The “Business Model Canvas” – Is the New Approach Really Better?

I’ve come across references to a “new” strategic planning tool called the “business model canvas” in a few places recently. As with other “new” tools, it does offer a different way to structure how you think about your business. But how new is this tool, really?

The most common approach to the business model canvas is to segment your thinking about your business into a small number of topics – such as customer segmentation, channels, customer relationships, value proposition, key resources, key activities and key partnerships. In some ways, this appears to match up to Porter’s Five Forces model, though it can – and will, in practice – ignore key environmental forces. This limitation saves critical time in the process of assessing and communicating strategy, but may lead to critical errors in strategy formulation in industries where environmental forces are in tremendous flux, such as health care.

Customers vs. Channels

The basic business model canvas – correctly – places great emphasis on the flow of value to the customer. Interestingly, channels are treated entirely separately from customer segmentation, despite the fact that the value proposition may be more advantageous to channels (fitting into a retail channel’s distribution strategy, for example) or to customers (offering a superior product or service regardless of how well it works for any channel). Failure to assess these advantages holistically can be crippling. A product which flows smoothly through a specific channel may have very low appeal to customers, and risks rapid displacement if other channel concepts become widespread. Similarly, a product which has high customer appeal may still stagnate if the dominant channel architecture does not fit key attributes of the product. In many industries – manufacturing or service – it is the holistic compromise embodied in your value proposition which really determines your success or failure at any given time, and separate assessment may create a blind spot around this phenomenon.

Strategic Competency; the Importance of Differentiation

I find the canvas approach to assessing “key resources” and “key activities” to be interesting. In Strategic Planning, we began a practical application of Prahalad and Hamel’s concept of Strategic Competency, which has become a cornerstone of the most successful strategies of recent years. In practice, using the canvas categories, you would likely find your strategic competency somewhere in one of these two boxes – but, unfortunately, other strategic assets might be mixed in with competency in “key resources” and the core competency may or may not be recognized as the focus of the most important “key activities”. Still, many companies may find they can correctly identify strategic competency using this categorization, so it may be useful. Indeed, it may be a useful tool for identifying strategic competency in a more thorough strategic planning process. That being said, a thorough examination of strategic competency backed up by market data is a far better way to approach this critical part of the strategic planning process. Most importantly, I would contend that the fact that most people have approached strategic competency incorrectly, and failed to adequately use the tool to build clear differentiation is the main reason why people like to back up to a more simplistic approach such as “critical resources” and “critical activities”. There is no substitute for competency-based differentiation, and true differentiation of a focused competency is the single biggest factor in strategic success.

Adaptability to Changing Business Conditions

One of the main advantages that has been touted for the business model canvas is the ability to “pivot” your strategy and rapidly change the structure of your business to fit new strategic realities. The very simple analysis of a few key strategy elements may indeed be useful for some companies in this area, although deployment and execution aren’t really a strong suit of this approach. Certainly, a strong, objective, competency-based strategic plan can be a much more useful tool for rapid adaptation to environmental change, especially since the business model canvas can be used to dangerously skirt critical issues. Part of any strategic planning process should be a rigorous monitoring process which allows for course corrections when business conditions change. Monitoring is key to the success of any strategic planning process. At best, the business model canvas is a novel tool for business model innovation in industries where certain environmental variables (regulation and technology, for example) are more constant. As a replacement for a simplified model of strategic planning and execution, it shows many shortcomings.

Have you used this tool in your business – or wondered how you might change your approach to innovation? Please let me know your experiences, both good and bad – it’s the best way we all can learn about tools that can aid the strategic planning process.

How Collaboration Tools For Business Enhances The Self Esteem of A Business

A business that uses collaboration tools for business purposes has higher self-esteem. The old adage of, “two heads is better than one,” is very applicable in business. If two businesses are non competing and like minded, then there is no reason why they should not work together to generate more revenue and sales.

1. More than one set of eyes looking at product

One of the biggest reasons that a business can have higher self esteem when working with another business is that that other business will be helping the company control their product. What this means is that the product will have a higher quality because it has to pass muster by both companies. This double quality check will give a business a marketing advantage against any competitors who may be trying to compete against the collaborated businesses.

2. The risk associated with starting a new product is shared

The risk and money needed to start a new product or service is shared across the two businesses. This may be one of the best reasons to collaborate with another business. A new service or product offering can be one of the most expensive and time-consuming ventures a business can undertake. This is especially true when the business has to eat the cost themselves without outside help from any other source. A business can build more products and services (assets) by sharing the load with another business. However, this also means that they split the profits, but the information gained by working with another business is invaluable. This could lead to the creation of products and services that the business may not have known about before the collaboration.

