... where visionaries, game changers, and challengers discuss business models
When I tried to implement the business model canvas for building a medical device for developing markets, the biggest challenge was the "mindset of the organization" to wear a different lens and start looking at it holistically. Building a momentum for a "shared perspective" and "driving the change" was the biggest challenge.
Cultural changes are always hard. Often, with companies in domains such as medical devices, the hardest element is to get the leaders to shift their focus away from their products and onto the customers. Critical to success of any business is understanding the market, and the value you are creating that is important for the customer. There are many, many great products that have failed in the marketplace because the companies failed to understand the concept of value from the customer's perspective.
Further, it is important to understand in B2B sales there are multiple customers that have to considered for the value. The end users are only one of the clients. One must also consider the value prop for the recommenders, the financial controllers, and the decision makers.
One of the challenges that we are facing is re-focusing people's thinking and attitudes to embrace the business model and align all strategies to the direction spelt out by the model.
Similar to Anil's experience, it is very important to focus on the value proposition - customer segment relationship. It sometimes helps to isolate the initial conversation to just that topic. The rest of the business model canvas then naturally fills in from that understanding.
Let me give you a practical example.
I was working with a procurement organization that was very locked into their ways of thinking, extremely focussed on their processes. To shift the conversation I asked the senior leaders what they felt their value was to their clients. They responded they created great contracts that saved their clients money, i.e. they defined value by what they do. The next question was - if you create a great contract that saves the clients 40% but the supplier defaults and doesn't deliver, how much value have you created for the client. The obvious answer was - none. Value for the clients is defined by the delivered good or service they need to sliver their products and services. By re-defining the core value of the business, we were able to look at the whole of the business and shift the conversation on what was most important to the clients.
i find that HOW you come up with the model greatly affects it buy in
a) Did you get the 'leader' (CEO, board etc) to buy into it?
b) Did you develop and test the model collaboratively with the people?
A hard lesson I've learnt is this: A B-grade model that the people collaboratively come up with is far better than an A-grade model that the boss or some consultant or a single individual comes up with. (everyone loves their ugly baby more than the neighbour's model baby )
The simple act of collaboratively building, testing and challenging the model is the biggest and most effective way to re-focus attitudes and to embrace it.
My challenge is to get same perception about the terminology within management member
if you can, get everyone into a 2-hour Introduction to the Business Model Canvas. I did one which went like so
- Started the session with a parable of 10 blind men and the elephant. point of the story was that most of us, like each of the blind men had a small perspective of how the company creates value. Getting the whole picture will change how each person behaves and enables them to be more proactive in adding value.
- "What if we could describe how our business works on ONE page? (as opposed to sleep-inducing stragegy documents?) - I introduced the canvas as the most effective tool for that
- I played the video from Strategyizer about the BMC
- I worked through the Google and Facebook business models
- I then divided them into groups to map our the canvas for the company
At the end, I get all groups to consolidate their canvases into one.
That usually does it to bring everyone to the same vocabulary.
You have to appreciate the approach to customer relations has evolved, expanded since BMG was written. This is probably the most common confusion about the canvas I find with my clients and course attendees.
In BMG the focus of CR is mainly the nature of the relationship you have with your customers and how you are going to support them. That hasn't changed in what we teach now. Is your relationship going to be automated or personal short or long term, and how will you interact wit your customers?
What has been added to the perspective comes from the relationship with Steve Blank and his work on customer development. The second element of CR is the strategies you want to follow to acquire, retain and improve the interactions with customers - commonly known as the GET, KEEP, GROW strategies.
That brings me to the most significant aspect of CR. What I teach in my courses is CR is about the STRATEGIES you want to use to get and keep customers. Those strategies include the nature of the relationship with your customers, as well as acquisition and retention of customers.
Things like 'lock-in' or 'switching costs' are retention strategies designed to ensure customers remain with your company. Other strategies may include competitions, loyalty programs, reward programs. Discounts, promotions, brand image are examples of acquisition strategies.
In this way CR is different from CH in that your channels are the specific mechanisms you will use to transact business and implement your customer relations strategies.
Thank you Mike. That quite clarified it a lot more. Any books or material you would recomend for me to get more inight into this block?
Or put differently ... in what way does the BMC fall apart if I take out the CR block?
Not sure why you would want to remove the CR block. Even if the customer(s) is mandated - as with a government agency or an internal business unit - it should be necessary to understand the nature of the relationship and the strategies to be followed to ensure a healthy, encouraging engagement with the targets.
Here's an example. I worked with two government organizations who were in the same general area of interaction with the public. For one of them social media was for broadcasting, to disseminate critical information. For the other, social media was for problem identification and resolution, a way for citizens to contact them when they need support. In neither of these cases was the discussion around acquiring or retaining customers, but in both cases the discussion was about the purpose of engaging citizens.
sorry I didn't explain, I don't actually want to remove it. Just thought if someone more clueful explained to me how the bmc falls apart without that block, then i'll understand it better.