Top 5 questions to ask to assess a business model design
What top 5 questions one should ask to assess an enterprise business model(s) design?
11 comments
- Who and how do you manage your financial management capabilities?
- Who and how do you manage your party management capabilities?
- Who and how do you manage your offer management capabilities?
- Who and how do you manage your expense transactional capabilities?
- Who and how do you manage your revenue transactional capabilities?
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Thanks for your input. I agree that the
capabilities that you identified will difinitely reveal good insight of a
business model.
How about question like below:
- Does the model provide ongoing competitive advantages?
- How much is a switching cost for a prospect to become a customer?
- Does the model provide great margin and recurring revenue?
Thoughts?
How about question like below:
- Does the model provide ongoing competitive advantages?
- How much is a switching cost for a prospect to become a customer?
- Does the model provide great margin and recurring revenue?
Thoughts?
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My 2 cents
1.How does the model fit enterprise strategy?
2. What is the risk exposure due to the business model?
3. How does the model deliver against financial aspirations?
4. How does the model affect customers and internal stakeholders?
1.How does the model fit enterprise strategy?
2. What is the risk exposure due to the business model?
3. How does the model deliver against financial aspirations?
4. How does the model affect customers and internal stakeholders?
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Great input Hari. Regarding your risk related
question, are you suggesting the risk could arise due to change in the
business model or something else?
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@Syed
Risks due to introduction of the new model. And risks due to non-deployment in terms of opportunity cost, losing competitive advantage etc.
Risks due to introduction of the new model. And risks due to non-deployment in terms of opportunity cost, losing competitive advantage etc.
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The questions 5 Capabilities Model (NEW) are the framework for those types of questions;
- Let me add some color to my approach; Offer management capability drill down
Management capability questions level 2 discovery
What level of maturity
according to the external stakeholder classification systems?
- New offers may be a research and development type
How does this model fit into maturity model?
- Brand new Emerging Technology
- aka...a companies competitive advantage offers
- Not the definition used by this writer
- Assume higher risk any many conditions must be met to claim hardware, software or service revenue.
- Equals high risk and non-GAAP revenue model
- May be exclusive to a single or few customers typically equal in size to a global company in advanced or emerging technologies
- Infrastructure in place (yes? or no?)
- This would be the competitive advantage audience or the companies risk appetite and you should expect peaks and valleys.
- On occasion you will find a cash flow heavy company using the downtime to exploit the slower economic downturn to ramp up their competitive advantage pipeline.
- This was stated on the following link;
- Cash Flow Dependency
- 1 this is typically early field trials - not eligible for revenue
- This would require highly skilled resources-cost that people assume is paid to service and therefore service must support the model in any sideways manner that someone comes up with.
- This entire product and service cost must be captured in expense-we should have only a pace car going north. See analogy.
Advanced (not new) but not matured enough in industry sales to have graduated to the 1 billion in revenue across the market.
If not, does the organization have a leader position according to the industry analyst? Finally, if either are true the SEC reporting has an exclusion or has categorized this in the risk category of advanced technology x.
Of the two types discussed combined the rule typically doesn't exceed 30%, what will be removed from the current portfolio to ensure this balance?
Who's communicating the end of life and when?
Does the timeline align to the new business model proposed?
Transactional capabilities both expense and revenue
Do either of the risk categories have a dependency on any supply or joint selling arrangement?
Would the core/foundational offers be managed direct or in a resale model?
There's another layer in the party management capability to derive the transaction models...:)
Alexander Davidge •
On a purely practical note:
Is it simple enough for sponsors /decision makers to digest?
Is it illuminating enough for them to be interested?
Is it relevant enough for them to care?
Is it detailed enough to be meaningful?
Is it coherent enough for people other than me to pick it up and own it?
Is it simple enough for sponsors /decision makers to digest?
Is it illuminating enough for them to be interested?
Is it relevant enough for them to care?
Is it detailed enough to be meaningful?
Is it coherent enough for people other than me to pick it up and own it?
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So for very productive feedback from everyone. Thank you very much.
@Lisa- There should be an exit strategy for a business model as well, i.e. selling to a competitor, IPO etc. Where this question will belong in your 5 identified model capabilities area?
@Alexander Davidge- I like your response of "Is it illuminating enough for them to be interested? ". What criteria would you use for judging if the model is illuminating or not to its stakeholders?
@Alexander Samarin- Agreed, I can have the best model but if it’s not executable then it make no sense to run the business on such a model.
@Lisa- There should be an exit strategy for a business model as well, i.e. selling to a competitor, IPO etc. Where this question will belong in your 5 identified model capabilities area?
@Alexander Davidge- I like your response of "Is it illuminating enough for them to be interested? ". What criteria would you use for judging if the model is illuminating or not to its stakeholders?
@Alexander Samarin- Agreed, I can have the best model but if it’s not executable then it make no sense to run the business on such a model.
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Syed
Think of these management (3) capabilities as the codes (financial) assigned to a vehicle before it enters the highway. We must work with our suppliers (party) to build a vehicle traveling south (expense transactions) Start enters southbound at any point. Exit ends the build in south.
A customer (party) purchases a vehicle at the point of entry to highway traveling North (revenue transactions). The exit strategy must take any vehicles off the road at an exit and define the strategy to end of life those vehicles or sell to a competitor etc... Entry and Exit are the only things we must have at this level in our design. We keep it global and allow local flexibility to be defined within these simple rules.
The exit strategy and who what when or why get's managed by the exiting vehicle.
Think of these management (3) capabilities as the codes (financial) assigned to a vehicle before it enters the highway. We must work with our suppliers (party) to build a vehicle traveling south (expense transactions) Start enters southbound at any point. Exit ends the build in south.
A customer (party) purchases a vehicle at the point of entry to highway traveling North (revenue transactions). The exit strategy must take any vehicles off the road at an exit and define the strategy to end of life those vehicles or sell to a competitor etc... Entry and Exit are the only things we must have at this level in our design. We keep it global and allow local flexibility to be defined within these simple rules.
The exit strategy and who what when or why get's managed by the exiting vehicle.
The codes from our management capabilities tell us the details.
To keep us using the same approach anywhere in the world, we just want to summarize south and north with the codes assigned telling us the where and when or how.
Your executive audience, cares about details after they have a total of all travelers in both south and north directions in summary. They will drill down on the details after they digest the totals.
Does this answer your question?
Syed Suhail Ahmad •
Great analogy Lisa. Thank you.
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