The world is full of instability and uncertainty … Every decade, financial markets and economies go through moments of turmoil.
2020 has experienced massive disruption from the COVID-19 pandemic. In 2016, the UK voted ‘OUT’ in a Brexit referendum. In 2008, we had the global financial crisis with several banks including Lehman Brothers failing. And in 2000, there was a dot-com bubble, which caused several technology businesses to fail.
So how do you get your business or career into shape, ready, and able to handle the disruption?
As many Business Models crumble during turbulent times, it has become clear through examples like Amazon and Chipote that a strong or Agile Operating Model will help a business to hold on, pivot and rebuild as new opportunities arise, and the right skills will also let you change jobs or even start a new business quickly, as a consultant.
How can you build an AGILE OPERATING MODEL to support your business or career against disruption?
Discover (including many examples to inspire you and to emulate):
- What is THE STRATEGY JOURNEY?
- What are the 10 Universal Transformation Challenges faced by enterprises?
- What are the 5 models in THE STRATEGY JOURNEY Framework that shape businesses for success, giving them the agility to overcome disruption, survive and thrive under different circumstances in the global economy?
- How is the Business Model different from the Operating Model?
- What makes up the ‘architecture’ of a business?
- How to build your LIST of next steps in your TARGET OPERATING MODEL?
- What is and makes an Agile Operating Model? What is business agility?
What is THE STRATEGY JOURNEY?
Why does it matter?
All enterprises, no matter their size, are continuously navigating through the Five Stages of THE STRATEGY JOURNEY as they tackle different challenges across their organization.
These five Stages represent the business lifecycle, that is the journey from strategy to execution of every enterprise as it transforms to survive, thrive, and grow.
In and during each strategy journey, an enterprise undertakes…
Motivation & Leadership: Leaders must set the target mission, vision, and goals for the business along with values. This allows the appropriate strategies and tactics to be defined. It also rallies and motivates the team, and sets the organizational culture. This builds the brand that is needed to drive engagement from customers. It also drives agility, accountability, and action during strategy execution by an aligned organization.
Great examples of strong leadership that motivates are Tim Cook’s leadership at Apple and Satya Nadella’s transformation of Microsoft.
Business Design: With a clear vision and goals to focus on, ideas can be generated and problems prioritized, allowing them to be tested for their viability as propositions with value for all stakeholders, including customers, staff, partners, and shareholders. The business must innovate new business models that enable its value propositions to be adopted by customers and produce profit.
A great example of good business design can be seen at Tesla and Elon Musk’s strategies, starting with a sport car to help fund future projects as the business moves towards its ultimate goal or mission and vision in the Energy Sector.
Value Design: For a business to grow and produce profit, it must have a strategic position in the ecosystem or value chain that it operates within. Value is created when the business can find the right balance between customer intimacy, product innovation, and operational efficiency across its value streams or processes and capabilities, all while tapping into the wider value ecosystem for sources of competitive advantage.
The Apple Ecosystem backed by its IOS platform is the best example of value design, as Apple products and services despite their higher or premium prices, have the ability to make customers justify their purchases through all the other value added benefits, in order to stick with the Apple Brand. Value design is all about building stickiness in your services.
Business Architecture: To support everyday functions as well as growth, a business must have highly agile capabilities or functions across its entire Operating Model. Its architecture has to support the most optimal use of people, process, data, and technology resources, as well as funding, to allow remarkable services to be delivered in a way that can match the key performance indicators (KPIs), while enabling the business to scale.
The most valuable company in the world fully focused on data and its processes in Amazon has the most robust business architecture, built into its Operating Model. Amazon’s Operating Model is so powerful because of its subsidiary Amazon Web Services (AWS), which allows the company to supply what was originally its own infrastructure as an ecommerce company, to other customers, all the small and even big businesses who need Web Services. The AWS cloud not only hosts other companies software, but provides many of its own software ‘as a service’ (SaaS) applications to customers, while allow third parties to host their own SaaS applications, to create a huge network, and actually makes more money for Amazon that its retail marketplace.
Business Transformation: No business will survive by being complacent with the status quo. Change and innovation are essential to stay in the game of business and get ahead. In order to deliver outcomes that are aligned with the strategies in the mission and vision, change must be managed as a portfolio of projects that are coherent across different business functions from front-to-back or end-to-end.
Poor transformation was the result of Blockbuster’s failure while new rival at the time Netflix focused on providing a better customer journey, and Yahoo failed because of its poor transformation decisions to not invest in its search algorithm or security, versus the transformation investments that GOOGLE made when it first developed its Search Engine for the long term.
