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What defines a successful business model?
What factors do leaders need to consider in the design of their business model? How can they make it fit for purpose when seemingly everything around them is changing at pace?
Research has shown that a successful business model is shaped by the alignment of several core factors that allow an organisation to create, deliver, and capture value efficiently. There are many variables that feed into this. Key factors include:
- clear value proposition
- strategic alignment of organisational design
- agility to adapt, and
- a strong, performance-oriented culture.
Clear Value Proposition
A clear value proposition focuses on “what the customer wants” and identifies the business’s unique selling point (USP). Whether your business is in retail, hospitality, or professional services, this is constantly evolving as customers (clients) demand quicker, more responsive engagement and easier access to content/products.
Adopting technology enables businesses to deliver more quickly in a changing environment and ensure offerings can service the global market. As such, what may have been the traditional USP of 10-20 years ago – being cost – is now a myriad of USPs.
This constant shift in the landscape of delivery and speed means that a company will need to re-evaluate its USP annually to ensure it remains fit for purpose. Ultimately, to achieve any sort of longevity, it must become synonymous with its brand. Otherwise, the USP could become redundant before they have mastered it.
Strategic Alignment of Organisational Design
Successful organisational design examines not only your teams and leadership, but also the processes that deliver your value proposition in an efficient and effective manner. Processes are changing dramatically, hence the constant in the org design should be leadership for at least 3 years, but longer if possible. However, ultimately, it can be held that strategic organisational design can no longer be accurately forecast for more than 3 years, as roles and responsibilities within the leadership team evolve as the wider business landscape changes. As we have offered in other articles, the C-suite is changing. (see here>>>) This needs to be reviewed for each new strategy to ensure the focus is on the correct roles. 3 years is the old 10 years in a business life cycle.
Agility to Adapt
This “condensing of strategy time frames” addresses the absolute need for a company to be agile to adapt. This is perhaps the most crucial characteristic for companies today. As the business environment around us changes at a rapid pace, with technology, AI, 24/7 demands and the socio-economic environment, companies need to ensure they are constantly open to iterative design. Rather than a “set it and forget it” approach, effective models must be updated regularly.
Companies must also ensure a level of resilience not seen previously. The ability to withstand “black-swan” events and market volatility is essential, once again suggesting that the operating models we see today will not be the same in 10 years’ time.
A Strong, Performance-oriented Culture
A performance-oriented culture should consistently promote accountability and align with the company’s strategic goals. The culture will likely be value-led and value-driven, and it is widely held that values should remain constant in an organisation for 5 – 8 years before they need to be reviewed and tweaked, if necessary. However, if the selection of those values has been done in a manner to underpin the brand, ethos and desired culture in an organisation, the tweaks will be limited. As such, this may be the factor that WILL remain consistent in 10 years time.
This final factor is perhaps the one that will have the greatest longevity in today’s operational and business model setup. Hence, it is critical that entities spend the time “getting this right”.
Final Thoughts
In short, to ensure a company remains agile and alert to a changing environment, it is appropriate to set strategies for no more than 5 years, ideally 3. Business models that work today will likely not be fit for purpose in 10 years time, so plan to change and build in resilience markers to ride the stormy waters of change. Personnel and leadership skill sets may warrant ongoing review as the environment continues to change.
Barden Executive Search
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