You understand your business model right? Of course you do. Today the phrase “Business Model” is over used and has a variety of meanings so, although you understand your business model, I bet your team would be hard pressed to define it the same way.
As a strategist, I find that management teams are not clear on how the pieces of their business fit together to form their unique business model. To develop a new strategic direction, you must first understand what is at your core before you start messing with changes to it. Therefore, I have honed these 4 elements to ground strategy discussions. Although they are not everything that you need to define your business model and outline a winning strategy, I find that gaining clarity on these four elements goes a long way to anchoring the rest of the important aspects of your business to create true competitive advantage.
1. Your Target Audiences
Defining who you serve with your product or service offering is the first core element of your business model. It is highly likely that you have multiple and seemingly overlapping targets, but grouping these targets into three clusters and ranking them in terms of their importance to your business focus is an important first step. Once defined it is easier to explore the historical beliefs about these target groups and your assumptions about how your relationship to these audience many need to evolve as your business model evolves.
2. Your Market Offering
Mapping your product and service offering against your target audiences and define the needs your current offering is striving to address brings discipline to what you offer. As organizations grow they can expand their product/service offering for a variety of reasons. Deliberately aligning your offering to your target audiences may result in you redefining what you offer, or it could identify a new target to serve. This exploration often results in greater clarity on what to eliminate and where to increase focus in the near term.
3. Your Essence
The concept of "essence" in business strategy comes directly from marketing strategy or brand development strategy. I don’t recommend diving deep into your brand essence is this first pass, but understanding the concept of your entity's essence is critical for shaping a unique position for yourself in what is almost always a crowded, highly competitive market. I define essence very simply: what you are best at and what is most important to you. As you look ahead, you will continue to invest and protect what you are best at and you will seek partners and collaborators that share what is important to you. Making this clear up front saves a lot of back and forth conversations in planning later on.
4. Your Unique Strategic Position
We all want to be unique! Organizations have an imperative to distinguish themselves, a competitive imperative. If you don't strive to establish your difference in the hearts and minds of those that you serve, the market (your competitors, partners and customers), will do so for you and you may not like the result. Although executing a powerful marketing and communication plan is the way to ensure that the market holds you in the exact space you desire. Defining your ideal unique strategic position is a core element of your business model that you need to address early on and continually test against.
The next time you are discussing shifts to you “business model”, I strongly recommend you stop and reground your thinking around these four core elements before proceeding. Who knows, you may find that the shift someone is advocating is not a good shift for you.