And all businesses are constantly working through …
10 Universal Transformation Challenges … that should form their main business objectives
- Starting a business or launching a new product or service
- Improving organizational culture for change
- Developing customer relationships with sticky experiences
- Growing through service extension or diversification
- Adapting to ecosystem changes
- Increase value by building business assets
- Building agility to optimize capability efficiency & effectiveness
- Optimizing transformation activities for ROI
- Becoming more intelligent with data to drive innovation
- Leveraging local or global networks to improve operations
Agnostic of turbulent events, all business, big and small, for-profit and not-for-profit, private or public-sector and government-backed, are working through these 10 different problems that challenge them to different degrees of severity and complexity.
And businesses can transform by overcoming these challenges or evaporate…
In fact, in our fast changing digital economy, and without the additional disruptions caused by big turbulent events, companies are already shrinking with their business lifecycles becoming obsolete in as little as 10 years, as customers change their behaviors.
Disruptive events simply accelerate what might have been inevitable when the company isn’t in the right shape to stand the test of times, from having built an agile operating model through effective digital transformation.
When resources are tight, these transformation challenges become increasingly difficult for a business to manage, and that is what makes them fail, when they fail to overcome the problems that are the root cause of one or more of these transformation challenges to a catastrophic level. And the evidence is clear with these statistics of failure dominating all the headlines.
What matters though is how your business deals with these challenges and the outcomes achieved from successful transformation, as the business executes the goals and objectives that motivate it in its Mission Model, its Business Model, its Value Model, its Operating Model and its Transformation Model, along its strategy journeys.
Solving problems and transform your business with the 5 Models in THE STRATEGY JOURNEY Framework
THE STRATEGY JOURNEY Framework is comprised of 5 Models with the tools and techniques to help you and your business navigate your strategy journeys, and overcome the transformation challenges that could disrupt and cause failure.
The ‘Mission Model’ describes the core purpose of an enterprise providing laser focus on the target mission that it seeks to achieve, while enabling the business to pull followers and people toward its future vision.
The ‘Business Model’ describes what constitutes and drives a business, giving it the means to make profit as well as growing the value of the business itself. It encompasses customers, value propositions, and details of what makes the business grow.
The ‘Value Model’ describes what constitutes value for an enterprise or a customer, encompassing where the value is created, the exchange of value between different stakeholders, and most importantly, how to find new opportunities to create value in the wider global business ecosystem.
The ‘Operating Model’ describes HOW the business runs to support the design, build, testing, and delivery of its value propositions. Comprising processes, data, technology systems, people and governance of the business’s capabilities to operate at a cost to achieve business outcomes.
The ‘Transformation Model’ describes the effort in time, resources, costs and the governance of the roadmap associated with the transformation journey of an enterprise, as it executes changes to its capabilities and improves its business agility, for continued value delivery and growth.
Each of the 5 models correspond as enablers to the 5 different stages of the lifecycle of a business, that is, the business’s strategy journey.
How is the Business Model different from the Operating Model?
The Business Model is a strategy that the enterprise sets to drive how it will create and grow value, and WHAT it shall do to achieve it. It is a model used in strategy and planning, and a hypothesis of targets that the enterprise must achieve to be deemed as successful. It fails when it doesn’t achieve its projected targets such as a particular revenue stream or profitability.
The Operating Model (in comparison) is HOW the enterprise will physically implement its strategies, especially its Business Model but also its Mission Model, Value Model, and Transformation Model, through its business activities. It is HOW the business is being run and a model used for strategy execution.
When a Business Model fails for any reason, an enterprise with an agile Operating Model will have the capabilities (within its architecture) to support the business as it pivots to newer and different Business Models, through conducting its business activities in new and innovative ways. If the Operating Model cannot support other Business Models, then that is where the business itself could fail entirely.
In an economic crisis, customers may stop consuming certain products and services causing these Business Models to fail, because they are not able to generate the income or revenue from sales. Businesses with Operating Model that cannot operate differently and pivot to support new Business Models will quickly fail because they cannot bring in new sources of funds, and when cashflow runs out, then the business and its Operating Model will stop running. This is the case with many businesses during the COVID-19 pandemic, especially small businesses.
As the Operating Model is comprised of people, processes, data and technology systems in different locations both physically and virtually too, these resources could be diverted or transformed to conduct different business activities which in turn support different Business Models.
