The secret to building simple verifiable business models
1. Brainstorm potential dilemmas
See my previous blog on the topic of dilemmas and select the 2-3 dilemmas which seem most important for the business area you are exploring. You are looking for dilemmas which are both ubiqitous and high impact.
2. Define the chosen dilemmas.
For each dilemma:
- Identify the horns of each dilemma ( ie competing decisions)
- Identify the impact of each decision on your key business outcomes (financial and near market)
- Draw the simplest model (Causal chain) which links these decisions to these outcomes (The Essential Model)
3. Expand the Essential business model into its 3 key sub-models :
- The Empirical Model. This is the underpinning verifiable model of the part of the business under consideration. This should be totally objective.
- The Value Model. This captures the value produced in money terms when key objects (customers, users, orders, staff ...) transverse the Empirical Model.
- The Causal Model. This covers the dilemma decisions, how they relate to each other and the impacts they have on the Empirical Model. This will be subjective but should be based on real life experience.
About Ken ThompsonKen Thompson delivers keynote conference speeches, workshop facilitation and in-house consultancy in four key business areas:
- Creating High Performing Teams in enterprises including Virtual and Mobile Teams (based on the Bioteams Book)
- Establishing effective Collaborative Business Networks enabling companies to co-operate effectively in areas such as sales and product development (based on the book - The Networked Enterprise)
- How to use the latest social media technologies including blogging and online communities to promote enterprises, brand, organisation or event
- Development of graphical on-line interactive Business Dashboards and What-if Simulators for organisations to support Performance Improvement, Strategy Development and Executive Team Development.
Bioteams Books Reviews
I have been thinking a lot about what happens when a leader gets under severe pressure, usually because things are not going according to plan. It seems to me this is the very essence of real leadership and where leaders can really justify their salaries. BUT according to Professor Dietrich Dorner, in his excellent book The Logic Of Failure: Recognizing And Avoiding Error In Complex Situations, there are two very tempting but ultimately disastrous tangents a leader can pursue in a crisis instead of addressing the real issues.