Look Forward and Then Act

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I had breakfast yesterday with a longtime colleague who was in town visiting with clients. After 20+ years in senior executive roles with global 500 companies, she decamped to a mid-sized firm that was trying to get to the next level.  Like many industries, this company has been reeling from disruption caused by the rise of digital technologies, and investors were expecting bold ideas.  With a board meeting just around the corner, the CEO challenged my colleague to work with the leadership team figuring out how to position the business to become more like a technology-led company?  Looking for guidance on how to proceed, my colleague asked, how do we do this?   As we spoke further, several issues emerged:

  • The company’s vision lacks a bold purpose
  • Clarity what it takes to look, feel, and act like a technology company is limited
  • An understanding of how its markets and customers are changing is not fully formed
  • Open collaboration and communication are the exception rather than the rule

Without a clear template for the future state, addressing these issues would be a challenge.  How could the organization make bets on its people, operations, and partners without first formulating its purpose and deciding what businesses it should enter? Like many companies, this organization seemed to attempting to optimize for the current rather than future business.  Its strategic planning process further reinforced this thinking.

As we parted ways, I left my colleague with the following food for thought:  set aside conventional wisdom about strategy formulation and take a hard look, instead, at who your future customers will be in the future and what they want.  Customer-centric thinking will clarify the types of businesses the organization may wish to pursue.  Apply this customer understanding to how the business could create and realize value from a new mix of offerings.

Patterns’ Power to Inspire

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There is a broad spectrum of solutions helping companies identify new innovation ideas, from a departmental suggestion box, to studying the best practices of others, even to the vaunted halls of big data analytics. However, I wanted to throw an often underutilized source into the mix – business model patterns. What is a business model pattern? As Osterwalder & Pigneur define in their Business Model Generation book, business model patterns are similarities in how the individual business model building blocks behave (with similar characteristics and/or arrangements).

There are plenty of patterns to choose from – OPEN, Long Tail, FREEMIUM, SaaS, etc. – and each has its own characteristics. For example, the FREEMIUM pattern has unique Revenue Streams and Customer Relationships behavior. Could these be leveraged by a shared service function trying to redesign its future operating model? Maybe. Can the pattern inspire one of the function executives to put her own unique twist on the way they manage relationships, or secure their funding? You bet!

BM Pattern - FREEMIUM

The power of patterns’ ability to inspire innovation was illustrated in a recent client engagement. We used a business model pattern presentation as a lead-in to a focused business model design session. The executives in attendance were asked to make notes of key building block features that they found interesting for each pattern discussed, and which might have relevance for their area. As we then moved into the actual business model design activity, it became clear that the participants had not only identified new possible variations on their offerings (the WHAT), but also specific business model changes they wanted to make to deliver that value (the HOW). Furthermore, they had already started to make the connection between the new ideas and their specific areas (i.e. made a preliminary implication analysis).

So, although ANY solution that leads to innovation is a step in the right direction, executives who don’t add business model patterns to their idea generation arsenal may be missing a relatively simple, golden nugget.

Getting started

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Given the very positive interest we have received with our new Business Model Innovation (BMI) offering, we have decided it was time to open a blog outlet focused on the topic and our experiences taking this thing to market. Stay tuned for regular updates and hopefully plenty of thought-provoking perspectives – most should be directly or indirectly related to BMI.