There are several key decisions that must be made when designing a business:
Customer selection (including channel):
- What are the greatest profit growth opportunities that fall within my planning horizon?
- Which customers are crucial to those opportunities?
- What high-value customer opportunity should be targeted?
Value Proposition and Customer Priorities:
- What are the unsatisfied needs that drive the behavior of targeted customers (what would lead them to switch suppliers or pay a premium)?
- Does my Business Design deliver differentiated benefits on these priorities?
- Does it hinder my ability to deliver these benefits?
- What customer benefits are generated by my business design (vs. my product)?
- What profit model(s) does my Business Design utilize to capture value?
- How does high profit happen?
- Where will my “Profit Zones” be?
- How do I maximize share there?
- How do I protect the sustainability of out-year cash flows?
- Why should the investment community be convinced that my cash flows can be trusted in the out years?
- What activities do I need to do vs. allow value chain partners to do?
- What assets should I own vs. letting value chain partners own?
- How can I restrict my activities and assets to the most efficient subset that is required to execute my business design well and retain strategic control?
- What kind of pro forma economics does my business design produce?
- What economics does it have to produce to be successful?
- How do I distinguish the microeconomics of a new business design from its potential economics at full scale?
- How do I rapidly test, learn, and adjust for improved profitability of a new business design during its initial 12-24 months?
- How will our functional organizations need to change to deliver a business design (R&D, operations, go to market, etc.)?
- How will our performance systems need to change (cultural values, leadership skill sets, human capital, metrics and rewards, etc.)?
- How will our enabling infrastructure need to change to enable the business design to go forward (balance sheet, planning/learning/ control systems, information architecture, etc.)?
The Discipline of Business Model Innovation: An Introduction to Business Design
by Adrian J. Slywotzky
Oliver Wyman, 2007