Noted author Mark W. Johnson states how a renewed business plan can help your company grow.
Recalibrating Your Game Plan
As human beings, we have always been intrigued by what lurks behind the screen, or what is yet to unfold before our eyes. The unknown has a great pull indeed, especially when moving in its direction involves a series of steps, each presenting myriad, almost incalculable results. This can often be the lot of the entrepreneur.
We all know that as an entrepreneur you need to focus on three important things:
2. The ability and preparedness to take risks.
3. The reward.
To be focused on all three of these vital aspects of your business, while maintaining an unwavering focus on your employees and customers can seem a daunting task.
Going some way to address to the balancing act of entrepreneurship, noted author Mark W. Johnson came up with a new book titled, Reinvent Your Business Model.
Along with being an author, Mark is the co-founder of Innosight – a highly reputed consultancy firm that caters to various global brands and business houses (including start-ups) ranging from Defense to Aerospace. The other co-founder of Innosight is the famous Harvard Business School professor Clayton Christensen, widely renowned for his theories and excellent works on disruption.
In his book, Mark states that, even within the business community, there are few people who actually know what a business model is. Indeed, entrepreneurs often eschew the very idea of a business model, preferring instead to rely upon their own unfathomable intuition. Even when their ventures come to grief they may stubbornly refuse to change their ways; at best they may leave the business model to their CFO while they get on with generating new, evermore risky schemes.
“Since not everyone is a serial business model innovator, it makes sense to focus foremost on solving customers’ important problems with a reliable, convenient or affordable product or service”. Mark W. Johnson
Whether it be the consumer industry or the service industry, the most critical yet abstract concept is the CVP or Customer Value Proposition. It is the CVP of a company determines its value.
Amazon still executing Jeff Bezos’s 1997 plan
Let us take the example of Amazon and the innovative business model that captivated and benefited millions of people worldwide. When Amazon finally drew out its charts and started re-thinking its business model, the prime focus moved away from the flow of cash from a seller-financed model, towards a consumer or buyer financed model. Amazon figured out what had previously been believed to be almost impossible. That is, to find a way to receive money in advance from the customer before paying their suppliers. This rethinking changed the entire landscape of retail marketing forever. Eventually, Amazon was able to focus on its distribution system and ended up benefitting millions of people worldwide. It became a system that benefitted the company as much as the customers.
When asked how a CEO can nurture and incorporate a culture within a company with the potential to galvanize the process of business model rethinking, Mark answered:
“I think you can screen for people who have a combination of creativity and drive while creating value for customers and growing revenue and profits. If your company can repeat and scale that, you’ll grow along with demand.”
Mark made the point that all business models are based on trial and error. There isn’t normally a business model that answers all the questions right away and charts the most direct course to the Boom!
The usual way is the hard way: You develop a business model, try it out and conduct a rigorous evaluation. Only then do you look to get intuitive, creative and capable people on board. Then, you rethink the business model all over again. This may be a pains-taking process but eventually, if carried out correctly, you may discover that it is the inherent tensions and seeming contradictions within such an iterative approach that generate the ultimate business model for your company.