Tuesday, 10 April 2012

Business Models

Ken Chad’s (@kenchad) breakout session on Business Models was a really useful plain English walk through everything any business or organisation should think about when shifting focus or approaching a new challenge. Devoid of jargon and full of references to business and marketing books and articles backing up his points, it was skilfully pitched to appeal to the multiple audiences attending the conference. I came away with some great tips I’ll tap into from time to time. Librarians could do the same when making strategic plans to face the future. Slides are here and give a very good taste of the session without overdoing the word count.


A helpful definition Ken used was “‘a business model describes the rationale of how an organization creates, delivers and captures value.” Crucially, for a UKSG audience, he explained that a business model “applies as much to a public sector organisation and not-for-profit, social ventures as to a a commercial company. To survive every organization that creates and delivers value must generate enough revenue to cover its expenses, hence it has a business model”.


He began by positing that organisations involved in scholarly communication face the challenge of relentless, disruptive, technology-driven change and tough economic times. Scary but best to face facts head-on! The start of any journey into developing a business model is to be clear on your organisation’s mission and the strategy. Sounds simple but getting these right is the cornerstone of the business model and probably often not given enough time or credence. He went on to explain that strategy is not goal setting but is ‘a cohesive response to an important challenge and that good strategy includes a set of coherent actions.’ 


Ken spent a bit of time on “the capabilities approach” and most useful to me was asking the question “what are the three to six capabilities that describe what we do uniquely better than anyone else?” Once determined, ask “can everyone in the organization articulate our differentiating capabilities?” and “is our leadership reinforcing these capabilities?”  To help determine capabilities he suggests we focus on value. “What’s valuable/special about what we do? Why should people use our products/services instead of alternatives?”


Towards the end of the session there was a helpful section on the building blocks of business strategy which incorporated the following six areas: Customer Segments; Value Propositions; Channels; Customer Relationships; Revenue Streams; Key Resources; Key Activities; Key Partnerships; Cost Structure. Boiled down, the key elements are about understanding your value propositions and how they seek to solve customer problems and satisfy needs and how successfully delivering on these value propositions creates the organisation’s revenue streams. 


I’d recommend taking 5 mins to skim the slides when you are next considering business models or need to focus on any of the building blocks. Slides are text-light and I think some key questions therein could produce useful food for thought and a way in to what can seem a daunting task to those who might consider themselves non-business types.


Finally, he has read a lot of books so you don’t have to. As I tweeted whilst at the session, I would not get time to do that much reading until I retire. The irony!

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