What is a Business Model?
Let’s begin with what it is not.
It is not a traditional business plan; that elaborate, largely static document that seldom survives your first contact with prospective customers. A business plan has its value, but more often than not, over time it becomes little more than shelf-ware.
In contrast, a business model is a clear, concise, and cohesive statement of how you are going to engage with your customers and compete in the marketplace. Of how you create and then capture value. Of how you compete and win.
It is the implementation of your strategy, an identification of the involved structures, processes, systems, and relationships. It guides and informs your work. It is dynamic and iterative. It is designed for ongoing refinement as you learn.
Your business model is a clear vision of the outcome that you seek, and as such will provide your team with a common vision and sense of purpose. Only through this clarity are you and your team able to properly prioritize, execute, learn, adjust, and repeat.
Business plans still serve a purpose, but unless you have invested the time, insight, and ongoing effort into creating and refining your business model, you do not have a viable business. Get your business model right, and do so right now.
At Threadian we endorse the concepts outlined in Business Model Generation by Osterwalder & Pigneur. Pick up a copy to understand why. In short, it is a useful tool that will help you to think through the various elements of your business model, and to then depict their interdependencies.
Business model development and tuning is a specialty here at Threadian. In every engagement, our client gains a far greater understanding of not just why his or her business may be struggling, but also of why it is succeeding.
Together we create a flexible, simple, and insightful framework that allows us to ask better strategic and operational questions, to truly engage in strategy refinement and strategic planning. Definitely no shelf-ware involved.
In closing, companies compete on the basis of their business models. Products do not sell themselves. Customer needs are not met nor loyalty created unless you understand how best to engage with and serve these customers. Through a well articulated and collectively understood business model, will always be able to identify what you and your team need to be doing right now to better deliver value to your customers and to better capture in profits your portion of the value you create.
We encourage you to invest the necessary time and resources to ensure that your business model truly is your basis of competitive advantage. The ROI from doing so is tremendous. Need help? Ask Threadian.