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No business can hold onto success by remaining exactly the same forever. Especially during uncertain times, business leaders should anticipate shifts in the market and be prepared to evolve their companies. Often, this means updating and adapting your business model to better suit the current climate and meet consumers’ changing needs.
Of course, effectively and efficiently recalibrating an established system is easier said than done, so we asked Forbes Coaches Council members for advice. What first step should business leaders take when analyzing and modifying their business models to better align with fluctuating market demand? See their enlightening responses below.
Create Space To Explore Solutions
Give yourself and your team space for exploration. Permission to get curious about potential solutions, even if they seem outrageous or unrealistic, is the breeding ground for innovation. Notice the parts of your model that stem from the assumption “this is how it’s always been done.” What would it look like to eliminate them completely? – Hannah Koenig.
Start With A Vision And Work Backward
The first step in moving forward is to start with a vision and work backward. Leaders need to proactively develop a clear vision of where the business needs to end up, instead of reacting. Once your company has a clear vision and strategy, leaders should create team objectives and key results (OKRs) to ensure alignment and success. Leaders are also going to need to remain flexible and adjust OKRs accordingly. – Tacy Byham, DDI
Compare Today’s Client Needs To Yesterday’s
Reassess what your clients need now versus yesterday. Contemplate who else might now benefit from your product or services, and consider other applications of your resources and services to provide more relevant offerings. “What if?” is a powerful question to ask when contemplating a modification to a business model. – Stacey Staaterman.
Answer Basic Business-Modeling Questions
Consider these seven questions when assessing your current business model: What problems does your business solve? What resources are needed to deliver your value proposition? Do you earn before you spend? How do you generate recurring revenues? What is your customer retention rate? How does your cost model compare to that of your competitors? How scalable is your business model? Alexandra Friedman.
Base Your Redesign On Your Differentiators
Start with the customer and what problem your organization solves for the customer. Because there are usually many possible products or solutions that will meet a customer’s needs, think about what makes your offering distinctive. From there, design a business model that builds on those points of differentiation. Think about all aspects of your organization when redesigning your business model. – Reed Deshler
Leverage Your Key Leading Indicator
As management consultant Peter Drucker wrote, “The days of the ‘intuitive’ manager are numbered.” As a leader, you must know your numbers. In them, you have the beginning of wisdom. Beyond your profit and loss statement, balance sheet and key performance indicators, you also need to find and leverage the single, driving metric that moves your market. For a lawn-mower manufacturer, it’s rain. For snow-shovel makers, it’s snow. Do you know and follow your key leading indicator? – Severin Sorensen, ePraxis
Gauge The Relevance Of Your Current Model
Is the problem you are currently solving still a massive problem? If so, is your defined audience still in need of your solution? If so, are your differentiators still compelling? And, finally, how do you know? Once you have answered those questions, you can more thoughtfully seek to understand if you need to offer a new service, modify your current audience, or pivot into a completely new offering. – Stephynie Malik, SMALIK Enterprises
Benchmark Your Business Against Industry Data
My own preference is to read industry reports and then benchmark the business against this data. These reports generally give a five-year history and a five-year projection. The second step is to take the business model apart and put it back together as if you are rebuilding a fine watch. With three to five years of profit and loss statements, balance sheets and enterprise resource plans, I then study the business margins and ratios in depth. – Gene Russell, Manex Consulting.
Develop Leaders Who Can Spearhead Strategic Shifts
An organization must have a dynamic (i.e., non-static) strategic plan and constantly review it. Tied to that, there must be a “people plan” in place where leaders, in particular, are being developed to deal with anticipated strategic shifts and lead the organization through them. The business-model evolution will be driven by those ready-to-go leaders. The willingness to deselect leaders who cannot shift is equally important. – Thomas Bradley Cox, Oliver Group.
Get The Right Players In The Room
Often, a small team is relegated to a secret conference room so as to avoid disruption. While well-intentioned, this practice fails to get to the heart of the matter. The right players bring the voice of the customer, address the interdependencies of how teams work, and take into account the downstream implications. The right team making the few most critical decisions yields the best results. – Felicia Lyon, Panthera Leadership
Figure Out The Right Questions To Ask
The quality of the answers we get is directly related to the quality of the questions we ask. The first step is to make sure you are asking the right questions before you make changes. As Albert Einstein is credited with saying, “If I had an hour to solve a problem and my life depended on the solution, I’d spend the first 55 minutes determining the proper question to ask.” – Lorna Weston-Smyth, LWS Coaching and Training
Look At All Relevant Data
When evaluating the direction for your business to evolve, it is important to understand the intersection of what the market wants, what you can do well, what is aligned with your core purpose and what meets your economic goals. Likewise, it’s important to collect solid data on customer expectations, market trends and your capabilities to make informed decisions. – Maureen Metcalf, Innovative Leadership Institute
Clarify Why The Change Is Needed
Step one is to clearly identify and outline why change is needed. After the “why” is established, then the leader and the team can work on what needs to be done and who will do what, as well as how and when the leader proposes to measure success. It is very important for business leaders to not just focus on the process or the results, but also on the people and the relational aspects of the change. – Denise Russo, SAP
Don’t Get Stuck On Old Assumptions
The first step to analyzing and modifying a business model is to ensure that you are not getting stuck in the past. Are you holding on to observations, parameters or market expectations that were true at one point in time but not necessarily valid anymore? Make sure you challenge your assumptions around what is possible and what is not. – Faith Fuqua-Purvis, Synergetic Solutions LLC
Use Emerging Trends As Inspiration
Emerging trends are idea-generating. They serve as first-step inspiration and direction to modify a current business model. Consider being an early adopter of a trend that’s not even connected to your industry. Adapt it to your expertise, and then create a business model that meets the changing needs of a new market. You might even identify a trend that is a threat to your industry and create a product to address it. – Rick Itzkowich, Vistage Worldwide, Inc.