Refreshing Your Business Model
The business model provides the structure for delivering on the organization’s direction. It provides the framework for the operations needed to support the organization’s mission and is the genesis of the business structures that drive the functional-expertise required to optimize those structures.
Organizations refresh their direction and by nature the supporting business model, on a regular cadence, typically on an annual basis. Following the directional shift, or in parallel with that change, functional leaders revisit their aspect of the business model and make adjustments to better support the strategic direction.
Those adjustments range from narrow, requiring incremental adjustments, to radical, requiring a multi-year transformational rebuild of the business model. No matter the extent of the alteration, the business model will change. Regardless of where we sit in this change, supporting enterprise-level adjustments, within a function adjusting one aspect of the shift, or on a team deep within the organization navigating change coming at us, it is important to understand the entire business model to understand our part in delivering our mission and the knock-on effects of the changes we make locally.
The Generic Business Model
In its most generic form, business models are designed to create offerings that meet a demand. Those offerings add value to the organization’s input and manifest in products, services, intelligence, or a combination of them.
Drilling into the model, three critical efforts are accomplished by any business model.
- Establishing direction and strategy with targets for audience / clients / customers, markets, etc., either as a sole entity or in collaboration with alliance partners.
- Developing new offerings in the form of products, services and/or intelligence.
- Delivery of current products, services and/or intelligence to meet demand.
While these three business model aspects are always in place, their completion and delivery approaches vary widely between industries, markets, and individual organizations. The general model for government, non-governmental organizations [NGOs], and non-profits are, with the investments on hand, providing services and meeting readiness standards. Business models are focused on growth and wherewithal as measured by revenue and profit margin. We will provide a few examples to help bring home the point.
The Simplest Business Model
To understand the building blocks of a business model let’s start as simple as possible — the classic lemonade stand. This B2C business model consists of manufacturing operations, sales and finances.
Our product is lemonade. The manufacturing operation converts lemons, sugar and water into lemonade. Sales operations are the card table we place on the sidewalk to capture customers opportunistically from the walk-by / drive-by traffic. Finances capture the point of purchase [PoP] sales, customer payments, payoff raw material expenses, and employee income, and with the remaining money consider investments — other product offerings [perhaps ice tea], shade for the lemonade stand, signage to attract more customers, etc.
If we decide to add new product offerings, the model becomes:
The model is still simple. This augmented model is pretty much the model that most startups form. Startups focus on product development and delivery, sales, and managing the finances. They avoid anything that is not one of those building blocks. These aspects are considered mission-critical. As our revenue and profit increases and we hire additional folks to manage various aspects of our business concern, we will add new capabilities. However, everything we add will support this core business model’s capabilities.
The rest of this article builds on this model to deal with the nuances of various types of sales, product development, manufacturing, and finances within the complexities of the models.
Business Model Big Blocks
In our example above, we run our lemonade stand business by directly engaging potential customers and selling lemonade to those interested, thirsty folks who stop by. It’s a simple, low-structure model. It is great for what it does. The downside of this model is that it is not scalable. Only so many people will travel the street on which we have placed our stand. Of those, only a few will be thirsty at the moment. This is an impulse purchase business model. It requires us to have the lemonade stand up and running and passers-by willing to buy lemonade on a whim. Additionally, our kitchen can only support so much lemonade production. Most businesses are looking to scale. To scale our business, we need to move away from the impulse purchase model.
Typical Business Models
To understand business models, we need to start by determining how we will drive demand for our offerings and with whom we will engage. There are infinite ways to construct a business model. Fortunately, there are currently three popular approaches to driving demand. Most business today is transacted through some version of these three models — Business-to-Customer [B2C], Business-to-Business [B2B], and marketplace platforms.
B2C — The enterprise provides products and services directly to customers. Whether you are picking up milk at the grocery store or streaming your favorite series on Netflix, you are engaging a B2C model. These types of client engagements may be transactional [single purchase at the point of sales] or require an ongoing engagement [such as with utility providers or application subscriptions].
