Linking your Business Model to Strategy

This article follows on from yesterday’s post on using future scenarios to put your business model through its paces. Drawing on some of the great ideas put forwards in Business Model Generation, I thought I’d pull together my own view on using a number of strategy lenses to look a bit more closely at your business model.

There are a number of different ways in which external forces on your business can be categorised. Drawing loosely on Porter’s five forces, and on broader environmental analysis, we can look to three broad areas:

  • Industry Forces: the way in which suppliers, partners, competitors, and new entrants are behaving and their impact on your business (particularly in their impact on infrastructure and resources)
  • Market Forces: changes in buyer behaviour and the way in which switching costs, substitute products, and emerging trends are (or are expected to) impacting demand for your products
  • Environmental Forces: Regulatory change, economic shifts, and broad trends in technology and society can also impacting your business as they put pressure on both industry structure and market behaviour.

Obviously, there is a lot going on here. Wouldn’t it be useful to have a simple, high level view of your business and the way in which it might be impacted by these various forces? This is where the business model canvas can come in handy. As well as using it to map out what your business does, you can also use it as a platform for asking a few pertinent questions of your strategists… as a focusing mechanism. Here’s one with a few broad questions to indicate some useful lines of questioning:

As a starting point, you could try asking these questions of your business model brainstorm, and see how this affects your business model and its effectiveness in delivering a scalable source of competitive advantage. You could also use this as a starting point for more detailed strategic analysis.

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