The energy it takes to build a business is endless – by now, this is becoming more generally acknowledged. But, unfortunately, businesses today routinely fail at crossing over to the “next stage” because they are so busy pedalling the bicycle of their current business model they leave no time, attention, or resources to design, prototype, and test a more effective business model.
In the past 50 years, the average business model lifespan has dropped significantly, from 15 years to less than 5 years. The most apparent changes are how businesses sell to their customers and how they buy in business-to-business and business-to-consumer contexts.
When our business models are unstable, there are clear patterns within the business that you will notice more often than not.
Compromising company vision
Broad/unidentifiable customer segments
Substantial challenges to scale
Attracting incompatible talent
Thinking that even one pattern from the list is a lot to handle and can be a deal breaker. The problem with patterns is that they are repetitive in nature. It might not seem crucial to address these patterns at every moment, but what makes them problematic is that they play a big part in the decisions you make about your company that stunt progress more often than not.
There are various categories that exist inside a business model. A business model canvas is a helpful tool to visualise a business model. You can find more about business models and their different types here.
4 ways to get your business model to work right:
Whether it’s your value proposition, activities or customer segments, they all have to work together and contribute to creating categories that align with growth. For example, if your key activities are not directly affecting your customer relationships, then the model will find it challenging to sustain your business in those two categories. Similarly, it is essential to keep the focus on how everything connects. Your “key partners” must align with every category, or else there could be areas that work better than others and cause an imbalance in your business model.
A rigid business model might have some short-term benefits, but to drive real change, your business model should be malleable to identify the most optimum way to operate. More often than not, Owners & CEOs double down on a model that shows immediate results, but there are chances you could be missing out on a more effective business model.
There will be a time in the business journey when momentum and direction come into play. If you can throw a ball fast but have no sense of direction, the goal of getting to throw the ball quickly becomes moot, and vice versa. It would be the same. In theory, given the opportunity, the ability of a business to move at a great force while keeping in mind the direction does show success parameters and optimistic forecasts. However, this does require specific decision-making skills and a strong foundation. A well-laid-out business model will have the potential to assist in both dimensions (impetus and focus).
It’s essential to know the long-term goal for each category and that they align with the long-term goals of a business. The goals from all categories form an ecosystem and a framework for your business to reach “success”. Setting milestones helps keep track of your long-term goals and even helps flesh out newer goals that align with your progress.
If you’re looking for a success formula, be aware that it doesn’t exist. What does exist are frameworks you can build for success.
For comparison, relate how you would want to meet your health goals, you could eat right and exercise, but they aren’t success formulas. What thrives is the direction you take to meet your goals, and those open a lot of other variables. If you hit your goals with the proper force, alignment and time, you have “success”.
Let us know if you’re looking for insights from a business model innovation expert to assess your business model; we’re always happy to help.