There are enough good business models in the market place. However, what we need is a better one; the one that stands out amongst many a competitor. To design a better business model we need to have a set of criteria. In this blog post I am listing nine criteria that a better business model must conform to:
1. Robust: To start with, a business model must be built on a fitting architecture that is not only strong but exhibits vibrancy in internal health. No doubt it must be powerfully built. Equally important is that a business model must be scalable in terms of expected growth of business and flexible in terms of meeting any eventuality. Acid test of better ones rest on how the model works under trying conditions
2. Coherent: The second criterion of coherence has two dimensions: one deals with internal consistency where components of a business model are consistent in purpose and in practice; other dimension is to do with being logical in arriving at a decision or conclusion. Even a consistent model could fail if it does not lead to its proper conclusions. Put it the other way, a business model must provide direction leading to a desired solution in a consistent manner
3. Complete: “Half learning is dangerous thing”, said Ben Johnson. Equally, an incomplete business model is deemed counterproductive. A better business model must have enlarged scope covering all the elements to the extent that it tells the story in full. Completeness requires both breadth and width. One cannot do without the other
4. Substantive: Being substantive is to furnish details at the level required so that components of a business model demonstrate their importance, usefulness on the back of reality. These elements are to be shown in model architecture as possessing the capacity to work independently and inter-dependently
5. Simple: So simple it is so better a business model. It must be easy to understand and must be easy to implement
6. Practical: Anyone can fantasize on business model. But a better business model designer comes out with one that easily fits into the system within a business and outside in the wide area of competition. It must do the right thing in right manner. Let me turn to the management Guru Peter F Drucker for his comment: “Efficiency is doing things right; effectiveness is doing the right thing”. Do I need to say anymore?
7. Communicative: Like every company statement, business model must have in – built feature to communicate with the business world. There is no hide and seek or cops and robbers in a business model. It explains to the people out there how the business is going to practice its business. We need two characteristics to make a business model communicative: it must be impressive and at the same time it must be elegant. Google developed this one; other search engines are going pell-mell to bring out one that can match it
8. Innovative: Who said that? When you open the subject of business model invariably you are enamoured with what the industry calls as business model innovation (BMI). Nowadays every business feels the urge that either it must innovate or bring down the shutters. Innovation does not necessarily mean new idea or new product. It means lot of other things; new mode of doing business, new use of products, new markets for products and so on. The fundamental theme underlying innovation is how to keep completion at bay for the time being. At best, using innovation a business can roll out a business model that cannot be replicated in the short run by its competitors. What about long-run?
9. Positionable: The answer to the above is given by the capability of business model of being positioned in a particular point, line and level of an industry. Everyone concerned with designing and innovating business model is aware that positioning business model is the final arbiter. Because it gives short-run survival and provides long-term safety. On the one hand your business model should be defensible against competitors; on the other hand business model must be able to mount an attack against competitors if it is really necessary.
Muthu Ashraff
Business Adviser
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E-mail: cosmicgems@gmail.com
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Blog: http://cosmicgemslanka.com/blog/
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