Business Model Innovation Hub

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Business Model Validation and Streamlining

Some business models are more complex then others. In the last few years I have been engaged in a number of exercises to validate business models and also to streamline business models to optimize the ' value delivered'. The main reason for this was generally that top management was not sure whether the venture woudl turn-out succesfully or that they felt there was 'more to gain' but couldn't find with certainty where this opportunity should come from. Some key challenges I encountered are:

- lack of end-2-end understanding of the business model within division, business units, which result in sub-optimal decision for the company

- Unclarity of cause and effect relations between projects and business outcomes within units and departments, projects and programs

- Huge investments in business case development and execution, but no or little investements in managing the results/outcomes of the business case, the programms and projects over time

- Static and re-active management of the business. There is focus on risk management, but not certainty management, there is focus on reporting results, but little on up-front analysis to steer results other then a one of investigation of what a plan might result in.

- General focus on finishing a project rather then realizing the benefits that are associated with the project.

To deal with a number of these challenges we've develop a methodology and toolkit to support a sustainable and innovative approach towards managing value for clients, society, shareholders and employees. Happy to share if you're interested or read

Tags: http://www.gowerpublishing.com/default.aspx?page=641&calcTitle=1&pageSubject=295&title_id=10023&edition_id=13350

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Comment by Roel Wolfert on August 10, 2012 at 1:45pm: Thank you Mike, I fully agree! Institutionalizing of core business information, expertise and especially business model understanding is essential for business continuity. I used the BMG approach in the past to support the modelling and development of the understanding on a broader level which was experienced as value add by many staff in the companies I worked with. On top of that I found the Value Management approach a great way of quantifying the business model and take out any discrepancy between theory and reality. In my view these two appraoches are completely complementary...I just need to work further with Roger Davies and some BMG experts to make the methods and toolkits more complementary and natural so more people can use it if they like it.

Comment by Mike Lachapelle on August 10, 2012 at 12:54pm: Thank you Roel, for the thoughts.

Another challenge for large businesses is implicit or internal knowledge. In many organizations the complexity of the business is understood by the operations or management very well, but only in their heads. When those people leave the business, that accumulated knowledge leaves with them, and the next generation of workers starts from scratch, or invents their own understanding of the business. One has to make that knowledge explicit so it can be shared and passed on.

Continuity and shared understanding are two very important reasons why it is important to document the business. The BMG approach provides a common language and a tool set to do that.