B2B — The company provides products and services to other businesses. These offerings come in the form of high-cost engagements such as automotive fleet sales, corporate travel agreements, enterprise platform deployments, and so on. These types of offerings almost always require an ongoing relationship with formal, negotiated contracts with sophisticated, demanding clients.
Marketplace Platforms — These platform businesses connect service providers with clients. They are unique [to the B2C and B2B models] in that the providers and clients can switch roles. Examples of this model include companies such as Uber, Lyft, Airbnb, etc. The platform owner connects providers to clients with a set of engagement requirements designed to reduce risks for all involved and establish behavioral expectations. Of course, the platform owner makes revenue from those connective transactions.
Whichever model is appropriate for your organization, the structure we set up will include consideration of sales channels, supply chain, product development schema, partnerships, alliances, suppliers, and other business structure big blocks.
Demand Driving Functions
While the direct point of purchase model is simple, we need to establish a sales model that allows us to grow the business. Let’s examine a couple of ways to extend our model for scaling.
B2C Sales Model
There are three general approaches to B2C sales that establish channels for sales: online sales, sales from a company’s brick & mortar retail site, or placing products with general retailers.
Online Sales — The direct sale website provides a pretty straightforward sales channel. These days, direct sales websites have become the darling of B2C sales for both the business and the customers. For the business, it is the cheapest way to get the product into customers’ hands. For the customer, it makes shopping convenient and something they can do if they have a phone. The downside is that customers cannot touch and feel the product or try it on if it is clothing. So, product returns are a big part of the online sales operation.
Brick & Mortar Retail — Many fashion and consumer electronics manufacturers have retail locations to sell their products. Think Gap, Apple, MAC, and so on. Note that these products can be sold through either the website or the brick & mortar channel. Other offerings require a brick & mortar set up. Gasoline is an example of something that you must go to your local retail outlet to purchase. Services, such as spas, hair stylists, etc. require a physical space set up to provide those services. The upside to these operations is that they allow a company to sell directly to customers and capture intelligence that helps refine product offerings. The downside is that it requires a substantial capital investment and staging inventory to support sales.
Other Retailer Sales — This method requires contracting with retailers directly, and often the distributors that supply them. The upside to this approach is that it avoids the capital investment in brick & mortar operations. The downside of this approach is that we have to set up a complex set of negotiated contracts with multiple parties, secure shelf or kiosk space, and stage substantial inventory along the distribution chain.
B2B Sale Model
B2B sales tend to be high stakes. B2B clients are sophisticated, demanding purchasers that require substantial relationship development both to establish trust and navigate the client’s requirements for the purchase to occur. Regardless of what model our B2B engagement uses, the front-end relationship development and contracting lead time and effort are substantial. Whether selling bulk products or preparing for a major, high-stakes deployment, a great deal of work goes into securing the service level objectives. Once we are aligned on the shape and form of the engagement, then the delivery is another substantial effort.
Direct Relationship Sales — Engaging potential clients for direct sales means understanding client needs and then translating those needs into solutions we can provide. This effort typically starts with a sales executive and, as the relationship develops, pulls in product and service expertise to support the engagement and build client confidence that our solution meets their needs. This approach is typically used to establish bulk ongoing product sales, capital projects [buildings, roads, etc.] and equipment [trains, ships, tooling, HVAC, etc.] or software platforms [ERP, CRM, etc.]. These are big spending efforts that we want to get right up front.
In-house Field Services — For offerings that require assembly, many businesses offer field services to manage the installation. Those activities include construction projects, major equipment installation [think data centers, highrise HVAC, etc.], and software platform deployment. For these high-cost, high-stakes efforts, in-house field services are usually insufficient to handle all of the contracts. Fortunately, a whole industry has developed to marry our offering to potential client needs. These are the Integrators.
