Today, I answered your question:
“What are the common business strategy mistakes?”
Four common mistakes I have come across in businesses formulating strategies are:
Richard Rumelt’s book “Good strategy, bad strategy” is an old but good read and discusses in length about what is a good strategy and what is a bad one, and why template-based strategies are so bad.
Today, I answered your question:
“Why does change management fail in most of the companies?”
There are many reasons for change management failures. One common reason is that the decisions surrounding change are approached in a project-like or linear process by senior management. For example, step 1 - what is the problem. Step 2 - how can we resolve the problem. Step 3 - formulate a strategy for rolling out the selected change. Step 4 - implement the change.
However, change involves people. People, or stakeholders, are often overlooked in the change process yet have the power to significantly influence the success or failure of the change. A common example from a technology perspective is business A researching and selecting new software to modernise the business. Six months after purchase none of the staff were using the software because it was too awkward to use and slowed staff down.
So, a more holistic approach is required for successful change. An approach of learning and understanding the interactions between stakeholders and the area requiring change before any decisions can be made on what that change should look like. This approach ensures the stakeholders have been considered, are part of the change process, and have had time to adapt to the change when it occurs. After change roll-out a delegated champion can keep morale positive by being available to support stakeholders with difficulties surrounding the change and to remind them regularly to apply the new changes.
If you are currently looking at adopting a popular business model, whether it be for a new business idea or innovating or updating an existing business, a strong strategy would be to familiarise yourself with today's popular business models. Then adopt one (if possible) that will be widely adopted over the next 5 years. That way you can get ahead of your competition. Here is some useful information and a resource to get you started:
A strong, precise business model(s) can be a powerful tool for innovation, competitive advantage, decision-making, and culture development. Business models (BM) can either be explicit, written/drawn out, or implicit, unspoken/ undocumented, yet no less powerful. A business model can be a graphic, template, or text heavy document in the form of a business plan. Often businesses have more than one business model (BM). For example, a business may have one BM for each of the following:
Building and developing strategic partnerships
There are over 50 types of BM’s that most businesses fall into (Gassmann et al, 2014). Some of the most common today are:
Freemium (18) - use some of the service for free, upgrade for additional functionality;
Subscription (48) - pay a monthly fee starting at an affordable price point with the option to increase or decrease over time;
E-commerce (13)- sell products/services online;
Performance based (38) - the client pays on results.
St Gallens Business Model Navigator (Gassmann et al, 2014)
A strong, precise business model(s) can be a powerful tool especially during COVID and beyond.
Business models (BM) can either be explicit, written/drawn out, or implicit, unspoken/ undocumented, yet no less powerful.
Often businesses have more than one business model (BM). For example, a business may have a BM for innovation, change, technologies, building and developing strategic partnerships, acquisitions that focus on buying up established competitors with key skills/products/services that complement the business.
There are also over 50 types of BM’s that most businesses fall into (Gassmann et al, 2014). For example, freemium, subscription, flat rate, e-commerce, retainer.
Business model(s) (BM) are powerful tools to any size contemporary business if applied skillfully. Here are a few examples:
So, a business model is a vital, powerful tool at any time for any size business at any stage of development. During COVID especially because a business needs to know what decisions can be made, within which boundaries, while retaining its core and lead over competitors so that they business continues to succeed during and beyond COVID.
A business plan, explicit or implicit, is the blueprint of your business. So it is different for each business. Below are some general questions to answer.
In my experience working with start-ups and existing businesses, I find the best place to start is to graphically represent the business as a business model. It is far easier for everyone to understand the business when viewed as a graphic, and to build on.
I like to use an adapted version of Gassman, Frankenberger, and Csik (2014) “magic triangle” framework (below) as it provides a simple, easy to understand graphic of the information needed to create a business plan and model with the focus on the view from your customer’s perspective of the value you provide.
Each corner of the triangle and the centre can be developed with more information as your research develops. The details can easily transfer into a business plan and an interesting pitch deck for those presentations to potential investors.
Simply fill in the four circles. Who is your target market, what value are you providing your target market, how will you provide it, at what cost, price, and mark-up (pricing model)?
Now build onto your initial answers for each circle providing much more detail as you progress. Detail comes from your knowledge of your business and experience. It also comes from thorough research and analysis. For example:
These are some of the questions to answer. Once answered add the information you accumulate to the different triangle circles. Show you know your business, market, and finances.
Now you can easily transfer the information from the graphic into a old format business plan with headings such as described by SmartAsset Top 10 Components of a Business Plan - SmartAsset
A strategy is a researched, well thought out and planned action plan for achieving your goals and objectives. A capability is having the ability to expertly apply skills in practice in an ethical, professional, safe, and expert way.
Here’s an example:
Let’s say you want to run a marathon and win. You have never done this before. You would not turn up at the start line on the day, say “I am here” and expect to finish the race or win. Rather, to successfully run and win the marathon (your goals) you would sit down long before the race day and research what you need to do to achieve those goals.
You would find out what shoes and clothing is best, how much fluid you will need during the race and where you can find it along the race track. You would train for some time before the race to ensure you have the endurance to run the distance and the strength and speed to win. You would research your competitors to find out what a win would mean - the times and pace you would have to achieve to win on the day.
Here is an example of a strategic capability in business.
Being in business is no different to the marathon example. Each day businesses win/lose clients against competitors. If a business loses too often for an extended period, it will no longer be able to stay in business. We see examples of businesses closing every day. So, to stay ahead of competitors businesses need to research their competition, sector, industry, formulate a solid, effective strategy, and develop the capabilities needed which they may or may not have, to carry out the strategy actions of stay ahead of the competition. Today, in our digital world, businesses strategically use scientific knowledge as a capability for staying ahead of the competition.
“Jack Welch said, “An organisation’s ability to learn and translate that learning into action rapidly is the ultimate competitive advantage”. What does it mean?”
The current business environment changes every 18 months as a result of technological advancements. Technology advancements create new ways to deliver services (e.g. Netflix streaming films rather than dvd’s), creates new types of products (VoIP phones rather than analogue lines), and new ways to deliver value to customers (convenient e-commerce rather than in store shopping).
So a key capability each organisation should have is the ability to adapt every 18 months using new technologies to keep them competitive. However, not all aspects of a business can be changed.
For example, changing the culture of a business is tricky, time consuming (longer than 18 months) and seldom successful (IBM is an example of a successful culture change).
One area an organisation can be adaptable is in effectively and efficiently collecting, analyzing and skillfully using relevant knowledge from within the organisation. A simple example we see everywhere is asking customers for feedback on the product/service/process as they have experienced it. The feedback can be used to enhance the organisation and increase the customers satisfaction dealing with the organisation. This translates into a loyal, happy customer who will think twice about leaving for a competitor. This is an example of what Jack Welch meant when he said “An organisation’s ability to learn and translate that learning into action rapidly is the ultimate competitive advantage”.
Organisations often use external experts to manage this aspect or to develop the capabilities within the organisation as it requires expert skills.