In the COVID-19 pandemic crisis, we have witnessed how companies with different levels of business agility in their Operating Models, both big and small, that have invested in infrastructure to support different processes or business activities, and especially in their digital capabilities, are able to cope much better and in fact, some of their services may be in higher demand, while others decline, as they ‘pivot’ their Business Models. Many are using different tactics to fight for survival while others are thriving but having to deal with different logistics issues but with an agile Operating Model, they can be scaled up or scaled down accordingly to divert resources towards the most important and demanding business activities and even pivot their Business Models.
Many traditional businesses in the food and retail industries have shifted to home delivery services leveraging their digital and distribution channels instead of dine-in or shop-based services, as demand climbs with many eCommerce supermarkets at over capacity. It has been difficult for many to even book a delivery slot with online supermarkets like Ocado in the UK. Examples include Top Cuvée, a neighbourhood restaurant and a bottle shop with a bar, who have pivot to and online food delivery service in Shop Cuvée, and in the town of Norfolk in the UK, most independent local businesses have also shifted to online food delivery from the local bread shop to local grocer, and more.
Likewise, you have many manufacturing companies, shifting to produce Personal Protective Equipment (P.E.E), hand sanitising products or ventilators, as Burburry, Brewdog, Mercedes Formula 1, Airbus and so many more businesses have done.
And you have businesses like Chipote, the Mexican Grill Chain who as result of ramping up their digital channels, perform better in terms of sales despite COVID-19 resulting in their share price rising. Having an agile Operating Model and thus the ability to take on more demand spurred by the COVID-19 crisis, is the reason Amazon wanted to hire an additional 75,000 staff into its operations.
What makes up the ‘architecture’ of a business?
When all 5 models in THE STRATEGY JOURNEY Framework are joined to work together, they are able to support all of the different layers of the business, comprised of all its different business functions, that make up its architecture.
Not to be confused with the 5 enterprise architecture layers as described by the Zachman Framework, which takes a solution-led approach, rather than a service-led approach, the architecture of a business is comprised of 6 layers that map to the people, processes, data and technology systems who operate and run the business and their roles and responsibilities.
There are five internal layers that are responsible and accountable for:
- Setting the context or direction by which the business operates including specific desired goals and objectives with specific outcomes that add value – the Contextual layer. This is the responsibility of senior management or business owners, and the board of directors, who are accountable for the business’s actions and existence.
- Conceptualizing the different services and capabilities that the business will focus its attention on, in order to follow the context it has set and achieve its desired outcomes – the Conceptual layer. This is the responsibility of business managers and product or service owners who set the business models and targets that the organization will attempt to execute.
- Logically organizing and orchestrating all the business’s activities to deliver its services, and the value promised, including managing what change specific changes required – the Logical layer. This is the responsibility of change management including different project managers and analysts.
- Physically supporting the execution of business activities with the infrastructure and logistics necessary – the Physical layer. This is the responsibility of engineering and technology infrastructure, who must be present to set up the environment for business functions to operate.
- Execution of business activities that create value and deliver the services to customers, who would exchange payment and give the business is revenue and profit – the Action & Implementation layer. This is usually the responsibility of the frontline or customer facing staff or channels who deliver the business’s products and services.
And all stakeholders in each of these internal business architecture layers will either directly or indirect interact with customers, users and partners external to the business through the 6th architecture layer – the Experiential layer.
So an organization’s Business Architecture describes how the different layers and all the stakeholders and resources interact to operate and run the business in its pursuit of value creation through service delivery, and it is supported by the 5 models of THE STRATEGY JOURNEY Framework.
This architecture exists in all business and enterprises of all shapes and sizes. The difference is in how strong and agile it is, from what lies underneath.
Many traditional small businesses will have very few people and potentially less advance technology systems supporting many of their processes and thus may not be in the position to act or react on the data about their business and customers that they don’t have, compared to some larger corporations with separate teams just for marketing versus engineering.
Eg. A local cafe versus Starbucks or local grocers and convenience stores versus Amazon.
On the flip side, some larger organizations may also have lots of old legacy systems and processes or too much bureaucracy as well as being disorganized and unstructured, which severely impacts its ability to transform, while there are micro-businesses who can generate significant revenue by themselves as solo entrepreneurs who utilize highly digitized Operating Model, made up of mostly integrated Cloud Hosted SaaS (Software as a Service) applications to support their micro-businesses.
Eg. Big Banks and older manufacturers versus Clickfunnels (aka Russell Brunson) or ijustine, and other Bloggers, Instagramers and YouTubers.
Investing your resources in both time and effort to develop how the 5 models operate in your business, and through your business activities and in the Operating Model especially, is how you can build that resilience, and the foundations for future success.