Integrators — Integrators are largely focused on software platform deployment. Most companies seeking to deploy a software platform will turn first to an integrator for problem assessment, counsel and support in deploying the platform. Thus the name — integrator. Integrators act as the client’s agent in understanding their problems and capability-needs; and, then translating them into the solutions our products provide. Integrators become experts on our products and, by nature of their role, are both champions of successful deployment and a rich source of feedback for perfecting our products.
OEM Business — An OEM business model provides clients our technology housed in the client company’s logos and in some cases design. You see these sorts of products in stores such as Safeway’s Signature Brand or Costco’s Kirkland Brand. In essence, we are offering another business a slate of products with their logo and design. They provide a bulk, ongoing demand that we cover through our supply chain. Engagement relationships can range from contracted transactions to deep organizational engagement effectively managing their supply chain.
Marketplace Model
As mentioned above, the marketplace model is built into a technical platform and facilitates transactions between service providers and service requesting customers, for a fee. I mentioned a few companies above. However, the use of this model is wide ranging and includes all the big tech company players including Google, Amazon, Meta, etc. and niche players such as Etsy and dating apps. You cannot do any online shopping without engaging in a marketplace model.
These models derive revenues from a percentage of the transaction, advertisements, or a combination of both.
Additional Sales Model Considerations
Expertise is Required — While the above models outline various general approaches, the devil, and creativity, is in the detail. Functional executives are placed for their expertise in the demand drivers arena. They are tasked with building specificity into the model that provides a competitive advantage. While it is easy to understand the basic models, it is a great challenge to deploy a finely tuned, highly competitive instance. Think of it as the difference between a beginner skier navigating the bunny hill versus an expert skier smashing moguls all day long. This will be true for the other building blocks of the business model.
Using Multiple Models — Companies often use multiple models either to sell a product through multiple channels or to sell multiple product lines. Apple sells their products online, through their own brick & mortar locations, and through other retailers. Larger companies often have multiple businesses, each requiring its own business model. I once worked for a peripheral products company that had multiple businesses using both of the B2C and B2B models and all of the associated sales channels that I outlined above.
Marketing Enhancement
Beyond having sales folks in place to manage the customer / client relationships and sales operations in place to manage transactions and sale trend analyses, we can strategically supercharge the demand driver efforts through marketing. Marketing considers how we approach selling a product or service. Classical marketing considers how we set up our offerings using the four Ps — product, price, place, and promotion. Analyzing product features and what they do for the customer / client, what channels are best suited for the client, tiering offerings at various prices to meet various needs, and establishing promotions for products to shape demand. They ask questions like, do we sell items as single units, bundled offerings or by subscription?
Marketing and sales work hand-in-hand in the engagement process. The client / customer journey from product / service awareness to loyalty is shepherded by either marketing or sales or both.
In essence marketing leads the horse to water. Sales convinces the horse to drink it, and then keep drinking it.
Demand Fulfillment Functions
The mandate for demand fulfillment is to ensure that the client / customer needs are met to either their service-level-objective [SLO] — a service response aiming at a target, or service-level-agreement [SLA] — a contractually required service response. The response time for the queue in which you are waiting when calling your phone provider has an SLO. It is a target they shoot for. The contractual requirement that our company fully meets clients’ orders 95% of the time would be an SLA. Not meeting an SLA has penalties. The demand fulfillment requirements are true whether delivering products or services. That said, the service delivery model has fewer building blocks associated with it.
Services Demand Fulfillment
Service delivery requires having backend operations in place to ensure that services are delivered on demand. Whether our business is a house cleaning service or a video streaming service, we have to have operations in place to support it. For the house cleaning service we need to have a scheduler that works both with clients to schedule cleaning appointments and building access, and with the cleaning teams to ensure that they meet the appointment window. The effort has a lot of tactical moving parts but is both capital and labor limited.
On the other hand, a streaming service requires an interactive user interface [device or television], a network to transfer the content, a substantial data center footprint to house content for access with engineering support, and a customer support team to address issues. Service provision for a streamer is highly capital and labor intensive and includes partnerships with satellite, cable providers, and content producers.
The bottom line for service providers is that they need an established backend operation that works as a well-oiled machine.
Product Demand Fulfillment — Supply Chain Management
Product demand fulfillment requires the same high-performance operations as a service demand model, adding substantial complexity to address the physical aspects of building and delivering products. The management effort overseeing the conversion of raw materials into client / customer delivered finished good products is called the supply chain. Demand-signals prompt the supply chain to position finished-goods products where they need to be and establish signals throughout the process to ensure future demand is met as well. The graphic below is the simplest version of a supply chain.
For each step in the supply chain process, we add value to the execution effort in either positioning materials for use or converting materials into something more valuable. Each stage also adds substantial cost to the effort. The age-old supply chain challenge is to find the fine balance between not having enough inventory in the supply chain to meet demand and having too much. Undershooting means unhappy or lost customers. Overshooting means we have over-invested in inventory [so we cannot use that money to invest elsewhere] and, that inventory overage is subject to spoilage, expiration and waste. Every effort within the supply chain is to ensure demand is met without over-investing in inventory.
Real World Supply Chain Complexities
While the concept of the supply chain is pretty straightforward, its practical realities are substantial and require consideration.
The example below is a multi-tiered assembly process that we’ll use as an example.
Raw Materials
Raw materials come in all sorts of forms ranging from chemicals, rare earth metals, components, commodities [such as oil, cotton, etc], packaging materials, and so on. Each comes from a different supplier of varying reliability with their own handling, transport and storage requirements. Some raw materials are difficult to procure because they are hard to find, make, or are so new that available quantities are small. Some raw materials can only be procured from a single source setting up a single point of manufacturing failure. Needless to say that raw material procurement and staging is filled with endless challenges and requires substantial vendor management efforts. If possible, we want to have multiple suppliers on tap for each of the base components. In the assembly example above, if we are purchasing our CPU microchip from a single-sourced vendor, we have a single-point-of-failure risk that we need to manage closely.
Raw Materials Staging
In some cases your raw material may be converted to an interim product that we call work-in-process [WIP] which is a value-added improvement but not a finished product. Those WIP materials might be in the form of assemblies, refined chemicals, packaging setups, etc. Regardless, the WIP represents an additional manufacturing step and staging effort extending the cost and duration for the supply chain activities. These materials may be coming from many sources and must be staged together in quantities that support the assembly / manufacturing batch schedule. In the example above they need to be staged wherever the assemblies are being put together.
Manufacturing
Manufacturing is its own world. Many companies manage supply chain and manufacturing operations separately. For simplicity, we will discuss it here as part of the supply chain effort. Manufacturing is where we turn those raw materials and WIP into finished goods ready to meet consumer demand. That has its own scheduling, technology, and labor challenges. Beyond that we may want to reduce supply chain risk by either having more than one manufacturing site or contracting with manufacturing vendors to deal with overflow demand. Each add-on means increased overall manufacturing costs and associated inventory. We again are doing a risk reduction versus cost assessment to determine what our optimal investment will be. In the case above, the assembly and finished goods efforts may all be done in one location. On the other hand, cost efficiencies or expertise constraints may require that the assemblies be configured in a different manufacturing location or contracted out to a vendor, and then shipped as WIP to the finished goods assembly site.
Finished Goods Staging
We need our products relatively close to demand. Amazon cannot overnight deliver to Broomfield, Colorado products staged in Taiwan. Thus they have a world-class global network of warehouses to stage goods near where the orders are coming from. Unless our business model delivers custom built products directly to the customer, we need warehouse space locally, or at least regionally, to meet demand. Warehouse balancing, getting the right product mix, at the right levels, in the right location is a tricky business requiring demand projections and demand trend analysis with thoughtful staging. Mistakes are expensive resulting in dissatisfied customers, increased wastage, decreased funds for investment, or all of the issues at once.
Customer Delivery
Depending on how extended the supply chain is with distributors, integrators, retailers, etc., targeting and controlling delivery to the customer also has its challenges. We may be dependent on our partners to ensure the client or customer is satisfied, requiring relationship and expectation management.
Replenishment
For organizations that have complex, ongoing B2B relationships with distributors, retailers, and OEM customers, they establish an effort to monitor customer demand fluctuations and ensure that supply replenishment meets demand changes. This ongoing operational effort works hand-in-hand with the sales team to ensure all key customers are satisfied.
Logistics & Reverse Logistics
Planes, trains and automobiles. Logistics ensures raw materials and goods get from point A to point B balancing demand response, cost, and transport related wastage during the transfer and staging. It is often the logistics team’s responsibility to select transport methods and warehousing to meet the organization’s needs. Moving goods on a container ship is slow but cheap. Transporting goods on a flight is expensive but fast. It is incumbent on the logistics leader to find the right mix to best support the business model at the lowest possible cost.
Reverse Logistics is used to transport returned goods to the designated disposition site for either repair and return or reselling, or for destruction. Unless it is a designated repair item, the pressure is off for rapid placement. So typically reverse logistics focuses on bulk, low cost options.
Customer Services / Client Support
Generally, customer services / client support operates separately from supply chain efforts. However, because it is a critical part of the customer / client experience, just like manufacturing, we will include it as part of the supply chain activities to simplify the discussion. This is the function tasked with vetting product usage guidance, customer inquiries, product problems, and customer dissatisfaction. This effort, for premium B2B customers may be embodied in an assigned sales executive acting as a support liaison between us and or larger clients.
On the other end of the scale, individual end customers will likely experience a tiered support process. If you have ever navigated this tiered support process you know that it is fraught with frustration, handoffs, repeating your problem over and over again. Most tiered processes are tiered as such:
- Tier 0: Guidance collateral and training videos.
- Tier 1: Frontline support dealing with known, documented issues and their fixes.
- Tier 2: Light troubleshooting to get to a one-off fix or address and document a new issue.
- Tier 3: Difficult, complex problems that require technical expertise.
If you have ever navigated these customer support tiers you you know that it is fraught with frustration, handoffs, long periods in the support structure [phone call or online chat], and repeating the problem over and over again to each support person.
Product & Service Offerings Development
Structuring your business model to drive and fulfill demand is critical to keeping your business alive today. However, to thrive and grow, the company needs to deliver an ongoing stream of new products and / or services that deepen and widen client / customer engagement that nets additional revenue. Additionally, an organization wants to mitigate risk by broadening its portfolio of products and services along with its customer base. That means we need to structure to develop and deliver products and / or services to grow our footprint.
What do we mean by new? ‘New’ is an eye-of-the beholder term. Most certainly we are aiming for new offerings to the marketplace. However, that new offering might also be new to our company as well, and new to us has implications for how we deal with it internally. Additionally, new encompasses a wide range of possibilities — never been seen before, old offering with new features, old offering in a new form, old offering with new technology. It is worth spending a few minutes discussing the implications.
Filling the Demand Hole
We are imaginative creatures and are able to come up with infinite new potential offerings. However, since the whole point of providing new offerings is to fortify and grow our organization, we need to focus our imaginations on products that will grow demand. There are two approaches to do that.
Taking the customer’s / client’s lead — Perform market and sales analysis to understand what the customer / client needs. This usually results in incremental offerings that fill the identified hole. This approach is less disruptive to the market and the company.
