevant literature reveals that more than three dozens of different components in the business model such as target customer, type of offering, and pricing approach, etc. Companies may explore the concept of a business model by addressing several core questions that the majority of business model researchers deal with their models such as: (1) Who is the target customer? (2) What need is met for the customer? (3) What offer will we provide to address that need? (4) How does the customer gain access to that offering? (4) What role will your business play in providing the offering? (5) How will your business earn a profit? In any working business model, the answers to these questions are fixed. But what if they weren’t? What if you considered each of them as a variable? What new opportunities could you capture that you can’t address with your current business model? The business leaders can articulate a vision-empowered story by answering these questions form the essence of business model experimentation and weave them into a vivid business story.

The business model story is data-supported as the essence of a business model is some source of value that represents a competitive advantage: Often, when the shareholders say they want the model, they are asking for the summary of the model. The important point is that there is a real model behind the narrative summary of the model. It generates predictions for how much money they will make. As such, it contains numeric values representing the business leader’s assumptions about the market, about profit, and about costs, etc. This is important because these assumptions can then be measured through market research. An enterprise may have more than one business, as most moderate size enterprises have more than one business, and therefore more than one business model. A real business model is an analytical model that lists all of the sources of value, cost, and risk, and contains formulas to interconnect them. When business models don't work, it's because they fail either the narrative test (the story doesn't make sense) or the numbers test (not having the satisfied ROI). Thus, telling a data-supported compelling story to articulate business model is an important step to share the vision and persuade shareholders that the model does make sense, to get the top leadership buy-in and employees’ engagement for transforming the business model story to the business reality.

Articulate a vivid business story with all interrelated and sequential components such as business model, business strategy, and business architecture: A business model shows what an organization intends to do to create value. Business strategy is the way an organization intends to realize its business model, and business architecture is the way the strategy is operationalized. Business strategy diagnoses the key business problems that the organization needs to solve, set guidelines, and take actions to implement tailored solutions. Business Architecture shows “how” an organization actually creates value. The business strategy of an organization is included as part of its business architecture model. The sequence is - Business Model, Business Strategy, and then, Business Architecture. A major focus of business architecture is that of understanding and improving value creation and value flows. The business architecture content posted earlier clearly indicates this: Value Streams, Value Chains, Value Systems. The digital leaders as the great communicator can share a compelling story, develop a plot with all these important pieces, and articulate the story in an informative, analogical, and persuasive way.

The business model is a living breathing thing and can be articulated as a vivid story. The analytical parts are encased in the business plan. And the analytical parts of the model are the parts that are used to make the ROI case. The challenging part of the real business model is that one must be careful of what cost optimization/restructuring/ performance measures need to be considered while trying to model a particular business growth scenario. Business models are full of stories, but you need to learn how to articulate them with clarity.


Post a Comment