How to redefine and reimagine your business model
The COVID-19 pandemic highlights the need to not only understand your business model but to adjust it to current circumstances. Using this business model framework, you can re-evaluate how to create value in this new business environment. A business model review is a chance to investigate your company’s desired outcomes and how to mitigate risks.
Focus on the core activities — budget, income, supply chains, and staff. These should be viewed through the lens of innovation — adding value may require making significant changes to pre-pandemic businesses operations. By conducting a thorough review, you can spot issues within the business before they have a negative effect on value. This business resiliency tool provides questions that senior leaders should ask when making key decisions regarding phasing out of lockdown.
The four key parts of a business model — from defining the proposition to delivering and capturing value.
Define. For whom and with whom do we create value?
Create. How do we create the products, services and experiences that meet customers’ needs?
Deliver. How do we innovate to deliver our products and services to the right customers at the right time, place and price?
Capture. How do we share the benefits of value creation to incentivise key stakeholders to continue to partner with us?
Questions to ask when reviewing your business model.
What would the effect of any decision to re-define my business model be on stakeholders?
Organisations need to have a good understanding of stakeholder groups. This includes customers, suppliers, employees and shareholders. Information is needed on how customers’ demands and needs have changed and continue to change as lockdown restrictions are lifted.
Does a re-definition and the changes that I would have to make have wider community or social value?
Business leaders must be aware of the impact on the wider community. This could be in terms of health and safety or the perception of profit of economics. A wrong step could result in overt criticism that leads to customers staying away.
Would re-defining my business model and core aspects of products or service offerings damage the environment?
There may be a tendency to focus on the current pandemic, but other factors such as the environment should also be considered.
Would this decision undermine trust in the business as articulated in the company’s values?
Trust is earned through interactions with stakeholders, so it’s critical that decisions strive to build trust. This means not only acting ethically but also delivering efficiently. The pandemic means that trust in our institutions is being tested more than ever and it is therefore critical that business leaders are aware of this. Carefully review any decisions made to re-define and reorganise the business through the trust lens.
Would this be considered ethical by wider society?
Ethical considerations are more important than ever as the crisis has made us all aware of what is really essential within society and in times of stress it is important to retain your ethical approach ensuring that your teams are encouraged to consider ethics in the decisions made to bring your company out of lockdown
Adapt to the new environment.
Does the pandemic affect our methods of delivery and associated costs?
Technology can improve the speed and efficiency of delivery as well as relationships with customers. Members around the world embrace technology to restore their engagement with customers and indeed create new market activities using technology. For example, could you create an online platform or application which gives you an improved or additional market facing option for your business.
How would this be perceived?
The changes needed coming out of lockdown may mean that perception is critical. If health and safety is compromised too easily then stakeholders may become nervous. Similarly, if over cautious competitors could get ahead of the curve.
Would negative press affect the brand? If made public, would these activities damage the brand?
Transparency often shines a light on decisions allowing a wider perspective that brings decisions into focus and helps ensure that the business stays aligned to the zeitgeist. The pandemic makes this more important than ever.
Often the spirit is more important than the letter. Public health regulations exist to ensure public safety and the rules are often underpinned by scientific data and societal values, meaning that thought should be given as to how to implement business processes in line with the rules. Any sense of taking advantage of loopholes could put long-term value creation at risk and be unethical.
Are we creating unnecessary additional complexity?
There is some concern that the current focus on public health means that business leaders introduce measures that are unnecessary or overly complex. While this concern is understandable, stay clear headed and focus on long-term value.
Who should value be preserved for?
The pandemic is an example of how value needs to be preserved. The recent UK discussion on dividend payments is an example of how discussions on value capture can become pertinent.
Getting your business up-and-running in a compliant manner requires reviewing, testing and asking key questions. Reimagine your business model to preserve and add value wherever possible. Government guidelines and economic considerations must be weighed as you seek a balance for successful business operations during the crisis, and post-crisis. Here are resources to help: