A good business model provides benefits to all of its
stakeholders more effectively than existing competitors or
new entrants can. Here are six common ways to provide a
greater array and volume of stakeholder benefits:
1. Help your customers add customers for themselves faster
than their competitors.
2. Stimulate industry growth through providing more
benefits and fewer drawbacks at the current price level.
3. Reprice your offerings to encourage using more of them.
4. Reduce the resources needed to provide and use these
offerings.
5. Reinvent the resources generated by your business model
to provide even more benefits and fewer drawbacks in the
future, faster than your competitors can.
6. Fairly share excess resources with the stakeholders who
have supported and provided the business models success in
a predictable way, so that no other organization can offer
these stakeholders as much benefit now or in the future.
But you shouldn't stop there. Let's consider why.
For new products, becoming just good enough can be the
enemy of greatness. The pressure to get to market will
often cause a new product to provide fewer benefits than it
might have. If getting to market is the key issue,
providing fewer initial benefits is a good decision.
You can always put more benefits into a "new, improved"
version down the road. But, if you lose sight of what
should be in that new product as soon as possible, someone
else will make the improvements and take some of your
customers away.
Business models operate much the same way. Even a small
lead can create substantial rewards for getting to market
sooner. Yet, without clarity about "what comes next?" what
comes next will be "nothing," or worse--a detriment.
In developing optimal business models to help your business
reach its fullest potential, my investigation shows there
are another four elements to add to the basics required for
a good business model:
1. Your business model opens new windows of opportunity for
you, while closing those and other important windows of
opportunity for current and potential competitors.
2. You find ways to provide more helpful benefits for more
types of stakeholders with each round of business model
improvement.
3. You serve stakeholders who would normally not be able to
meet your minimum standards to become lenders,
shareholders, employees, suppliers, partners, or customers.
4. Your business model improvements expand your ability to
make more types of business model innovations more rapidly
in the future.
Good examples of optimal business models can be found by
studying companies like Business Objects, Ecolab, Iron
Mountain, and Paychex.
Copyright 2008 Donald W. Mitchell, All Rights Reserved
----------------------------------------------------
Donald Mitchell is chairman of Mitchell and Company, a
strategy and financial consulting firm in Weston, MA. He is
coauthor of seven books including Adventures of an
Optimist, The Irresistible Growth Enterprise, and The
Ultimate Competitive Advantage. You can find free tips for
accomplishing 20 times more by registering at:
====> http://www.2000percentsolution.com .
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