Withthisinmind,fiscalprudenceishighlydesirable.Usethesuccessesofthepasttobuildafinancialbufferforthefuture.Insteadofattemptinghigh-riskprojectsthatdemandheavycapitalinvestment,keepsmall-scaleexperimentsgoingtocontinuereinventingyourbusinessmodel.Workalsotowardsimprovingyourfinancialperformanceoverthelongtermfasterthanyourcompetitors.Reinvestinfurtherbusinessmodelinnovationswithaviewtowardsbuildingagoodbufferagainsttheleantimesthatsurelywillcomeinthefuture.Actintelligentlyandyoucanbuildonastrongfoundationratherthanbeinga“onehitwonder.”
■FindBetterWaystoSharetheBenefits
Oneofthekeystosustaininginterestinyourbusinessmodelreinventionsofthefutureistomakeaconsciousanddeliberateattempttorewardallstakeholdersfairlyinthewaytheyprefer.Unlessthebenefitsaresharedfairlywithallthosewhoareresponsibleforcreatingthem,therewillbelittleenthusiasmformorereinventionsinthefuture.
Thisis,however,oftenadifficultissuetodealwith.Formanyfirms,theallocationofrewardshasastronghistoricalelementthatreflectsthecompany'soriginsratherthanitsfutureneeds.Often,someofthestakeholdershaveanegativeviewofthecontributionmadebyothergroupsofstakeholders.ResolvingtheseconflictingpointsofviewfrequentlyturnsouttobeoneofthemostdifficultdecisionsanyCEOmakes.
Sowhat'sthebestapproachtomovingforwardwithimprovedmodelsforsharingthewealthcreatedbyabusiness?
Startbyeducatingallgroupsofstakeholders—ontherealcoststhatareincurredbyotherstakeholders.Helpeachgroupgetafeelfortherisk-rewardratiosthatcurrentlyexistforeachgroup.
Whenevaluatingpotentialchangesinthebusinessmodel,choosetheonethatwillmaximizethebenefitstoallstakeholders—ratherthananyalternativethatprovidesgreaterbenefitstojustoneoranotherofthestakeholdergroups.
Avoidallbusinessmodelchangesthatharmtheinterestsofanystakeholders.
Treatstakeholdersfairly—aswellorbetterthanyouwouldtreatacustomerwhomyoucannotaffordtolose.
Whenthinkingaboutbusinessmodelchanges,discusstheoptionswithyourstakeholders—andlearnabouttheirconcerns.Ifpotentialproblemsareloomingonthehorizon,discusstheissuebeforehandratherthanscramblingtopatchthingstogetherlateron.Thatwayyoubuildsomereservoirsofgoodwillbeforeitisneeded.
Talkaboutyournewbusinessmodel—andhelpstakeholdersunder-standtherationalebehindthechanges.Thatwayanystakeholderswhoaredisadvantagedbyanewbusinessmodelwillnotcometofeelthatthechangewasmadesolelytoaffecttheirbenefits.
Askforideasonhowbettertosharethebenefits—andencourageeveryonetoworktogethertofindawaytomoveforward.Themorepointsofviewthatgetinvolvedinthistypeofdiscussion,themorerobustabusinessmodelandrewardsystemwillemerge.
Encouragestakeholderstobecomemoreinvolvedinwhat'shappening—andbuildontheirstrengthsratherthanconstantlyfocusingonproblemsanddifficultissues.Peoplethatareachievingsomethingimpressivearefarmorelikelytobeforthcomingwiththeirsuggestionsthanthosewhofeeltheyarebeingsweptalongbyeventsbeyondtheircontrol.
Helpstakeholdersunderstandtheimpactofunexpectedcircumstances—becausethewayyoudealwithunanticipatedwindfallsorproblemsspeaksvolumesaboutyourcommitmenttosharingbenefitsequitably.Thisisoneofthosesituationswhereactionsliterallyspeaklouderthanwords.IfallthathappenswheneverunexpectedlygoodnewsisannouncedisthattheCEOandexecutivesgetabonus,thatwillsayalotaboutyourpriorities.
ReinventionBecomesaRecurringActivity
Successisagreatcatalystforstillmoresuccessinthefuture.Onceyourorganizationreapstherewardsofreinventingyourbusinessmodelafewtimes,enthusiasmwillbehightomaintainyourcompetitiveadvantageinthefuture.
