If you’ve been following our blog, you’ll know that I’ve recently spent lot of time chatting to people and reading up about leadership. Based on this research, and my own personal experiences as a business owner, I’ve outlined four essentials that I think are paramount for leadership success. They include – teamwork, strategy, execution and leadership. I’ve already written about the importance of teamwork, and this week I will be focusing on the importance of strategy. More specifically, I want to highlight the value of developing a sound business model.
To start, I want to make something clear – having a business plan is not the same as having a business model. Your business model is at the centre of how you aim to make money, it is the engine that determines how well you are going to deliver products and services to your customers. A business plan, on the other hand, includes your goals, long-term objectives and other hopes for the business.
Traditionally, business models saw business owners having a product and premises; they’d try to form some sort of brand loyalty and secure customers. This business model was simple – you buy something and then sell it to someone else at a higher price.
This works well enough, for a while. But these days it’s become quite clear that business execs need to create a business model with sustainability in mind, thinking about how their product or service will continue delivering value into the future.
In an era of digital transformation and the Fourth Industrial Revolution, business models should be developed to create a closed loop ecosystem that secures new clients quickly and generates enough value so that users keep coming back for more.
What does this mean? Well, look at a successful brand like Apple. According to Interbrand’s annual survey, Apple outdid the likes of Google, Coca-Cola and Microsoft to be named the world’s most valuable brand. And that’s because Apple’s offerings have gone beyond smartphones and tablets to include various subscription-based offerings like a music streaming service, a cloud storage and cloud computing service, as well as a mobile payment and digital wallet. And these all interlink with each other and with their hardware offerings.
So, let’s assume you’ve already established a business, is it possible to reinvent your business model? And how necessary is it to do so? From a strategic perspective, I believe that business leaders need to sit down with their board members and re-evaluate their existing business models at least once a year.
This entails asking questions like:
- How safe is my business model?
- Can it evolve?
- Is it still relevant?
- Can my competitors do something better or faster than I can?
- Is this still something the market needs/wants?
- Are there any laws or new regulations that could put my business model in jeopardy?
- How quickly can I secure clients?
- How predictable are my current and future revenue streams?
- What are my human capital requirements to support this business model now and what will they be in the future?
One of the biggest mistakes I see in the industry is that people totally underestimate how much time it takes to properly plan, develop and implement a solid business model. They also frequently overlook the value of securing buy-in from their workforce. If your teams don’t understand the business model, if they don’t believe that they’re contributing to something bigger or don’t feel like the model offers them opportunities to grow, they’ll have no connection with the business and they won’t support your business goals.
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