Introduction to Business Model

Before you go further in reading this document I want you to pause and answer one question.  How do you define Business Model?  If you take the time to create a thoughtful response to that question you will gain more from what I have to say.

The term business model often surfaces when CEOs are reporting on the success (or failure) of their companies.  They use the term in so many ways that it brings doubts as to just how well they understand what a business model actually is.  The next time you hear the phrase being used try to understand exactly what they are talking about.  See if you can conceptualize their description.

I have found it difficult to do that because when many leaders are saying Business Model what they are referring to are vague images in their minds of what their business should look and act like.  It is more of a transient vision statement than an actual model.  Unfortunately for them, and those that work for them, that apparition exists only in their minds.  And to make matters worse that ghostly image is unintentionally evolving.  What was there three months ago has morphed into something new without anyone else knowing, even though there are projects and initiatives underway to try and capture the earlier vision.  If the model is not visible how does one go about building it?  How can a group of executives ‘know’ they have a common understanding of the desired model if none of them are looking at a model?

There was one company that had three executives and a strategy consultant spend nine months developing a strategic plan.  The management team needed to have a plan in place in order to meet certain goals.  At the end of the process the group had settled on a particular corporate direction and some of the key strategies needed to make their vision come true.  The most important strategy centered on the company having a ‘World Class Supply Chain Management System’ put into place.  The CEO upon being asked to clarify what that would look like stated that the company would spend exactly what it took to give the customer exactly what it wanted.  If the company spent one dime more than was necessary then that would be a problem.  The CFO was asked the same question and he responded that being a world class Supply Chain management meant studying Wal-Mart, P&G and Dell and developing something superior to their processes.

Compare those responses and ask yourself if you think both of those people had the same vision in mind.  It is obvious that they didn’t.  Here were two people who had spent considerable time together to co-develop the strategy, could repeat the words of the strategy but weren’t on the same page when it came to how to execute that strategy.  That is the danger of language – assuming we all mean the same thing when words are being used.

The term Business Model can also be found in the world of academia.  In undergraduate business studies but especially in MBA programs the phrase is often used.  Case studies of companies typically refer to their business models.  The term is used hundreds if not thousands of times in the course of obtaining an advanced degree.

Since the phrase is so widely used in business and universities wouldn’t it be reasonable to expect a common definition?  From seeing that term used in many different ways I came to the conclusion that people don’t share a common understanding of what constitutes a Business Model.

To verify my suspicions I conducted two surveys.  One was with a group of business people and university students and the other was with a graduate business class.  The audience in both cases was there to listen to a presentation I was going to make on the concept of Business Models.  Prior to taking the surveys I asked those present to raise their hand if they were familiar with the term Business Model.  Every person showed me they ‘knew’ what the term meant.  My next instruction was for them to write down their definition on the piece of paper I had given them without conferring with anyone else.  I was not looking for a homogenized version of the term but wanted to hear from each person individually.  I also asked them not to include their name.  What they had to say was more important than who said it.

I collected and recorded all the responses and now have dozens of different Business Model definitions.  Allow me to share the beginning of just seven of them.

1. A business model is a process ….
2. Business model is the technical design …
3. A business model is a description ….
4. Rules and goals of the business as a whole.
5. The method of running the business …
6. A plan …..
7. The strategies needed ….

As you can see from just these definitions my hypothesis was confirmed.  Every one of those definitions is very different than the others.  A description is certainly different than a process.  Rules and strategies bear no resemblance to each other or any of the other descriptions in that list.  There is a vast array of ideas being applied to the concept of Business Model.

The question begs to be asked:  “How can business leaders and students attending the same university, studying the same field, have such a large array of definitions for one of the most basic business concepts?”

I think I know why.