Creating a demand hole — Generating a sticky offering that customers / clients did not know they needed but once they use it, cannot do without. Everyone wants to be Steve Jobs inventing technology that completely changes how people work, recreate and behave. Most of us never will. Disruptive technology is awesome. However, it is also incredibly risky. We might invest loads of money, time and effort to deliver this new capability, to market indifference. Additionally, this new offering will disrupt our organization. We will have to rebuild the business model around it. While I have laid out a number of negatives for disruptive technology, its delivery yields the highest reward in immediate demand and in establishing a new marketplace playing field that others will be drawn to. Disruptive offerings are the holy grail and to be approached with caution.
Types of Offerings
As we discussed above, ‘new’ can mean a lot of things. Let’s discuss the possible types of new offerings.
New offering — An innovative offering that creates new demand and potentially new markets. Whether or not it is disruptive to the world, this offering will disrupt the organization requiring changes to the demand driving and fulfillment efforts. We will likely have to develop new internal expertise and experts. We have experienced lots of these in the past forty years in the form of laptops, internet capability, iPods/Phones/Pads, and so forth.
New to the company offering — Developing a new offering that is already in the marketplace but new to our company to hit segments that our current offerings do not address. These new offerings are internally disruptive to our demand driving and fulfillment efforts much as completely new offerings do. However, we can hire already developed expertise to support the effort.
New features in existing offerings — This incremental innovation typically comes from market and customer feedback. These types of new offerings are only lightly disruptive requiring minor adjustments to existing demand driving and fulfillment efforts. We internally already have the developed expertise to manage these offerings.
Offering backend improvements — Typically these improvements increase performance and durability or reduce costs and may or may not change the customer’s experience. These backend changes do not typically change the demand driving efforts. They typically drive minor, manageable changes to the fulfillment efforts.
Development Process
The offering development process is mission critical to the organization. To that end it requires operational attention and thoughtful development. The stages of product development include:
Conceptualization — Generating and screening ideas that result in an offering strategy, and roadmap.
Design — Architecting the offering to perform as desired at the required cost point while delivering on customer / client expectations.
Prototyping — Developing a simple working version of the offering to test and learn from it.
Testing — Testing a finished version of the offering to ensure that it performs as expected or to resolve any identified issues.
Launch — Make the offering generally available to the customers / clients / users.
Enterprise Support Functions
With demand driving and fulfillment functions covered we have one last category of functions to discuss — the enterprise support functions. These are the functions native to all developed organizations and support customer demand efforts via financial, people, regulatory, and quality management.
Finance
As mentioned early on in this article, finance is mission critical. Cash flow management is critical from day one, tracking incoming revenues and other funding; and outgoing expenses to ensure that we do not venture into the red, unable to cover payroll and the bills. This crucial effort keeps the organization afloat. Finance manages more pieces that, as the organization forms and grows become distinct efforts including:
Financing — Raising capital via stock valuation, loans, grants, etc.
Resource Allocation — Providing and monitoring spend on functional budgets for people and other needs.
Capital Budgeting — Allocating budget for longer term building and infrastructure investments that will be ‘written off’ with depreciation over time.
Risk Management — Ensuring that critical corporate risks are identified, and to the degree possible mitigated.
Human Resources
Even the smallest of organizations needs to hire people to fill critical roles and manage the human-related needs such as compensation and benefits. As the organization develops the services differentiate into:
Recruiting — Finding and placing the most qualified candidates.
Compensation — Standardizing the pay levels and bonus awards by role and type to provide a competitive offering.
Benefits — Providing healthcare and other benefits again with being competitive in mind.
Performance Evaluation — Managing the employee performance tracking effort.
Employee Exit — Strategies for retirement, voluntary and involuntary severance.
Employee Issues — Resolving the occasional employee behavioral issue or complaint as they arise.
Infrastructure [Technology, Facilities & Services]
Our organization needs infrastructure support in terms of where the organization is housed and architected technology platforms on which to run our operations and manage our business.
