Previously we discussed why small businesses fail, why Business Shaping matters and introduced the 5 stages of THE STRATEGY JOURNEY®. So, what is THE STRATEGY JOURNEY®? And how can a business master its journey to create value for customers, shareholders, founders, employees and society as a whole?
What is THE STRATEGY JOURNEY®?
1. Mission Model
All businesses either start with a Mission and/or a Vision or they must create one. It is fundamental to success. Without this, there is nothing to direct the company, its people or customers, and no purpose by which to operate. How would you even interact successfully with customers and why should they pay you any attention?
According to Michael Hayman and Nick Giles, authors of the book – Mission, it is Mission that makes the real difference in successful businesses. They interviewed founders from companies including AirBnB, Tesco, Decoded, and Bebo who echoed this sentiment. Mission is fundamental to any business. While we have our own Mission and Vision statements for Stratability, on reflection this one by Steve Jobs for Apple in the 1980s actually works for Stratability too. It has inspired me and the founding team:
“To make a contribution to the world by making tools for the mind that advance humankind.”
The Vision must be a long-term future state that you are striving to achieve. It is what creates a following for your business; be it loyal customers, investors, employees or ultimately your brand presence. The Mission is much more immediate. For example it might detail what will happen within the next 2 years. It is something you set out to deliver as part of the Vision. It has an outcome so it should be measurable. You need to communicate this to everyone so people understand and know what your business is about.
2. Business Model
Just as failure is likely if a business doesn’t have a clear Vision and Mission, without a Business Model, there is no business. Otherwise, all you have is an idea, which has no value unless it can be turned into reality.
A successful Business Model must comprise of a value proposition that has real tangible benefits for a specific set of target customers and deliver profit to shareholders. It is fundamental to test every value proposition. It must be fit for purpose in the market, and customers must actually want it. Once you know people like and want the product, the next step is to ensure the product is complemented by a remarkable customer experience that supports the customer journey. This includes how you will distribute the value proposition to customers and what kind of relationship you need to build with customers.
Of course, the key to it all is revenue. Along with the value proposition or product, the Business Model explores the different ways to monetise the business. Looking at the target customers, and their social economic factors, the business model must outline strategies for pricing, distribution or place and promotion.
Alexander Osterwalder’s books, Business Model Generation and Value Proposition Design are great resources to help you design a viable value proposition and Business Model. The Lean Canvas by Ash Maurya is also equally useful. Both authors, while not focused on execution, do begin to touch on the activities of the Operating Model – more on that later.
3. Value Model
There are many ways to create Value for a business including Value for customers, shareholders, employees, the wider economy and even society as a whole. Honing in on this Value and having a strategic position that is differentiated is essential. It is not enough to have an idea or even a product. An idea if not implemented is worth nothing and leaves the opportunity for others to discover it and succeed with it. A product can fail if customers don’t understand it or need it. It can be about timing too.
The Value Model is important (if not the most important element of strategy) because it provides that bridge from business strategy to execution.
It is essential to understand what ecosystem or marketplace a product (or service) belongs in – looking outwards. The Value Chain that supports that product must be understood and prioritised in order to create Value. What role does the product play in the market Value Chain? Who are your partners? Can partners become customers or will they provide your business with customers acting as channels for your products and services?
Value can only be delivered through a sequence of activities, or a process, that when executed delivers specific outcomes that are desired by your stakeholders – your customers, partners and shareholders. So it is fundamental to also understand this process in the form of the Value Chain for the business or organisation – looking inwards. Your business must ensure it has the capabilities to support and service its own Value Chain.
4. Operating Model
The Operating Model is not just about operations and technology. It is actually the implementation of the Value Model, and hence sets the foundations that determine an organisation’s capability to succeed, be it big or small. When businesses run out of money it is often because they don’t consider their capabilities. They haven’t thought through the activities they need to perform to build the business, run the business and continuously change the business. The Operating Model considers the people, processes, data and technology in a business and how they work together to achieve outcomes that are aligned to the business objectives. It is the allocation of resources across the Operating Model that sets it apart, alongside the well-positioned strategic Business Model.
“The value of an idea lies in the using of it.”
I have recently been approached by a few talented individuals at one of our courses who expressed their annoyance or fear of others stealing their business ideas. They asked me how they could protect their ideas. My response was to start executing. NDA documents are useful but what’s the point if you don’t do something about it and start implementing? Implementation of an Operating Model isn’t easy, it’s a lot of hard work and if someone else made the effort to do it, they should be congratulated. They were the ones that created Value. If you’ve gone down the route of patenting your product, then you have started implementing.
