First Things First & Aspiration vs Reality
We previously wrote on how important a tool the Business Model can be to a company. So now we want to launch into the steps to begin creating but first a few things to consider before we jump straight in.
1.Two business models should never be the same. You can certainly model someone else’s business (it’s a great way to view a competitor!) but we should only use this as a starting point. Creating a carbon copy of a competitor or customer simply won’t work. Your companies skills, values, capability, vision or customers will differ, something in your mix will be different and well why would you want to copy anyway? you business should be as unique as you and you should stamp your personality on it.
2.Our research and my personal opinion is it is best to complete your business model from the top and work downwards. You should always begin with the company Vision and then move onto the the customer facing side of the business such as marketing and sales.
3.Most businesses can categorise their model into one of a few types. These share similar business model layouts. The two model categories we will focus on are the customer based model and product/service based model. There are other types such as Freemium (free basic service to a paid for full monty premium service) and Multisided (bringing customers and suppliers together on one platform) but 80% of companies fall into our chosen two.
4.To do full justice to each component it would warrant one or maybe several books worth of content to fully master, but here we are only really interested in an overview to get you started. You don’t need to master the categories you just ned to know enough to be able to complete them. We cover much of this in our I.BOS and 1.BOS courses if you prefer a more workshop based learning environment.
5.I have referred to this in previous articles but if you can make the time it pays great dividends to define your current business model and your aspirational business model. This means looking at it warts and all. To have a before and after model you have the means to visualise what needs to be done and then create your business plan with its targets and goals to make it happen. The two models may overlap in areas with some already meeting the required condition. This is good as it helps to define what areas need thought and change, whilst others can be left alone for now, providing greater focus.
Business Model meet Strategy
In creating a business model you unlock a ton of information. In each section there are questions needing to be answered, decisions to be made, areas needing to be defined and research conducted. All this information unleashed will also form your business strategy.
In any situation it really pays to consider by-products in all areas of our work – what else gets produced and be of use whilst creating our primary purpose. For instance the founders of the company 37 Signals wrote a no 1 best selling business book called Rework whilst developing their own business systems. The book was a by-product of what they had learnt along their journey. In the material world every item we make produces some sort of waste, from swarf to energy – what else can you re-purpose?
Strategy works at the top level of the business. If you have one already use it to guide you in completing the components of your business model. if you don’t, then as you work through the components use it to create your business strategy.
In the book Playing to Win by Lafley and Martin, strategy is created through the answers to 5 questions. We answer many of these whilst creating our business model. Each of those questions are listed below set against the components of our business model. These 5 questions must be considered as a whole i.e. deciding where to play must be considered against our capabilities, do we have the necessary skills or resources to be a particular market segment?
- What is your winning aspiration? – Vision
- Where will you play? – Segmentation and Positioning
- How to win? – Value Proposition/Pricing & Revenue Streams/Cost Structure
- Capabilities? – People/Resources/Suppliers/Operations
- Management Systems? – Business Operating System & Process Design
Component 1 – Vision
Vision is a statement of intent for your business – what is the purpose of your business? Why did you establish your company? Where do you want to operate?
Remember when you first started your business – you probably had an idea of what you wanted to accomplish, how things would look in the future and maybe even the route you would take to get there – this is what we need here. Like putting a pin in map its point one in establishing where you want your business to be, a statement about the ideal future. From this vision you can begin planning how you get from here to there.
As this is your business model, the vision is not your personal one but the one for the business. It is important to clearly separate the two. Your personal vision maybe to create a certain level of wealth and independence or travel the world. Whilst important to define your personal vision it’s not what we need here. Ultimately you want the vision to be clear and paint a desirable future that can be communicated throughout the business. It should be your businesses guiding light, it’s North Star. The vision statement should be big enough that it guides every decision your business makes.
Depending on the size of your organisation you may do this by yourself or with your leadership team. It’s good practice to work with your senior staff and their input can certainly help gain buy-in to the vision, but ultimately it’s your business so you can decide.
In our workshops we look to define the vision in detail, using some simple tools. You may already have one, if so great simply insert here, if not it’s time to create your Vision Statement. Our 5 part process is detailed below for doing so. Writing down the Vision Statement is a wonderful exercise as it make it real, no longer will it be a dream in your head but a real tangible document which you can hang up add to you emails and be the focus on team briefings. If the vision stays in your head then staff will find it hard to work with you on accomplishing it. Once defined, it makes every other process much easier as you have a focus point.
Some organisations refer to their vision statement as ‘Our Purpose’, others have both a Vision and an ‘Our Purpose’. In essence it doesn’t matter what you call it, it matters what it states. Those companies with both tend to have a brief one line Vision with a more detailed statement in the ‘Our Purpose’.
The One Page Vision Statement – a Five Stage Process
We use this 5 stage process in order to fully identify your company vision. This should add up to about 1 page but can be more or less so don’t so feel you have to pad or reduce. This one page Vision Statement is perfect for giving people the full impact of what you are about and it lays the foundation for all decision making.
We divide the vision statement into five stages. There is no one correct order to complete this in, it should be more of an organic approach buts go from 1-5. Fill in the one section first where you are most confident and have firm opinions, then the others will become clearer. Don’t be concerned if you have to go back and revise stages as you complete others, this is also natural as each stage can change with an overall clarity.
I would recommend starting with a draft copy leaving it a day coming back to it review and polish up. This can then be the first page of you companies Operation Excellence Handbook (we will discuss this in other articles) and be distributed, pinned up wherever your staff are located. The more you communicate this vision the more people will buy in.
These 5 stages will add up to a big impact on your business. They will guide every other stage of the business model and your business. Simply by doing this exercise alone will make you feel epic!
If you need more help, why not consider enrolling on one of our short training courses. Designed to help business owners take full control of their business – scale up and create freedom. Email us to register your interest and we will let you know when the next course is available.
Please note sources of inspiration and information for this article, include, Built to Last by Collins & Porras, Play to Win by A.G. Lafley and Launch by M. Stelzner
Here are a few examples of vision statements to inspire you.
To bring inspiration and innovation to every athlete* in the world
*If you have a body, you are an athlete.
Our vision is to be the most trusted retailer, where people love to work and shop. We’ll do this by putting our customers at the heart of everything we do and investing in our stores, our colleagues and our channels to offer the best possible shopping experience.
Disruption is in our DNA and we’ve made sure this is captured in our purpose, the reason Virgin exists. Virgin Group’s Purpose is “changing business for good”. Changing business for good means:
- Thinking about the long term impact of the business decisions that we make today
- Having a clearly articulated, embedded and measurable purpose in every Virgin business that drives their decisions and fuels their success resulting in positive impacts on customers, people, communities and the environment
- Embedding our purpose principles and values in all existing and new business investments
- Pioneering systemic change beyond the Virgin Group through Sir Richard Branson’s profile and advocacy as a global business leader and rising to the challenges.