Business Model Reinvention

I once worked for a firm who found themselves going through a rough patch. With staff leaving left, right and centre the department was quickly dwindling to the point of no return. With no clear direction, a decimated sales pipeline, and a team of under motivated staff we were finally paid a visit by our otherwise inattentive divisional head. I still remember his opening comments for the one and only one hour workshop that was allocated to saving our skins:

So. Our business plan doesn’t seem to be working. Has anyone got any ideas what our new business plan should be. And can you make it fit on a single page of A4 so I can present it to the group strategy meeting at the end of the month. They like a lot of charts, so go easy on the word count.

And that was pretty much it. A somewhat stunned silence was met with a few half-hearted ideas and very little constructive discussion. The team was all gone within two months.

How else should you pivot your business model? 

We needed to reinvent ourselves. We needed a way to explore our business model, find out what was not working and test out some ideas which would overcome those obstacles and pivot our business model effectively. The question was how?

Osterwalder and Pigneur suggest a five phase approach (along with some of my own somewhat irreverent comments and suggestions):

  • Mobilise: bring together your design team, create awareness of the need for change and develop an agreed approach forwards. Or you could just all go to the pub with some pens and paper and get on with it
  • Understand: explore your current state and do some fact-finding to uncover needs and problems including going out and talking to customers. An accelerated version would be to have your team create a 15 minute sketch of the existing business model and talk through the key points of failure. You need a clear view of the value proposition, the profit model, the use of resources, and the processes which get the job done in a repeatable fashion. See here for a previous post on these four key elements to disruptive innovation
  • Design:  generate and test viable business model options. I’d recommend stating your very clear hypotheses and then getting as close to your customers as possible to test them. Ash Maurya outlines a very clear approach to doing this in Running Lean. For those of you still sitting around a table in a pub, get creative and explore your business model canvas bit by bit. Don’t stop at the first idea, push through and generate more.
  • Implement: my take on this is to put together all your tested business model elements into a single model and run it as a complete prototype. Gather some data and see if it worked. Track your results and go back to step 2 and try some other ideas until you are sure you have the best model you can come up with. Steve Blank talks about achieving escape velocity to move on to the next phase.
  • Manage: Continuous improvement should be set up anyway, so my take is that this is the management of a validated business model, i.e. you have now scaled so you want to keep a hand on the tiller to keep things running.

Hindsight is a wonderful thing. In our case, simply having the business model canvas as a shared platform for exploring our options would have been an enormous help. Adding on this layer of structure to the process could take it to the next level.


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