Six easy steps that will make you rethink your business model
By Lisa Richter
As director of the Control System Integrators Association (CSIA), a not-for-profit, global trade association that seeks to advance the industry of control system integration, a major goal is to help members grow business. It is important to periodically review your business model.
When was the last time you really thought about your business model? What? You haven't? Or it was so long ago you think you might have been sporting an epic 70s 'stache or rocking a groovy pair of bell bottoms? With Q4 comfortably settling in-strategizing and budgeting season-there has never been a better time to grab a beverage, go dark, and really take some time to dig into what makes your business tick and how you are going to position it for success in 2020. Let's get started.
1. Gather your leadership team: It is time for The Talk. Set aside some time to unflinchingly go through a set of questions about your customers and company. Some examples of questions about your customers:
- How well do you understand your customers' needs?
- Can you formulate the key unmet needs of your customers?
- What is the monetary implication of not meeting these needs?
- What would resolve those unmet needs?
- Are there solutions available today that could solve your customers' problems? Why haven't they been implemented yet?
Some examples of questions about your company:
- What are your key areas of deep expertise? What are key areas where additional expertise or mastery is needed?
- What are areas of weaknesses?
- Who are considered competitors? Only other system integrators (SIs)? How do you differente from competitors?
- How is the market segmented?
Pro tip: Consider breaking this list up and tackling it in separate sessions to ensure your team stays fresh.
2. Play matchmaker. Next, have your team match the unmet needs of your customers with your capabilities and areas of deep expertise. Avoid the temptation to design the solution to the ultimate detail. Assume that technology is available to solve problems, and focus on identifying your customers' issues. Pare the list down to three-to-five options to flesh out further. Some things to consider:
- Are there solutions to key customer problems that leverage your capabilities/areas of expertise?
- What part of the solution do you consider to be critical to master?
- What part of these solutions can you provide?
- Which parts can you develop?
- If you can't, who can you partner with?
- Are there other industry verticals that could use them?
- What is the addressable market?
3. Write it down. Take the time to document the ideas that came out of the brainstorming sessions and start to do some due diligence. Some things to think about: Have these ideas already been commercialized? If so, are your solutions better mousetraps and are they adding real value?
4. Bump against other businesses. Now it is time to analyze your best solutions from the perspective of their associated business models. Do not forget, the innovation may come from delivering an exisiting solution through a different business model.
Pro tip: You might find this book useful: Business Model Generation: A Handbook for Visionaries, Game Changers and Challengers by Alexander Osterwalder and Yves Pigneur.
5. Innoculate against analysis paralysis. Continue to refine your concept, but be mindful of reaching the point of diminishing returns. At some point, research and analysis will start cutting into time to market-or worse, open a window for a competitor to climb through. (Speaking of which, now would be a good time to look into patenting your work.) Remember, perfection is the enemy of done. Some things to consider at this stage:
- Are you comfortable with rapid prototyping and failing fast? Can you and your organization quickly move past a failure to learn and regroup for a new launch?
- How much of your time and resources do you plan to dedicate to this venture and not risk your current operation?
- How far out will you plan in pursuit of the new business?
- Serial venture capitalists consider having one out of four investments pan out as quite normal. This failure rate is unacceptable from the perspective of a traditional SI. Can you and your organization cope with this?
6. Create a business plan. Finally, you need to put together a solid business plan to share with investors, including how you will sell your plan. This sounds daunting, but there are plenty of resources available to help, including CSIA's A Business Model Analysis Guide for System Integrators. (This is normally a member-only resource, but is now available for download.) It is not easy-or particularly fun-to scrutinize your business and contemplate a pivot. But you owe it to your business to buckle down and do it. Right on, man.