It is not unlike the parable of the seven blind men and the elephant shown below.  None of the seven men had ever experienced an elephant before and therefore had no basis or context for this magnificent creature.  Each blind man was asked to describe an elephant.  The first one touched the tail and described it as a rope.  The second one touched a leg and said it was like a tree.  One touched a tusk, another an ear, another the back,…  While each man’s description of the elephant was technically correct if a person took only that one perspective s/he could not know what an elephant looks like.

In order for those men, or anyone else for that matter, to know what an elephant looks like they need to know all of its parts and their relationship to each other.  By viewing each part individually it is not possible to know what any complex entity looks like.

A business is a very complex entity.  Now mentally substitute the elephant in the story about with the idea of a Business Model.  Scan the list of seven different definitions from my surveys and understand that each of those definitions is just one part of the business model.

I have come to understand that the reason why I receive so many different definitions for a Business Model is because it isn’t just one thing.  Plans, rules and regulations, processes, strategies, design,.. are all different parts of the Business Model elephant.  Each piece doesn’t capture the totality of the entity but it does provide one glimpse.

That doesn’t mean a definition for a business model can’t be created to describe a business model.  I have spent many years in this area and have developed a definition that works well.  It aligns perfectly with the system I have created to make the Business Model Design a reality.

A Business Model is:

An aligned design of the products, processes, people and support functions that enables a business to achieve sustained performance.

My definition encompasses all of the ‘parts of the business model elephant’ listed by the seven responses from my surveys.  Some of the survey responses are easily seen in the definition while others exist at a lower level.  My goal was to use the fewest words to capture the totality of a business model and I believe I have succeeded.  If there are aspects you believe to be missing, such as strategies and goals, trust that they are accommodated in the process but not readily apparent in the definition.

I am a much more visual person than auditory.  When I was in a senior executive role my staff would come to me with an idea and I would always say “Show me the picture”.  Without the picture I didn’t know if we were on the same page.  We unknowingly use the same terms when we are referring to different ideas.  Just go back to the seven responses listed above for proof.

With that in mind I have created a visual document to go with the above definition for Business Model.  It is my “Show me the picture” of a Business Model but unfortunately I am unable to import it into this document.  If you were able to look at it you would see that the diagram illustrates how the business entity exists within the competitive environment and then how each of the components of the business exists within the overall context of the business entity.  Context is King and that understanding is embedded into this approach.

The model works regardless of whether the company provides a product or service.  And while I use the term ‘business’ I am not referring to only for-profit companies.  It is any entity that provides a product or service for someone else.  Corporations, single business units, agencies, organizations and even departments can all use this diagram to show its inner workings.

The picture is a high-level view.  Each of the parts in the diagram can be decomposed to help the reader better understand the context of what it is they are viewing.

When you study my Business Model Design take notice of the red arrows throughout the diagram.  Those arrows indicate a flow.  That flow actually represents a progression or sequence which in turn creates dependencies resulting in this document taking on a more three-dimensional perspective.

Look to SlideShare for a PowerPoint by me on this topic.  There I wll be able to share my business model design diagram or canvas.

Before closing there is a concept I wish to share with you.  “The environment determines the relevance of a design”.  This is critical to understand because it can and should be applied in every aspect of a person’s life.  My definition of Business Model ends with the words ‘sustained performance’.  The only way to achieve that level of performance in anything we do is to constantly adapt to a changing environment.  That is true for products, processes and businesses alike.  As the expectations change so must the corresponding designs.

There is an entire system that goes with this diagram.  And when applied it creates a laser-like focus on what a business needs to do in order to achieve its goals.  That brings us full circle to the idea that “It’s all about Performance”.

Outside In design

I spend time in several Business Process groups on LinkedIn and one of the terms I keep seeing is “Outside In”.  I keep seeing people using that phrase as if they just had an epiphany or that they just came over the ridge and have seen the promised land.  What I don’t understand, or what surprises me, is that it seems to be a new thing to experienced people.  “top down, outside in” is how everything should be designed.  How do you go about designing something where you have not established its purpose?  How do you design something if you don’t create specifications (performance requirements)?  Outside In is common sense and I don’t see why it is getting so much play.

