Last week I attended a webinar run by Dr Jeffrey Tobias, managing director of The Strategy Group, on business model transformation.
Dr Tobias is a great strategic thinker; he also happened to be one of the facilitators of my MBA course at AGSM in Sydney during our final strategic year in 2014 and led us through a fascinating exercise on Design Thinking using Australia Post.
For those who don’t know, Design Thinking is a solutions-based approach to creative problem solving. The first formal model was outlined by Nobel Prize laureate Herbert Simon in 1969 and has been influential in shaping many of the Design Thinking process models today.
It’s not about tweaking things at the margins, it’s about digging deep to uncover ways of improving user experiences. Old ideas regurgitated in new ways are still old ideas.
When we think about how to achieve sustainable, profitable growth, the concepts of innovation and disruption spring to mind.
But how many businesses out there can we say are truly disruptive? UBER is an oft-quoted example of disruptive innovation, but there are arguments to say that while the business is innovative, it is not disruptive innovation.
While these terms may well be overused buzzwords, in the age of the customer, we do need to be thinking outside the box when it comes to maintaining strategic relevance.
What got us here, won’t get us there
The premise of the webinar was that many business models that have been successful in the past, won’t be successful in the future.
As such, business model transformation is not a one-off concept; every organisation today needs to be regularly reflecting on whether their approach remains relevant in today’s VUCA environment (volatility, uncertainty, complexity and ambiguity).
Launch, deliver, sustain – and repeat. Business model transformation is a process, and the customer lies at the heart of it.
Dr Tobias talked through the nine box Business Model Canvas developed by Alex Osterwalder. If you’re interested to find out more, this article provides a detailed outline of the steps involved, the first and most critical being identifying your customer segments.
As an advocate for the customer, I couldn’t agree more with The Strategy Group’s assertion that in moving from idea to execution, the critical initial lens to apply is desirability; do people actually want the product/services/CVP you’re planning to offer them?
Too often, we see companies take a finger-in-the-air approach to testing market demand; behind any failed product launch is a marketer who didn’t take the time to understand their customer.
Of course, desirability is just one component. There’s also viability and feasibility to consider: if you were to undertake the strategy, what is the execution risk, market opportunity and risk, and financial opportunity and risk involved?
Execution is widely recognised as one of the key risks to strategy, so if you’re contemplating a large-scale shift in the direction of your business, it pays to make sure the organisation is ready, willing and able to pull it off.
Dr Tobias says that by conducting simple, low-fidelity experiments starting with desirability, the new business model can be significantly de-risked.
Don’t just apply more lipstick to the pig
We often hear about the concept of failing fast, and often. To do this, you need a culture that supports risk-taking, and accepts failure as part of the journey to success.
If you’re serious about business growth, don’t just apply more lipstick to the pig.
Take the time to reflect on whether your business model is truly customer centric. Does it reflect the needs of your customers not just today, but importantly, tomorrow?
Do you understand your customers’ pain points? What opportunities you have to surprise and delight them? What the most significant opportunities are to build a better customer experience?
If the answer to any of these questions is no, there is likely some work to do before you’re able to successfully position your business for the future.
Kristen is a highly motivated and passionate researcher with 13 years’ experience in financial services and seven years in the market research industry. As Director of CoreData WA, she is based in our Perth office and responsible for business development, client relationship management and project management across a diverse client base.
Follow Kristen on LinkedIn: www.linkedin.com/in/kristenturnbullcoredata