Successfully shifting your business model to create more value for people, planet and profit means you need to invest in two things. (1) Managing your current organization to amplify and sustain your current business models and (2) searching and growing new business models. This blog explains how you can do this.
Most companies are caught up in running their day-to-day business and focus on short-term results. They invest a large part of their time, money and resources into what they know already. They continuously improve their current business model.
You know that even the most successful businesses become irrelevant over time. You also know that the lifespan of a successful business has shortened significantly. To ensure your business thrives in our rapidly changing world you need to find out where value is next for your business, our society and the world around us. And you know that this requires a long-term approach to your strategy.
Execution is about growing and maintaining your already proven business model(s).
You know who your customers are, you know what value they are willing to pay for and you can determine with fair accuracy which buttons you need to turn to increase your impact. This side of the organization relies on predictability and avoids risk as much as possible. For this you have a growth strategy.
Search is about exploring, validating and growing new business models. These are adjacent to – or totally different from your current business.
You enter unknown territory in one or more areas. This makes it difficult, or even impossible to predict in advance if – and how much impact you can make. This side of the organization has to embrace uncertainty and take risks. For this you have an innovation strategy.
You can no longer stick with one single, static business model. But how do you grow new business models while sustaining existing ones? The answer is simple: a portfolio of business models. Ironically, managing a portfolio is far from simple. It is almost like playing chess on steroids.
Many businesses offer multiple value propositions and as such have a portfolio of different businesses. However, what’s often missing is a business model assessment and investment approach.
That's why we use the business model portfolio map. It is a magical model that helps you to plot your current business models and your future business opportunities. With your portfolio on one page, you can assess and strategize. Wanna give it a go? Great! You can download your portfolio map with examples and instructions here. Just scroll down to get started.
As a first step, plot the current business models that you are executing on the right side of the map.
Pro tip: You can create a portfolio map with different levels of granularity. For both a group of independent businesses, a specific business or through value spaces within a business.
Second, add all your new business opportunities on the search side (=left) of the map. Notice how there are different stages there? Each stage shows what your organization should be focused on based on the maturity of the idea.
Pro tip: Not sure where to plot your initiatives? Each stage has a milestone that you should have achieved before passing on to the next stage. Did you validate your problem-solution with customers in the market? Great then you can plot your opportunity in the grow phase.
Once you have your full portfolio plotted you can use it to have conversations with your team and as a strategic decision-making tool.
You and your team can have conversations about strategic questions such as:
How balanced is our current portfolio between search and execute? Are we doing the right things to achieve our long-term vision?
Do we have enough business opportunities that we are exploring, building, and growing in our search portfolio?
How could spotted business opportunities bring value to our portfolio? And what is needed to make it a success?
As you can see searching for value and building your future business is different than delivering value today. In fact, it requires a different organizational approach. That's why we urge you to make innovation an essential part of your company’s strategy.
Read our interview with Egbert Kroon, Director of B2B Innovation. T-Mobile embedded innovation in its long-term strategy to accelerate their shift from products to services.
You need to have a crystal clear vision for the future for your portfolio map to work as a strategic decision-making tool. You are navigating uncertainty, and without a clear north star on your journey, your ship has a high risk of becoming aimless at open sea.
So before your start. Make sure that you and your team are aligned on the impact you want to make, what role you want to play for your customers and how you are going to create value for you, our society and the world around us.
Is your vision blurry? Or do you feel like you can use some strategic smart-asses to support you? We are here for you any time of day and we are really just one click away.