So I responded to a discussion and wrote the following: 

‘Outside In’ is about Context.  Understanding Context is critical in every line of thought – not just BP design.

In order to understand the purpose of an activity you have to understand it in the context of the process in which it exists.  Processes are a collection of activities.  Evaluating an activity on its own has some merit but to fully understand the activity one must understand it within the context of the process in which it exists.

Seeing an activity on its own will not provide you with an understanding of how it fits into the whole.  Every activity has a cost associated with it and should also have a value associated with it (non-value added activity?).  The activity receives its performance requirements from the next level up – the process.

In order to understand the purpose of a process you have to understand it in the context of the system in which it exists.  Systems are a collection of processes (Senge – Fifth Discipline).  Every process has a cost associated with it and its corresponding value.  The process receives its performance requirements from the next level up – the system. 

 Every business has a number of systems which support it and to understand the performance requirements of those systems you have to view them in the context of the overall business.  The system receives its performance requirements from the next level up – the business. 

 And there is where some companies have stopped their thinking.  They view their systems, processes and activities only in the context of the business itself.  They are operating in a vacuum and use performance indicators focused within their four walls.

 However those businesses need to go the next level up – the competitive environment.  They need to add another layer of context.  The business operates within the context of the competitive environment.  If a business does not factor the competitive environment into their performance requirements it will be flying in the dark.  And the likelihood it is going to hit the mark (from the competitive environment’s perspective) is slim to none. 

Hence the need for Outside In design.  While one can look at performance from the ground up (activity to process to system to business) the requirements come in the opposite direction.  One needs to understand the competitive environment first.  One has to know what the outside (competitive environment) is requiring to know the minimum performance requirements for the business and then it cascades all the way down to activities and individual employees.

And the competitive environment is not defined solely by the expectations of the customer.

What happens if your company slightly exceeds customer expectations but there are competitors offering even more?  In that situation you will most likely lose market share.  Remember, your investors are not the only ones looking for a Return on Investment.  So are the customers.  Customers want to get the most for their money (the greatest return on their investment) and if your competitors are offering more than you then you need to adjust your performance requirements.  You need to be offering a compelling Value Proposition to the market and if you don’t understand what the customers want and what your competitors are offering then you will most likely fail.

Companies don’t get to decide what the performance requirements are for products and services.  Customers do.

That is one perspective on Outside In design.  Where does your understanding differ from mine?

Invalid Business Assumptions

Each person goes through the day making assumptions.  We assume the sun will rise in the east; the light will turn on in the bathroom; the shower will have hot water; the car will start when we leave for work and our computer will connect to the internet.  The number of assumptions we make every day as we walk through our lives must add up into the hundreds.  We are blind to them because events unfolding in front of us do not challenge our assumptions but instead support them.  Unknowingly to us most of our assumptions are strengthened every day. 

 

Perhaps assumptions are mental habits or conditioning and serve a similar purpose to learning how to tie shoes.  When we first learn to tie a shoe it requires considerable attention or intentionality.  We think about each move and either verbally or mentally repeat the instructions.  It is a very manual and slow process.  As we learn to tie our shoes we create ‘moving memory’.  The more we practice the less attention is required and the faster and smoother we become.  After the memory is completely programmed within us there is no benefit to keep thinking about each movement.  Movement without thought can be a good thing.  Ask any athlete about thinking too much when playing a sport.  Just let your body do what it does and it will perform well.

 

Assumptions are often referred to as something bad.  Many times I have heard the phrase:  “You know what happens when you assume something?  Makes an ass out of u and me”.  So what would our lives be like if we didn’t make any assumptions?  What if we thought through every situation and condition before making a decision or taking a step?  If making assumptions is a bad thing then it follows that not making assumptions is a good thing.   

 

We have all had an experience where we made an assumption that led to an unexpected and negative incident.  In those situations we vow to never assume anything again because it can sneak up and bite us.  Is that vow realistic or even desirable?   

