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In previous articles, we proposed an approach to evaluating your current Business Model #14 – The Entrepreneurial CRO: Evaluating your current Business Model, set out Business Model concepts, tools and frameworks #15 – The Entrepreneurial CRO: Business Model concepts, tools and frameworks and Business Model innovation and selection #16 – The Entrepreneurial CRO: Business Model innovation and selection.
In the final article in this short series, we propose some thoughts on Business Model implementation. One of the key attributes of leadership is to become a relentless change leader – an individual who promotes enterprise-wide innovation and ongoing adaption to the core Business Model, so that large scale strategic initiatives that ‘get the business back on track‘ become less necessary.
Many firms appear to stumble from one strategic initiative to the next, creating wide-scale corporate disruption and fatigue. By implementing tangible ‘small wins’, the firm can start the process to reposition itself.
Having said this, implementing even small changes can be challenging, particularly when the corporate culture is resistant to change and is self-reinforcing. There are many reasons why it can be daunting to implement changes to the core Business Model, not least the challenges of generating and sustaining diversity of thought that drives the right behaviours across the firm.
From innovation to implementation
The criteria for selection of the limited # of ‘high-value’ options can in itself be challenging. Even with the benefit of experimental-learning and rapid-prototype development, it can be difficult to reach consensus as to which Business Model innovations should be taken to the next stage of development. It might in fact be possible to launch disruptive products and services that do not fundamentally change the core Business Model.
A Target Operating Model (TOM) provides a blueprint for the application of strategy to a business or operation. As a high-level representation a TOM is useful in allowing people to visualise the organisation from a variety of different perspectives across the value chain and in response to various scenarios.
Once a TOM has been developed and approved, the normal response is to develop a ‘plan’ that will lead to execution in a controlled environment. In reality, it is very unlikely the plan will actually be realised as intended in today’s dynamic and fast changing world. Through constant scanning of both the internal and external environment, the plan is likely to emerge as the learning process continues and as a result the intended destination will also change, perhaps several times.
It is this expected change in destination that has the potential to confuse supporters and ‘change agents’ alike. There will undoubtedly be many in the firm who are resilient to change for whatever reason and who will be quick to say this change in destination is evidence of failure.
By adopting and communicating a ‘small wins’ approach to Business Model innovation, complete and regular outcomes can help build a coalition, deter opponents and lower resistance to subsequent improvements.
Business Model innovation represents one of the most compelling opportunities for value creation and value capture. Whilst established firms should not undertake Business Model innovation lightly, there are likely to be compelling reasons why firms should consider innovation:
- There are unmet needs and wants of a large group of customers
- An opportunity to capitalise on emerging technologies through the creation, or re(combination) of technological capabilities
- Low-end disrupters have entered the market and quickly become ‘price-leaders’ or offer a simple product that is easily understood and valued by their target customer base
- An overwhelming need to respond to a shifting basis of competition – for example, value creation at the intersection of industries that previously had little to do with one another
Reciproco provides knowledge integration across risk, solvency and strategy, including digital transformation, leading complex and unique projects in regulated sectors. Helping senior executives and management teams focus on strategic challenges to create a competitive advantage.
Darren Munday is the founder and Managing Director of Reciproco. An experienced executive with over 20 years’ global experience with multinational companies, including Chief Risk Officer reporting to the Board.
Darren is an Honorary Visiting Fellow of the Digital Leadership Research Centre, Cass Business School where he also holds an Executive MBA. Darren is a Certified Fellow of the Institute of Risk Management (CFIRM) and Chartered Insurance Risk Manager (ACII) of the Chartered Insurance Institute.
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