How to build your LIST of next steps to create your TARGET OPERATING MODEL
Your business’s foundational architecture is built from developing each of the Strategy Journey models and applying and executing the strategies and tactics defined by them in the business and its capabilities. Essential as you work on each model, you will have iteratively:
- Learned from different interactions and experiences through the data collected and analyzed by the business, which could be turned into insights and intelligence,
- Innovated new service solutions,
- Solved the problems in the transformation challenges, and
- Transformed the business’s Operating Model to become more resilient and agile, with the ability to support more and new services in the future.
You and your business or enterprise will have the LIST of things you did and didn’t do well or not well, and the data to work out what to do next, to create a CHECKLIST of things to do, those next steps in your organization’s roadmap.
In fact, it was when I discovered that this was what I was doing, building this LIST and then realising I had an entire framework and method that others could also follow and learn from that I developed THE STRATEGY JOURNEY Framework. I was actually encouraged to write THE STRATEGY JOURNEY Book by a client who was buying my services and my time between 2015 and 2017, and he mentioned he wished I wrote it all down in a book (thanks Stuart McClymont if you’re reading this article 🙂
THE STRATEGY JOURNEY Framework with its 5 models is a problem-solving framework that guides you to shape your business so it has the agility in its resources and its Operating Model to keep transforming and overcome new and continuous disruptions from the business ecosystem and in times of turmoil with instability and uncertainty.
The Framework gives you these LISTS that you can work with, through 25 templated canvases that we at Stratability and all the experts who support us, with over 100+ years of combined experience, have developed overtime… from all our lessons learned, innovations of new service solutions, problems solved, and transformations developed to create various Target Operating Models in different businesses.
These canvases have been designed to support you to use design thinking and co-creation techniques to iteratively develop the architecture of your business overtime, in your business in its Target Operating Model.
Using design thinking and co-creation techniques means that the work is broken down into smaller actionable and practical steps for you and your business to take, while you also achieve quick wins along the way, and there’s isn’t an insumountable set of tasks that you and your business cannot taken especially when you are tight on funds and resources.
So, you can use THE STRATEGY JOURNEY Framework in your small business, and as a solo entrepreneur or consultant and to direct your career journey, as much as a larger corporation or multinational might be able to use the methodology to direct their big programs of work.
Check out some case study examples of different types of Target Operating Models you can emulate from our article on How to design a Target Operating Model (TOM) that delivers.
What is and makes an Agile Operating Model?
What is business agility?
An AGILE OPERATING MODEL describes a business with the capabilities to operate with business agility.
Business agility enables to be nimble with the capabilities to transform with appropriate speed to make the necessary changes in its Operating Model when it faces any kind of disruption, big or small. It is what gives a business its ‘speed to market’ and ‘speed of execution’, and enables the business to adapt quickly to different influencers from the markets and buisness ecosystem that it operates within.
The benefits of building business agility include:
- More time to learn, adapt, and improve using smaller projects that allow strategies to be tried and tested, as part of the strategy execution process;
- Better outcomes and hence more value added as the gaps between disconnected projects are reduced with a joined up and aligned end-to-end strategy that can capture both quick wins and deliver on strategic objectives; and
- Better and faster solutions as co-creation, a major component of operating with business agility increases the perceived value of solutions and embeds them into the customers and user journey at the same time, leading to faster adoption.
In THE STRATEGY JOURNEY Framework, which myself and the other co-creators at the Stratability Academy developed through problem-solving on numerous projects in different enterprises of all shapes and sizes and across many industries (from over 100+ years of combined experience)… you will find the tools, techniques and roadmaps, including different step-by-step paths, which we have captured, learned from and enhanced, to help you start your transformation journey to solve your problems and to get your business and career into shape.
When you apply the framework, you will begin to and naturally over time, perform the following 5 steps to build business agility in your business, enterprise and organization, and create an Agile Operating Model:
Access the current state of the enterprise and its resources. Consider the trajectory it will follow if nothing changes.
Architect the enterprise with its future in mind, to prioritize and focus on the right services, and capabilities to be addressed.
Put new strategies into action immediately through projects that can be achieved quickly. Track activity and collect data to enable learning.
Make better decisions on what actions to take in the next phases of transformation, based on the data collected, and the insights gained from its analysis.
Scale the capabilities, business activities and resources in the enterprise up or down with appropriate speed based on the different problems faced, to overcome possible threats of disruption from those problems.
Operating with business agility can apply to an enterprise and your career too if you view and manage your career as a business or project. In both, you can build different skills and capabilities to develop an AGILE OPERATING MODEL, that will empower you for the future, making you, your business and projects more nimble and resilient to possible disruptions no matter the situation, in whatever environment you face.