 

Why do we make assumptions?  To relieve ourselves of the active thinking about events that almost always occur based upon our experiences.  We don’t waste our time thinking about whether the sun will rise.  We don’t think about how our bodies will digest the food we have for lunch.  We don’t think about many things going on around us.

 

So from one perspective assumptions are time savers.  That is until the assumption does not work in our favor.  It is similar to the noise the refrigerator makes when it is running – you don’t notice it until it stops.  We don’t see our assumptions until things do not go according to plan.  Then we look for what we missed and try to see how it could have gone differently.  Quite often we discover an action we overlooked but did not recognize because we made an invalid assumption.

 

This is especially true in business.  Decisions based upon invalid assumptions can lead to disastrous results but we are blind to the assumptions until the results are coming in.  And then it can be too late. 

 

Imagine the value of a list of common invalid business assumptions that lead to poor performance.  By knowing the assumptions you can avoid making them.  Stay blind and you are doomed to repeat them over and over again. 

 

During the past four years my business partner and I have been compiling such a list and have found them to fall into four categories.  For the sake of brevity I have only included one invalid assumption in each category along with a description of the assumption.  I have three more invalid assumptions for each category listed in a lengthier document.  If you wish a copy of that document  contact me through this blog or directly reach me at skirkwood@gmail.com. 

 

The first category of invalid business assumptions executives make are about the Goals they develop.  These are important assumptions because the goals of a business establish the performance requirements for the entire enterprise.  For instance if a corporate sales goal is to increase revenue by a certain dollar amount then the year will be considered successful only if the business performs at that level.  Anything less is unsatifactory.  Goals and performance requirements are the same thing.

·        All Goals are Achievable.

o       Just because you set a goal does not mean you can achieve it.  Businesses are challenged to set “Big, Hairy, Audacious, Goals” (BHAGs) but if those goals are not achievable then setting and working on the goals is actually harmful.  There is nothing wrong with setting stretch goals but they need to be attainable.  If it is impossible for your business to grow a certain percentage with your existing Business Model – there are five discretely defined components to a Business Model – then you have to either change the goal or redesign your business to be able to achieve that goal.  If you are not designed to achieve the goal then no matter how hard you work or push your people you will not reach the goal.

·        Invalid Goal assumption 2

·        Invalid Goal assumption 3

·        Invalid Goal assumption 4

 

The second category of invalid business assumptions made by executives concern the Design of their business.  There seems to be an intuitive understanding that businesses have a design because the term Business Model is used frequently by CEOs.  A model is the physical manifestation of a design.  When a product is prototyped the designer creates a set of blueprints (designs) that are used to build the model.  The next time a CEO speaks about his/her business model ask him/her to show you the design.  And since the CEO’s understanding of the business design is so vague it is easy to have invalid assumptions about it.  Here is one.

·        Improving Information will Improve the Design of the Business

o       Many executives look to IT systems to solve their problems.  With better information they will be positioned to make more intelligent and timely decisions.  Executives need to remember that systems support organizations / organizations execute processes / processes create products or services / products or services are delivered to customers.  Systems are the last thing executives should be looking to change!  Will replacing the dashboard (information system) in your car change its performance capabilities?  No.  The root cause problem in your business is seldom the result of any IT system.  The fault usually lies in the design of the business.

·        Invalid Design assumption 2

·        Invalid Design assumption 3

·        Invalid Design assumption 4

 

The third category of invalid business assumptions deals with Strategies.  This is an activity that nearly executive has engaged in and can relate to.  It is the source of out-of-the-box thinking and it sets the direction of the corporation for years to come.  Strategic planning is considered essential for the survival of every company because executives know that to be stagnant is to die.  They have to change and the vehicle for change is thought to be strategies.  And if this is indeed the vehicle (which we know it is not) then any invalid assumption in this group can be crippling.  Here is the first invalid business assumption in this group:

·        Strategies are Strategies

o       Not all strategies are created equal.  There are at least three types of strategies:  design strategies, implementation strategies and execution strategies.  The nature of each type of strategy is very different as well as their timing.  Business executives often confuse a design strategy with the design of the business.  They are two completely different ideas and need to be kept separate in order to reduce confusion.  Know the difference between design and strategy.