3. The work is faster because the work force is doubled (in most cases)

The workload of creating and producing the product or service is also sped up because there are teams of people on both sides of the equation working on the project. The product comes out faster and of better quality because of the two teams. This leaves the business with more time developing new products and services based on the information they received by entering the market with the new product. If anything is a massive factor in business, it is speed. There is no better way to become twice as fast than to have two sets of teams working on the same problems.

A business can have higher self-esteem when they work with another business because the losses and profits are shared. They do not stand alone against their competitors; they have done the work to make sure that two sets of teams are working on the same problems. This increases the speed that they can release products and the amount of capital they have access to from the beginning of the project. If a business needs more self esteem, then there is no faster way to get it than by working with a non competing, like minded business.

The 7D’s of Success In The Olympics and Business

I have really been enjoying watching the Olympics this past week. They always encourage and inspire me to greater heights in my business, and as I thought about it I realized that there are a lot of similarities between running a business and doing a long distance race, whether it is running, swimming or biking. One thing I know for sure, running a business is NOT A SPRINT, and if you treat it like one you will burn out before you even get a chance to see any results. So let’s take a look at what it takes to win, and a lot of it has to do with how you deal with each of these 7 D’s.

1. Determination

It is one of the most important things that you can have in this business. It is what will give you the endurance to make it through the rest of the D’s. Decide in your heart today that no matter what happens you will succeed and achieve the life of your dreams.

2. Discipline

Discipline & determination go together. Consider determination your mental state and discipline actually doing the physical actions it takes to get there. Of all the things in my business discipline is probably the least fun. Pushing myself to get out and prospect when I don’t feel like it, or making those phone calls at night when I am tired, but then discipline kicks in and I do the actions I need to, see the results and am happy because I am one step closer to where I want to be.

3. Disorganized

When you are disorganized it makes it hard to keep track of everything in your business. It also causes a lot of frustration especially when a lead wants you to call and you can’t find the phone number because you wrote it on a piece of paper and you lost it. Another aspect of organization is having your calendar planned with continuous prospecting activities so that your funnel is always full. If you are disorganized you won’t succeed, because you won’t know where to start.

4. Disappointment

There will be times when things won’t go the way you expect, like you didn’t win the contest, or the sales you were sure you were going to get, didn’t come through, or someone promises you they will do something and they don’t. Disappointment can also come in the form of someone not supporting you the way they should, or not realizing that what you do is important. The biggest thing about disappointment is recognizing it and dealing with it quickly, so that you can get back to working your business.

5. Distraction

As a business owner you have so many things to do and it is so easy to get caught up with things that keep you busy, but don’t produce any results. I have to constantly look at my business and my activities with a laser sharp focus. There are many times that I need to decide if what I am doing is worth it or not. Are they adding value to my business or just dead weight that looks pretty. Ultimately 100% of you activities should fall into 1 of 5 of these categories with number 1 and 2 being the most important.

Prospecting/Recruiting

Appointing/Signing up new people

Training your team how to sell

Developing their prospecting skills

Recognition

And as much as I love social media, just talking to people all day on Facebook is not prospecting, unless of course you are talking to people who are genuinely interested in your opportunity.

6. Delays & Detours

If you think that you can become successful in business without delays, obstacles or detours, you are wrong. They are going to come especially when you are dealing with people and technology. I know what you are thinking right now, “That’s my whole business.” Exactly.

So what do you do when they happen? The first thing is not to panic. Stop, take some deep breaths and calm yourself down. When you panic the problem seems a lot bigger than it is. Second, you have to realize that there isn’t any delay or detour that can keep you from reaching your goal. Third, there is a solution. With every obstacle, there is always a way around, through, over or under. Fourth, they are only temporary. You can either change it or it will go away. The worst thing you can do is give up just because it gets hard. The hard times are where you grow into the person that can handle success and really appreciate it.

7. Dog Gone Tired

It is so easy to get so busy that you wear yourself out. Balance and endurance are very important if you are going to win this race called success. Setting yourself a schedule that is repeatedly doable, including rest and relaxation is very important. If you don’t do it you will be so tired that you won’t enjoy it and your effectiveness will be greatly decreased. If you find that you are getting tired then take a short break. Even 1 day of rest can do wonders for you. Don’t take too much, because then you won’t get back into the game.

Success isn’t some magical formula reserved for a few special people, but it is also only achieved by a few because only a few are willing to pay the cost to get there. At the Olympics we get to see the final result, which is the excitement and the medals. What we don’t see is the years and sometimes decades of unseen hard work that it took to get there. It is the same with those who are successful in MLM, you see them now and where they are at, but they also had years where no one even new their name and they were just out there working their business.

To Your Success,

Love ya,

Kim Thompson-Pinder