Taking a Design Approach to Your Business Model

Please download the assessment tool that accompanies this article.

“What is your business model?”  This is an important question that can be difficult to answer.

Every business needs a clearly defined, rigorously tested, and aligned business model – especially amid the challenging environment most organizations face today.  Taking a systematic, design approach to your business model will improve your organization and its performance.  According to Wikipedia, “A business model describes the rationale of how an organization creates, delivers, and captures value – economic, social, or other forms of value.”  Your business model is the “big picture” for your business, the context for making decisions, and the focus for where to improve your organization.

When diagnosing where to improve your business, business model assessment tools provide valuable data on whether your leaders have clarity on the business’ needs – and whether your leaders, managers, and employees are in agreement on where to improve the business and its current status.

When building your business, taking a design approach and using a business model blueprint enable you and your leaders to see the big picture of your organization.  They provide the framework for having the hard conversations without making them personal.

When delivering organizational improvements, a business model blueprint provides a visual for ensuring all areas are contributing to the organization’s direction, periodically assessing progress being made, and keeping everyone on the same page with the “big picture” of the business.  It helps everyone rally around where the organization is headed.

Business Model Areas

Documenting your business model involves defining the organization’s philosophy, value propositions, strategies, focuses, and measures.  In fact, a well designed business model includes strongly-aligned elements in each of the seven business model areas shown: Each area has a specific role:

• Philosophy creates purpose and enduring filters for decision making.
• Emotional Context creates the “connection” to our members/customers and employees.
• Strategy and direction provide tangible inspiration for what’s ahead, clarity on our uniqueness, and shows generally how the organization will get results.
• Alignment links the organization’s strategic direction to its delivery.
• Focus & Measures define where we’ll invest money and time and how we’ll gauge success.
• Delivery converts all of the rationale, direction, and uniqueness into results.

“Mediocre companies rarely display the relentless culture of discipline—disciplined people who engage in disciplined thought and who take disciplined action—that we find in truly great companies. A culture of discipline is not a principle of business; it is a principle of greatness.” Jim Collins

A business model blueprint is best viewed starting from the core and moving outward.  Inner areas nearer the core are deeper and more timeless, whereas outer areas are more flexible and changing:  For example, your Philosophy should stay constant over the years while your Delivery is likely to be changed (and improved) regularly.

Business Model Areas Assessment

To evaluate your business model, take the Areas Assessment survey included in tab 1 of the Excel surveying tool.  It will highlight the status of each of your business model areas.

See image of the Areas Assessment sheet below.

What areas exhibit your organization’s strengths and needs? Please list them below…

• Strengths (9s and 10s):  _________________
• Needs (7s, and 8s):  ____________________
• Major needs: (6s and below): _____________

In the final section of this article, you will compare the results from the Areas Assessment to the responses of your peers and your answers on the Complete Assessment below.

Complete Business Model Blueprint

With your areas of strength and needs identified, now gain understanding on the individual elements that comprise each business model area…

Review the complete Business Model Blueprint above for where each element fits in the overall business model.  To achieve a deeper understanding of each element and more completely assess your organization’s elements of strength and need, take the Complete Business Model Assessment included in tab 2 of the Excel surveying tool.

See partial image of the Complete Assessment sheet below.

From Assessment to Improvement

The results of these two assessments will expose key areas for learning and organizational development.  Following are several basic ways to review your scores.

1. Do You Have Clarity?

How clear are you on your organization’s strengths and weaknesses (in general and specifically)?  After reviewing your scores, answer these questions:

1. Strategic Clarity: Were your score results from the two assessments the same?  Specifically, do your Areas Assessment scores match the corresponding Complete Assessment AVERAGE row for each area?  The degree to which they match is your degree of strategic clarity.  Circle one:  Low – Medium – High
   
2. Operational Clarity: Do you know, specifically, what needs to be done and how to do it, in order to move your organization forward (i.e., to improve your organization’s assessment scores)?  Was it crystal clear which elements need improving and why?  The degree of your understanding of these issues, is your degree of operational clarity.  Circle one:  Low – Medium – High
3. Political Clarity: Are you clear on how individual departments and frontline employees would answer these questions?  (Maybe you should find out by having them take the assessment.)  Likewise, do you have a strong employee engagement survey or other tools for appraising the organization’s current culture and people alignment?  These answers and resources determine your degree of people/political clarity.  Circle one:  Low – Medium – High

2. Do You All Agree?

Do you and your fellow leaders agree on your organization’s strengths and weaknesses?

• Compare your Area and Complete Assessment scores to those of your coworkers.  How do the scores compare?  Discuss where the scores agree.  Then discuss where and why the scores vary.

3. Do You Have Outside Perspective?

Do you have outside perspective?

• Have your strategic planning consultant or a knowledgeable strategic partner fill out the Complete Business Model Assessment on your organization.  How do their scores reinforce or contrast with yours?  Why?

4. Do You Know How to Improve?

The fourth review involves creating a focused and time-oriented organizational development plan.

• What are the key areas and elements that your leadership and Board agree should be addressed?  In what order?  What will be the specific tactical plans implemented to address them?  Over what period?

Your answers to these questions are the beginning of your organizational improvement game plan for the next nine months to three years.  For more advanced reviews and to convert these results into organizational development plans, or for other guidance on improving your business model, contact us at (303) 980-8100 ext. 202 or rich.scholes@trynice.com .