·        Invalid Strategy assumption 2

·        Invalid Strategy assumption 3

·        Invalid Strategy assumption 4

 

The fourth group of invalid business assumptions is about Performance.  Performance is important for the health of the organization.  If there is substandard performance from the customer’s perspective then sales will suffer and the business will fail.  Customers are looking for companies that can offer the greatest Value Proposition.  If there are performance issues as it relates to the return on investment then stockholders will opt to invest their monies in better performing businesses.  Shareholders are looking to create personal wealth and companies that are not financially successful suffer in the market place and that has a negative impact on the company’s stock price.  Actual Performance is very important in the long-term prospects of any company.

·        Performance Problems are Always Execution Problems

o       Business executives are aware of the impact that the quality of a  design has on the performance of the product but they fail to apply that understanding to their business.  80% of the time the quality and relevance of the business design is at the root of performance problems.  A poor design can never result in good performance.  But since executives are unaware of business design they see execution as the culprit.  Execution is particularly attractive to management since those problems are the fault of the employees while the quality of the design is management’s responsibility.

·        Invalid Performance assumption 2

·        Invalid Performance assumption 3

·        Invalid Performance assumption 4

 

Knowing that you are operating under an invalid assumption may give you the chance to change your decision making.  If you are making assumptions about things that you can control then you do have the option to make changes.  If your assumptions are about large external events such as the economy, then you can not control the outcome but you can develop scenarios.

 

Context of Operations

This is most of an email I sent to a colleague who was about to teach a class on Operations.  This was my introduction to him of me and what I do.   

“I have spent the past 23 years designing processes (12 years), designing departments (7 years) and designing businesses (4 years).  If you don’t mind I will recount how that progression occurred.  Initially I worked on determining the root cause of process performance problems (nice alliteration) and designing solutions.  The effort was typically directed to one department.  As the projects grew so did the breadth of the processes.  It did not take long until I was working on processes that spanned departments which definitely increased the complexity.  I did have great success and eventually was asked to step into the CIO role at La-Z-Boy (LZB).  In that role I redesigned the IT department for the LZB division (3 years) and then created an entirely new IT department to service the all 14 divisions at LZB (4 years) plus the corporate office.  Though my title was CIO my actual role was IT Department designer, leader and manager.

 

As a Vice President I did have control over those areas reporting directly to me and so I could design them to work the way I wished them to.  IT, HR and Finance are all support functions and because each area is asked to participate in all projects you can see how important it is for them to work closely together.  If you know anything about IT you will be aware of the challenge made to every CIO – Align IT with the business.  Problem is businesses are not aligned with themselves and therefore there isn’t just one thing IT can align to.  (I contend that there really is not something called “the business” but instead a collection of departments that share a common business name.)  

 

Businesses need a way to have all of the parts working together.  It does not benefit a company to let each department go off and try to optimize itself thinking it will have an optimized whole.  It simply does not work that way.  Optimizing all the parts does not optimize the whole.  After leaving LZB four years ago I started documenting the design of the entire business to show relationships and how the parts needed to work together.  It actually shows how to align the parts of a company – the holy grail of business.

 

You have some process work in your course.  If you are a process designer you know that processes are invisible until each activity/component is documented.  Documenting processes is actually documenting process designs.  It is only when the entire process is visible that you can determine if a change is warranted and what the impact of that change will be.  By documenting the process before making changes you minimize risks of unintended results.  Also by documenting the process you can determine whether the process needs to be changed in order to achieve certain performance goals or if it is a matter of execution.  Poor process performance is the result of either a poor design or the poor execution of the design.  Until you document the process you can not know where the problem exists.  More than 80% of the time it is design-related.

