The combination of globalisation, Moore’s law and ubiquitous information have transformed industries into fluid, rapidly-changing landscapes. Today’s competitor is tomorrow’s partner and next year’s customer. In this article, the authors elaborate on the four stages of Business Model Cycle which managers, especially at new and growing ventures, can reflect on as they aim to build and evolve organisations to explore shifting seas and exploit opportunities.
“It’s the business model, stupid!” – Esther Dyson
The pace of business innovation and change is accelerating. To adapt, entrepreneurs and executives have adopted (and exhausted) a variety of management tools: blue ocean strategy, business re-engineering, organisational learning, TQM and disruptive innovation, just to name a few. But the combination of globalisation, Moore’s law and ubiquitous information have transformed industries into fluid, rapidly-changing landscapes. Today’s competitor is tomorrow’s partner and next year’s customer. How can managers, especially at new and growing ventures, build and evolve organisations to explore these shifting seas and exploit opportunities?
It’s all about the business model.
For more than a decade, we have been studying business models at small and large firms. We interviewed hundreds of entrepreneurs and managers. We analysed IBM’s Global CEO survey data covering 750 CEOs of large and tech-savvy firms. The business model has emerged from an ignominious birth in the dot-com era to become the dominant tool for exploring and exploiting opportunities. As the world of business accelerates, your firm’s business model will only become more critical.
There is only one problem. The hard truth is that no one really knows why some business models work and others fail. That is precisely why you need to diagnose and test your business model before you implement it. Equally important, you need to know when your business model must be updated and evolved.
In The Business Model Book, we demonstrate the general process for designing, evaluating, testing, and adapting business models. The business model cycle (Figure 1) can be used at every organisational stage: from pre-launch ideation to rejuvenating a multinational. You probably have most of the tools and capabilities ready to hand; you just need to use them effectively to build the right business model at the right time.
Figure 1: The Business Model Cycle
(from The Business Model Book, Pearson 2018)
The four stages of the Business Model Cycle are troubleshoot, re(design), test, and re(deploy).
About the Authors
Adam J. Bock is currently a Lecturer at the University of Wisconsin-Madison. He is also a serial entrepreneur, financier and venture consultant. He co-founded four life science companies including Nerites Corporation and Stratatech and managed multiple angel investing networks, facilitating $10 million of early stage investments. He is the co-author, with Gerry George, of The Business Model Book (2018), Models of Opportunity (2012), and Inventing Entrepreneurs (2009).
Gerard George is Dean and Lee Kong Chian Chair Professor of Innovation and Entrepreneurship at Lee Kong Chian School of Business at Singapore Management University. He joined SMU from Imperial College London where he was Deputy Dean of the Business School. He also held tenured positions at the London Business School and at the University of Wisconsin-Madison. He was awarded Fellowship of the City & Guilds of London Institute for his contribution to further education and research.