Toachievethat,youmustkeepexpandingthescopeofyoursuccessivegenerationsofreinventions.Inpractice,thatmeans:
■Focustostayaheadofyourcompetitors
It'seasytotalkaboutstayingfocused,butwhatexactlyshouldyoubefocusingon?Youshouldfocusonprovidingsuperiorresultsforyourcustomersbetterthananycompetitorcanmatch.Thisholdstrueirrespectiveofthebusinessmodelyouchoosetoemploy,thearrivalofnewtechnologyoranyotherexternalfactor.
Thefourstrategicquestionsyouneedtoaskallthetimeare:
WhatcustomerneedscanIbethefirsttoservewithanewbusinessmodel?
Howwillbeingfirstprovidemewithsomeinitialadvantagesinthismarketplace?
Wherewillbeingfirsttomarketprovidethemostbeneficiallong-termcompetitiveadvantage?
HowlargecouldmybusinessgrowasIexpandthenumberofcustomerneedsIserve?
Inotherwords,themoreyoufocus,themoreknowledgeyouacquireastowhatcustomersneed.Asyoukeepusingthatgreaterknowledgetocontinueupgradingyourbusinessmodel,itbecomesincreasinglydifficultforcompetitorstocatchup.Bythesametoken,ifyouloseyourfocus,yourcustomerknowledgeautomaticallydecreases—handingyourcompetitoranopportunitytoovertakeyoubybuildingabetterbusinessmodel.Focusisvitalandessentialtolong-termsuccess.
■Enhanceyourorganizationalcapacities
Newbusinessmodelsoftenworkwellforatime,andthentheireffectivenessseemstotaperoff.Sometimesthisiscausedbytheirappealwearingoff,atothertimescompetitorscatchonandmatchtheimprovement.Toavoidthis,companieshavetokeepregularlyenhancingtheirinnovationskills.
Somegoodwaystoachievethisare:
Trygraftinganimprovedbusinessmodelintoanothertree—bytakingbusinessmodelsdevelopedforoneindustryandapplyingthemtoanotherindustryaltogether.
Startbackatsquareoneeveryday—andask:“Whatdomycustomersactuallywantfromdealingwithmybusiness?”Eachday,youshouldbeabletoanswerthatquestionalittledifferentlyasaresultofwhatwaslearnedthepreviousday.
Lookforcorecustomerinsights—andbuildavisionofyourevolvingbusinessmodelaroundthoseinsightsratherthanaroundyourcurrentpracticesandprocesses.
Evenwhileyourrevenuesareincreasingrapidly,startsearchingforyournextgenerationbusinessmodel—becauseit'salwaysgoingtobeeasiertoattracttheresourcesyouneedwhenthingsaregoingwellratherthanwaitingforamarketdownturn.
Makethedevelopmentofimprovedbusinessmodelsanessentialskill—andkeepeveryonefocusedonhoningandrefiningthisskill.
Maketheprocessyouusedtocreateyourcurrentbusinessmodelexplicit—soyoucanmapthethoughtprocessesthatleadtoyourcurrentconclusions.Then,everysooften,youshouldtestthoseunderlyingassumptionstoseewhethertheyarestillvalid.
Fieldtestsomebusinessmodeloptions—andseewhatlevelofstakeholderenthusiasmtheygenerate.
Formsomeinternalteams—andhaveacompetitiontoseewhichteamcancomeupwiththebestbusinessmodel.
Developsomeinnovationmetrics—andcompareyourcompany'strackrecordinbusinessmodelinnovationwithyourkeycompetitors.Thiswillgivesomesortoffeelforwhereyou'reatintermsofinnovation.
NewTargetsofOpportunityAreSought
Somecompaniesfindthattheirinitialattemptstodevelopanewbusinessmodelarenotassuccessfulastheyhadhoped.Toovercomethis,workonabusinessmodelthathasthepotentialtoboostrevenuesandprofits100-fold.Thatway,eveniftheinitialresultsarelessthanprojected,itwillstillbeahugeboosttoyourbusiness.
Todeveloptheseboldandambitiousnewbusinessmodels:
Focusonhighgrowthareas—thosepartsofyourbusinessthathavethemostpotential
Expandyourservicesandbenefits—andsharethoseincreaseswithallyourstakeholdergroups
Onlyinthiswaycancompaniesconsistentlyfindnewgrowthopportunities,respondingtonewmarketdevelopmentsbybuildingoncur-rentsuccessesandcontinuallyreinventingtheirbusinessmodels.