 

Now reread the last paragraph and substitute the word ‘process’ with the word ‘business’.  The principles are exactly the same.  Most executives (people in your class) do not understand that businesses have designs.  They know products have designs and some will know processes have designs but few if any will know that the business has an actual design.  And because they do not know designs exist in businesses they do not look at the design when they are having performance issues.  They look at their employees (remember performance = design + execution) and if you can not see the design you go after execution.  This is why so many projects in companies have such a low ROI and management is frustrated with their investments.  They are not resolving the root cause.

 

I know this is a roundabout way of getting to one suggestion I would have with your course.  And that is context.  Context provides the appropriate background for any area of study.  One pet peeve of mine is when people judge actions taken decades ago and use today’s mores as the backdrop.  Without knowing what was going on in the past those judging do not have the right context to understand the actions that were taken.  Without understanding the entire business your students may not fully grasp Operations.  I do see that you speak about business and process design and I want to encourage you to show how things are connected, not separated.  It really is not ‘business and operations’ any more that it was ‘the business and IT’.  All of it is the business because “Everything is connected to everything”.

 

There is a particular sequence that leads up to the performance requirements for Operations.

Ø      Capstone. 

o       Strategic information such as the determination of the performance goals for the company.  What are the revenue goals and profit goals?  They drive everything. 

o       In addition you have to understand the competitive environment.  Without knowing the competitive environment you are making plans in a vacuum.  Returning to the idea of context, the competitive environment provides the context for designing the business for success. 

Ø      Market Model.

o       Markets, customer segments, product groups, products and Value Propositions.

o       Determine whether your Market Model can deliver on your revenue goals.  If not you have to make adjustments to the Market Model design.  You may increase your markets, sell to new customers, develop new products or redesign existing products.  You may acquire an existing company which will broaden your Market Model.

o       Part of the work in documenting the Market Model is determining customer expectations.  This is critical because Market Model requirements are input into Operations (Process Model).

Ø      Process Model. 

o       The Process Model contains all of the processes that the business performs.  What I am referring to may be slightly different than how you think about it.  Selling is a process.  Marketing is a process.  Assembling components is a process.  Making components is a process.  There are processes that focus on Creating Demand for a company’s products and services.  There are processes created in order to Fulfill Demand for those products and services.  I expect that in your course you equate Operations with Fulfill Demand processes.  If I am correct in that assumption I would suggest that in the future you consider all processes as part of Operations.  That is why Lean concepts work on the shop floor and in the office as well. 

o       The point I wish to make here is that the performance requirements for processes is not arbitrary.  The market place will determine what is an acceptable price or acceptable lead time both of which are determined by the Process design (Operations).  The market gives Operations the minimum requirements in order to be competitive.

 

I will stop here.  I have probably worn out my welcome by now.  You should know there are two more Models that are part of a business design:  Organizational Model and Systems Model.  If you wish to have an overview of them I would be glad to share it with you.

 

Everything I have written comes from my business partner and me.  I can not direct you to a different source because we are the sources for these ideas.  This is just the tip of our ice berg.  I have much, much more I could discuss. 

 

Let me know if you wish any clarification on the ideas I have presented.  I will be glad to respond.”

Silver Bullet

Every business leader is looking for a “silver bullet” to help them solve all of their critical issues.  Many executives mistakenly thought a new information system was the answer they were seeking, hence the well documented dissatisfaction with IT investments.  We have found that the closest thing to a silver bullet is Business Blueprints™. 

 

Here is a list of business problems that a set of Business Blueprints™ can resolve.  Don’t keep treating the symptoms but instead get rid of the problem.  Business Blueprints™ allow you to go right to the root cause of many business ills.

 

Read through this list and see how many sound familiar.  It is not uncommon to recognize three or four as being challenges your company is facing.

