Framework 65 Five Phases (mobilise, understand, design, implement and manage)
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Introduction
In developing a business model, progress on through these phases is rarely linear, eg understanding and design phases can proceed in parallel; business modelling prototyping can start early in the understanding phase; prototyping during the design phase may lead to new ideas requiring additional research and needing to revisit the understanding phase.
In the continuously changing world environment it is best to assume that any business model has a short lifespan. Thus the need to continually monitor & evaluate its performance and be prepared to revisit it regularly to check which components are still relevant and which are obsolete.
NB The idea for business model innovation can be found just about anywhere.
The 5 phases are summarised below
| Objective |
Mobilise (prepare for a successful business model design project) |
Understand (research & analyse elements needed for model design effort) |
Design (generate & test viable model options & select most suitable, ie adopt and modify in response to market testing) |
Implement (based on field test, implement preferred model) |
Manage (adopt & modify the model in response to market reaction) |
| Focus |
Setting the stage | Immersion | Enquiry | Execution | Evolution |
| Description |
- assemble all elements for successful model design - create awareness of the need for a new model - describe the motivation behind the project - establish common language to describe, design & analyse and discuss models |
- immerse in relevant knowledge around customers, technology, environment, etc - collect information, interview experts, study potential customers & identify needs and problems |
- transform the information & ideas from previous phase into model prototypes that are explored and tested - after intensive model inquiry, select the most suitable model |
- implement the selected model |
- set up management structures to continuously monitor, evaluate & adopt/transform the model |
| Activities | - frame project objectives (rationale, project scope, main objectives, etc) - test preliminary business ideas - plan the project (eg mobilise, understand and design phases - assemble the team |
- scan environment (include market research, study and involving customers interviewing experts and exploring competitors' business models - research previous attempts, eg what has failed and why - collect ideas and opinions |
- brainstorming, ie exploring alternatives - prototyping, ie building alternatives - testing, ie using criteria to rank the alternatives - selecting, ie based on ranking, choose the most suitable |
- communications - execution (includes defining, related projects, specifying milestones, organising any legal structures, preparing a detailed budget, project roadmap, etc |
- scan the environment for impact of external factors - continuously assess your model - rejuvenate or rethink your model - align model throughout the enterprise - manage synergies or conflicts between models |
| Critical Success Factors | - appropriate mix of people in cross-functional team with range of expertise, knowledge, experience, networks, commitment, attitude, etc - shared language to make communications effective & efficient |
- deep understanding of potential target markets - looking beyond the traditional boundaries defining target markets - questioning industry an established business/marketing, etc practices - actively seeking inputs from as many sources as possible |
- expansive thinking generate breakthrough ideas, ie ideation (explore multiple, bold ideas) - co-creating with people across the organisation - ability to see beyond the status quo (current business models & patterns) - making time to explore multiple ideas re models - an inquiry-focused design attitude |
- best practice project management - ability and willingness to rapidly adapt the model - align "current" & "new" |
- long-term perspective - proactiveness - governance, ie engaged relevant stakeholders |
| Key challenges/ dangers | - overestimated value of initial idea(s) - closed mindsets - limited exploring of other possibilities - project legitimacy within the organisation (need commitment/involvement from the top of the organisation - identify & manage vested interests especially those feeling threatened by project - managing upwards to decision-makers to gain their buy-in, etc |
- research disconnect with objectives - poor research owing to bias - over-researching, eg analysis paralysis - getting regular feedback - understanding the customer - breakthrough ideas may encounter strong resistance - understanding current models, eg strengths and weaknesses - status quo thinking dominates, ie happy with current ways of doing business - need to search beyond existing client base - need to demonstrate progress |
- watering down or suppressing the bold ideas - falling in love with ideas too early - need to experiment with alternatives like multiple revenue streams, distribution channels - test different ideas with outside experts &/or prospective clients, eg seek feedback*i - conduct risk/reward profiles - challenge the "status quo" situation - clarify, define & address the uncertainties - maximise inclusiveness/ participation/co-creation with a wide organisational representation - how to handle the current versus new model, ie should be integrated or separated - avoid short-term focus |
- weak or fading momentum - managing uncertainties ( monitoring the risk/reward expectations against actual results) - modifying based on market feedback*ii - using participatory approach, ie cross-functional participation to get buy-in by organisation & uncovering obstacles prior to implementation - project sponsorship to signal the model's importance & legitimacy - handling vested interests that could undermine the new model - creating the right organisational structures, eg standalone or a separate business unit, etc - highly visible, multichannel internal communications |
- complacency, ie failing to adapt/change - need to regularly review/ rethink model by all staff - not allocating enough resources to monitoring and reviewing - shortening shelf life of successful models - exploiting synergies and avoiding or managing conflicts - proactively managing a portfolio of future models - continually scanning the landscape and assessing your model |
Notes
i) need to be able to handle negative feedback like
- "it won't work"
- "customers don't need it"
- "that's not doable"
- "it goes against industry logic"
- "the market place just isn't ready"
NB such comments indicate potential roadblocks but should not be considered showstoppers!!!!!
For example,
"...Iqbal Quadir's quest to bring mobile telephony to poor rural villagers in Bangladesh in the late 1990s provides a powerful example. Most industry experts rejected his idea, saying poor villagers were pressed by more basic needs and would not pay for mobile phones. But seeking feedback and developing contacts outside the telecommunications industry led to a partnership with micro-finance institution Grameen Bank, which became the cornerstone of Grameenphone's business model. Contrary to expert opinion, poor villages were indeed willing to pay for mobile connectivity, and Grameenphone became Bangladesh's leading telecommunications provider..."
Alexander Osterwalder et al, 2010
ii) when Skype started to become successful, it was signing up tens of thousands of new users each day. It had to immediately develop mechanisms to cost effectively handle users' feedback and complaints. Otherwise skyrocketing expenses and user dissatisfaction would have destroyed the company
(source Alexander Osterwalder et al, 2010)