Business leaders need to tell a compelling vision-empowered story, clarify the logic to interweave all important success factors, to ensure that the business model makes sense and engages the people to implement it successfully. Business models describe, as a functional system, how the pieces of a business fit together to create customers and generate value.
Dealing with that “VUCA” reality is a strategic work; every enterprise runs into competitors; sooner or later, it is usually sooner due to increasing changes and frequent disruptions. So the essence of a business model is some source of value that represents a competitive advantage.
Logic underneath the business model is an entire frame of elements that describe the intents and constraints of a business and do it within the boundaries of the enterprise: At a conceptual level, a business model includes all aspects of an approach to developing featured products or services, for serving target customers: A Business Model is operational in nature and structural; it is therefore related to a business strategy in time, describing the rationale of how an organization creates, delivers, and captures multifaceted business value (economic, social, customer, cultural, or other forms of value).
A high-level strategic planning can produce a wide range of potential business models, each of them can further be examined in more detail to make it more specific and practical systematically. Business model reinvention also needs to be based on business’s core capabilities, either through providing new value-added service or product to current customers or exploring the new customer need.
Insightful managers scrutinize logic of business models, and improve investment decision effectiveness: Business model review enables the management to expand their thinking on how to adapt or redesign the basic building blocks of the business, to reach the next level of the business growth cycle. What the evaluations look like really depends on the nature of the business model. It is a little like the struggle in the sciences between theorists and experimentalists. They might dislike each other, but they actually need each other.
Theorists focus on principles, processes; experimentalists present learning agile, explore possibilities, learn-do-relearn-improve. Fine-tuning a viable business model is all about foreseeing and applying the emerging trends - that’s where you win the competitive advantage, and leveraging all necessary elements to create multidimensional business value.
It’s important to create a space for open dialogue and design brainstorming, developing a common understanding of business model innovation effort. The business model designers may methodologically review a list of levers for business model components, and generate the list of potential business model options, and then narrow choices based on their core capabilities in order to maximize the value via new business models systematically.
Understanding value in examining the logic of the business model at different layers of abstraction: A comprehensive business model is an analytical model that lists all of the sources of value, cost, and risk, and contains formulas to interconnect them. There are many layers of abstraction for a business model. At the high level of abstraction, business model descriptions can be a sentence long or a few paragraphs, they should be simple, intuitive, and tell the story.
But at the detailed level, they may need to emphasize analytic information or it requires that there would be any formal analysis. Find an analysis model that illustrates the numerical specifics of the operation of the business; identify customer sessions, tell how they were going to charge him, and identify what value they provide. Regarding the performance and behavioral reviews of higher levels of business model management, changes could be incremental through training and practices; transitional through improving on a process, or transformational if it is fundamentally shifting the entire business model of an organization.
Business model not only should be used for describing, analyzing, and predicting the evolution of a business system, but also provide a framework for managing its performance throughout the business growth cycle. To advocate a new business model, the business leaders need to tell a compelling vision-empowered story, clarify the logic to interweave all important success factors, to ensure that the business model makes sense and engages the people to implement it successfully.
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