 

1.      Performance Not Meeting Expectations

 

–          80% of performance issues are the result of the design of your business.

–          How can you solve design problems if you can not see the design?

 

The business design needs to be visible to know whether your strategic sales and profit goals are reasonable.  Changing strategies has absolutely no effect on the design of a company.  The key to performance is Design, not strategy.    

 

2.      Disagreement on Direction and Strategies

 

–          Are you certain everyone is going down the same road?

–          How did you decide to go in a particular direction?

 

The Pareto Principle is intended to focus businesses on what is critical.  Even with that tool most businesses are uncertain about what to do next.  Business Blueprints™ provide clarity in determining what is important in order to achieve strategic goals.

 

3.      Technology Selection

 

–          Are you interested in minimizing the risk of selecting the wrong technology?

–          Do you want to spend millions to automate the same ineffective processes?

 

A well-selected piece of software will support the updated design of a business.  Selecting a piece of software before knowing the design of your business is very risky.  Most companies do not know their design and most ITsolutions are considered to be a business failure for that reason.

 

4.      Problem Prioritizing Projects

 

–          How difficult is it for your management team to prioritize projects?

–          What method do you use when prioritizing your work?

 

Companies look for quick wins when selecting projects.  But the greatest ROI is not necessarily the best project to pursue.  Most of the work after updating a design is centered on implementing the new design so that the desired strategies can be executed.  Prioritize initiatives and sequence projects.

 

5.      Unproductive Strategic Planning

 

–          If strategy execution is dependent upon the capabilities of a design (and it is), how can you create strategies if you can’t see your design?

–          How much more productive would strategy meetings be if everyone was looking at the same blueprints?

 

Strategies must be embedded into the business design to enable the strategies to be executed.  It is harmful to create strategies that can not be executed with your current design.

 

6.      Alignment of the Organization

 

–          Are all the departments within your company going in the same direction?

–          How can you empower your people if they do not share a common understanding which is only possible with a set of Business Blueprints?

 

Alignment must be designed into a business; it can not be managed in.  Therefore the design of each business must be documented and made visible and the parts designed to ensure Total Business Performance through alignment. 

 

7.      Value Provided by Departments

 

–          How can you measure the value provided by the organizations within your business?

–          Has each department defined and quantified the expectations of its customers for its products and services?

 

By having the design of a department documented you can see its critical customers, services and processes.  You can also tell how well the department is performing against its customers’ expectations.  Raise the value of critical departments.

 

8.      New Management

 

–          How long does it take a new executive to understand all the parts of the business and their relationship with one another?

–          Would it be helpful if an executive could see pictures of all the parts of the business and how they fit together?

 

By having a documented set of Business Blueprints™ an executive can understand in two months what it will take 12 months without them.  This means better decisions can be made more quickly.

 

9.  Mergers and Acquisitions

 

–          Do you think that merging two cultures, product lines,   customer segments, processes, organizations,…. is more difficult than adding a room onto a house?

–          Would you like to significantly increase the likelihood of successfully merging two companies while reducing the time and cost?

 

Having the blueprints of two companies make mergers possible.  You can actually see how the parts of one company compares to the other and how to best combine them.  The costs and time necessary to create blueprints will pale in comparison to the risks and the efforts necessary to try and merge two undocumented businesses.

 

10.  Growing Faster than an Organization can Accommodate

 

–          How can you tell if each executive shares the same understanding about the destination of the company and how it will get there?

–          How are you changing the company to accommodate your growth?

 

Growing too fast can introduce serious challenges to any organization.   Communication become exponentially more complex as businesses grow.  You need to ensure that the design of your business can support the increased growth and it won’t collapse upon itself.  A set of Business Blueprints™ allows you to see your existing design and to make adjustments to accommodate that growth.

 

It is interesting that so many diverse issues within a business can have the same root cause.  And it is even more interesting to understand that having a set of Business Blueprints in your hand will position you to go after any of these issues within your business.  What problems are giving you pain?