A System of Activities

Dave Kinnear 1-On Leadership, 4-ExtPost, Blog

Business Model Canvas:

When I searched for “Business Model Canvas,” Google returned about 120 million links. A quick perusal of the results shows that there are many different kinds of business models and ways of outlining those models. One block in common in these different canvasses is the “Key Activities” block. Most of the other blocks are support or enablers of those activities.

It is also possible to start with a product or service concept and figure out what activities we must undertake to deliver the product or service to the market.

Key Activities

It is not only essential to identify the critical activities in our business model. We must also make sure we perform them in the most effective sequence and know who will be accountable for the actions.

Many times, the disruption of competitors happens through the innovation of a company’s business model. And to me, that means changing the activities or the sequence of the activities.

Food

I went to our local grocery store to pick up some items we needed. As I finished shopping and headed to the checkout, I noticed that the store had introduced several self-checkout stations. That isn’t new to the industry, of course, but it is new to our local store.

Self-checkout is an innovation to who does one of the grocery key activities—instead of a clerk, the customer is now accountable for checkout.

Finance

I have noticed quite a bit of innovation around company finance activities. Some companies have decided that outsourcing their finance activities makes more sense. Instead of a large accounting department, they have a few forensic accountants and allow outside firms to do all the other bookkeeping activities.

Through ATMs and online banking, banks ask their customers to take over the work that tellers were doing. Loans are now processed online with no need to sit in front of a loan officer for hours.

Cars

I mentioned elsewhere on this blog that the last car I purchased I did entirely online. There was no showroom, no salesperson, no dealer involved. I see that as a significant business model innovation. I predict more manufacturers will move in that direction.

Systems Thinking

Tweaking a product or service is not a business model innovation. Eliminating activities, changing the sequence of activities, and modifying who does the activity is business model innovations. To fully understand how to innovate a business model requires systems thinking. Most businesses have reasonably complex systems in place. Jumping in and making changes without considering the whole business system is asking for a disaster. The effort to innovate our business models is worth it in the long run.

Finding new ways to deliver goods and services to the market is more potent than advancing a product. As I look back at the examples of disruption (Uber, Tesla, and Amazon, for example), I find that the stakeholders in the disrupted industry are better off in the long run.

Leaders would do well to spend some time looking at how they can change their business model for the better. Innovation is not just for products and services. Your stakeholders will appreciate and reward you for your efforts.