Analysing the business model story

Our key focus is on working with clients to fully explore existing, proposed and possible new business models, and to understand how they are likely to be influenced by existing and likely future trends and events. This process is designed to ensure that business models which clients intend to pursue make sense in logic. That is, they are tested to ensure that, given all prevailing circumstances, and in light of emerging global, national, local and industry trends, they appear reasonable and likely to achieve their objectives. The precise methodology adopted for this process will depend in large part on a range of industry-specific and company-specific factors.

Some clients are satisfied they have the broad business model approach right. Where this is the case, they often elect to proceed straight to the quantitative assessment phase in order to undertake robust testing of all technical and financial variable sets - see the Business model analysis - quantitative page. Other clients, however, are unsure of which of a number of models would be best suited to their needs. Yet others will have arrived at a proposed business model mostly on the basis of assumptions and/or a "that's how it's always been done" approach. For these latter categories, the qualitative process outlined here can be very useful.

Qualitative assessment techniques

Some of the techniques we employ for the purpose of testing the logic and suitability for purpose of existing and proposed models, and generating ideas about new models, are as follows:

4C Thinking process (a Wingarra BMI tool):

• Ensuring all decisions are made on the basis of Comprehensive information. (Note that many of the techniques listed below this one are aimed at ensuring that all relevant information is assembled.)
• Challenging all conventional wisdoms and sacred cows which underpin existing models. The aim here is to break down aspects which rely on nothing more than historical longevity, and which are blind to emerging trends and relevant contemporary events.
• Using Critical thinking techniques to ensure that all decisions are made only on the basis of robust analysis - i.e. decisions are made with the head rather than the heart.
• Using deliberate and structured Creative thinking techniques to generate a raft of possible future pathways. As with all properly-constructed creative thinking programs, it is recognised that many of the ideas generated will eventually be discarded as impractical or not feasible. It is important, however, not to limit the flow of new ideas by invoking the culling process too early. The quality of ideas is often determined, at least in part, by the quantity generated. The quantity, in turn, is significantly impacted by the freedom allowed to participants to roam freely, to suspend "rational" thought processes, to consider "off-the-wall" and "left-field" possibilities and to look for unusual connections.

Scenario analysis (structured analysis of existing environment and emerging trends):

• Global
• Global regional (e.g. Asia-Pacific, east Asia, etc)
• National
• National regional
• Local
• Industry of which the company is part
• Connected industries (often connected in ways which have not traditionally been apparent or accepted)

Competitive environment analysis:

• Analysis of what recognised competitor companies are doing, and why.
• Analysis of what non-recognised competitor companies (i.e. companies which may already have become, or might become, competitors) are doing. In many cases, the recognition of previously unseen potential competitors can be enlightening in itself.

Online environment analysis, if not included above:

• There are very few examples of companies and industries which have not seen their ways of operating altered significantly over the past decade because of developments in online and broader telecommunications technologies.
• All companies need to understand the online environment, both current and likely future, and position themselves for exposure to opportunities and shelter from threats

Deconstruct and reconstruct the model:

• This technique involves deconstructing a business model and listing all of its constituent parts.
• For example, in the coffee shop example linked below, all of the individual elements within the shop itself would be separately listed - e.g. tables, chairs, till, display cabinets, espresso machines, cups, saucers, cutlery, reading material, Internet booths, etc. So too would all of the individual elements of the clientele - mothers with children, students, office workers, workers with laptops, etc, and all of the individual elements of the product offerings - e.g. coffee beans, tea, milk, soy, cakes, biscuits, rolls, wraps, etc.
• The list of individual elements is then examined in order to find elements which might be eliminated, modified or combined in novel ways, either with each other or with elements currently external to this particular model.
• From an analysis of the parts, and a consideration of elements of other - related or unrelated - business models, it is then put back together in a different way.
• As outlined in the coffee shop example, combining the till with office worker customers throws up a number of ideas about finding ways to speed up the ordering and collection processes so they are more likely to buy from that store - e.g. online ordering, prepayment, swipe card system, etc.
• For an example of how this approach can be used, please see the Coffee shop example page.

The end goal of these processes is to produce one or a number of feasible, actionable new business models, or elements thereof. Once this process is complete, it is time to fully test the model or models by designing and constructing financial models which allow all variables - technical and financial - likely to impact upon performance to be tested, both independently and interdependently. For an outline of this process, please proceed to the Business model analysis - quantitative page.