Facilities & Services — Our enterprise needs to be housed and cared for. Facilities & services provides and manages the office and common spaces, and building services [maintenance, food, security, etc.] required to support the organization.
Information Technology [IT] — While buried in this long list of support services, IT considerations figure prominently in the decision making of any enterprise. Organizations of size institutionalize their mission critical business processes, analytics and reporting on platforms and applications designed to support those needs. In my article, “Solutioning for Value” I provide a summary of the key enterprise management platforms currently available on the market. In my article, “Managing Large Scale Programs” I discuss the challenges in delivering those platforms into an organization to fill their operational gaps. Information technology investments are expensive, ongoing, resource demanding, and require input and consideration from enterprise leaders and most talented members.
Legal
Legal counsel’s initial responsibility is to ensure favorable contracts and compliance with local, state, national, and international laws. While most companies have a separate procurement organization task with contract effectiveness and cost management, for simplicity sake we will include those efforts here in terms of contract review to ensure the best possible terms.
Quality
While quality as a function has largely become part of every function’s practices, it is important to note that the quality effort focuses on meeting the organization’s own product performance requirements and in compliance with regulatory requirements.
Tweaking Our Business Model
We just spent a fair amount of this article providing a superficial review of current ‘standard’ business models and their constituent functional building blocks. Most senior executives understand the model they are operating within, inter-dependencies between the functional building blocks, and how to optimize their function. Why do the functional operators, program managers, and organizational leaders need to understand the whole model?
As mentioned at the onset of this discussion, we are continuously adjusting our business model, and the associated operating capabilities, to support an ever adjusting directional strategy. The changes we make within functions are not isolated. They have collateral impact on other functions and their operational capability. Understanding our role and value in the model, and our impacts on the other building blocks helps us to perform better and make more effective changes. To understand the organization’s business model is to understand the shape of our strategic direction.
As long as our organization exists we will be tweaking the model and then devising programs to deliver the capability required to meet the needs of our model. It is an endless effort that underwrites many industries and career profiles.
Takeaways
Our business model provides the framework in which we deliver our unique value, supporting the organization’s strategic direction. As our direction changes so does our business model. Tweaks to our business model drive all downstream efforts to deliver operational capability into the organization.
To drive demand, business models come in three standard forms — business to customer [B2C], business to business [B2B], and Marketplace models. Each has a unique approach to driving and managing demand which shapes the form of their functional building blocks.
The business model is made up of functional building blocks that each have a specific set of responsibilities, which operate collaboratively with the other functions, to deliver value to the organization. These building blocks fall into a handful of categories including demand driving, demand fulfillment, new offerings, and support functions. Each of these functions must be optimized to meet the requirements of our strategic direction and meet our strategic targets.
Demand Driving Efforts — Demand driving identifies and engages potential customers / clients and secures the revenues that feed organizational growth. The efforts typically support a B2C, B2B or marketplace model and includes sales and marketing efforts.
Demand Fulfillment Efforts — Service offering fulfillment requires a backend effort that, offering-dependent, can range from a low overhead manual effort to highly automated, capital-intensive global datacenter operations.
Product offering fulfillment is more complicated in terms of moving parts and requires a supply chain, logistics and customer services / client support.
Offering Development — Offering development needs to aim to fill a demand hole that increases the organization’s revenues and broadens its portfolio. While not as immediately time-bound and customer-scrutinized as demand-driven and fulfillment efforts, this effort is mission critical to growing the organization.
Supporting Services & Infrastructure — Enterprise support functions ensure the smooth performance of the demand driving, demand fulfillment, and offering development efforts providing a steady supply of the best available people, the physical and technical infrastructure required to ensure high performance and the lowest possible cost.
A well constructed business model supports the organization’s strategic direction. However, as the demand and operating environment changes so does the business model. So we will always be chasing and attempting to fill the gap that strategic direction changes require.
Find more articles from Sarah at: www.operations-architect.com.