If you have a great idea, you need to be lazer-focused on execution. An idea without execution is useless.
5. Transformation Model
Change is constant so there is no hiding from it. All businesses, be they startups or established Fortune 500 companies, must change with the times. They must be agile to cope with change and transform their business and operating models accordingly, to adapt to whatever the market throws at them.
Startups must learn to fail fast and pivot their strategy. Pivoting allows startups to hone in on a Value Proposition that will make the right traction with customers and grow sustainably if they get the Operating Model right. Growth itself can often be the killer of startups if they don’t have the right strategy and plan.
Large organisations must watch out for new entrants, changing conditions and deal with lots of new regulations. They have to make sure their cultures are agile and embrace innovation or they could end up as dinosaurs like Kodak and Blockbuster.
Agility helps businesses to be both reactive and proactive to forces from their ecosystem. A fairly nimble organisation, coupled with an innovative culture, can proactively invent new opportunities for themselves and be on the front foot. Currently most banks are spending the majority of their business transformation budgets (we’re talking billions!) on optimizing their Operating Models in order to compete. Meanwhile fast moving tech giants like Google, Apple, and Facebook – as well as emerging tigers like Alibaba – are focused on the Internet of Things, Artificial Intelligence (AI) and bringing positive disruption with the invention of new technologies.
The Transformation Model is the design of a future state at a point in time, and the implementation of the transition plan from the current state to that future state. Obviously, for startups, it’s all about transformation from the beginning as they are starting with a blank canvas.
Using Business Shaping to traverse THE STRATEGY JOURNEY®
All in all, a business needs to ensure it is able to execute its strategies whilst making the best use of resources, continuously evolving and all the while staying true to its Vision. A business’ Mission can change every few years, sometimes even faster if a pivot is required. That is what business evolution is all about. However, the Vision rarely changes and shouldn’t really. If the Vision needs to change, then possibly it was not visionary enough to begin with. Business owners and founders should be looking for an exit if it’s time for the Vision to change.
Business Shaping is the means to traverse the 5 stages of THE STRATEGY JOURNEY® based on the Vision and Mission.
Business Shaping enables the formulation of strategies and tactics together with an implementation plan that can turn a vision and business goals into reality. It provides founders and leaders with a game plan in the form of a roadmap that enables the organisation to focus on the right things to do with outcomes that are aligned to the Mission and Vision. It is a continuous process with each business cycling through the 5 strategy journey stages. That is precisely why setting up a business, running it and continuously evolving it is so hard, and only 1 in 10 really make it.
Growth can occur in many ways but ultimately there are only 1-2 percent of businesses that make up 50 percent of the money in the global economies of the world. It is the dream of every small business to get to this point. However, it is a long and hard journey where many chasms need to be crossed, as referenced by Geoffrey A Moore in his best-selling book on tech startup success – Crossing the Chasm.
Large organisations face their own problems as they continuously traverse the same stages of THE STRATEGY JOURNEY®. According to statistics from Bloomberg, PwC and many more sources, over 70 percent of all business change projects fail to achieve their strategic objectives. Even worse, based on over 400,000 companies surveyed by the Project Management Institute (PMI), approximately $109million is wasted for every $1 billion spent on business transformation. Large corporations must employ a different set of strategies and tactics to achieve their business objectives and create the outcomes that are sought by their shareholders and customers.
A structured approach blended with adaptive recommendations to help companies big and small, build or create Agility, Accountability & Action™ in their businesses is necessary to build successful outcomes. Lots of little wins that lead to a big win. This is Business Shaping.
This blog is a sneak peek of some of the content in my book THE STRATEGY JOURNEY® scheduled to launch on Amazon in November 2018! The book was successfully pre-funded with 100s of copies purchased via Kickstarter.
In upcoming blogs, myself and other community members will be providing much more detail on THE STRATEGY JOURNEY and including their own business and personal experiences, so tune in to stay up to date.
Julie Choo is lead author of THE STRATEGY JOURNEY book (Coming in June/July 2019) and the founder of STRATABILITY ACADEMY. She speaks regularly at numerous tech, careers and entrepreneur events globally. Julie continues to consult at large Fortune 500 companies, Global Banks and tech start-ups. As a lover of all things strategic, she is a keen Formula One fan who named her dog, Kimi (after Raikkonnen), and follows football – favourite club changes based on where she calls home.