Reinventing Your Business Model

A current article in the Harvard Business Review talks about reinventing your business model.  They see a business model having four interlocking elements that, taken together, create and deliver value.

*       Customer value proposition – Create value for customers

*       Profit formula – Creates value for itself while providing value to the customer

*       Key resources – Assets such as the people, technology, products, facilities, equipment, channels and brand required to deliver the value proposition to the targeted customer

*       Key processes – Deliver value in a way that a company can successfully repeat and increase in scale

My Thoughts…

This article caught my attention because the Harvard Business Review [HBR] sees processes as one of 4 key elements of a business model.

There is no doubt that companies are always looking to create value for their customers.  And, they can’t stay in business without making a profit.  A great deal of effort is aimed at assembling the key resources to deliver value to their customer.  However, I will argue that managing key processes is treated lightly by comparison.

Even HBR is talking only of the processes that deliver value to the customer.

In reality, a company is a collection of processes that support a ‘quote to cash’ process.  All companies will quote a price, deliver their goods and/or services and receive cash [and provide support].  The ‘quote to cash’ process is the backbone that keeps a company alive. 

In the past, processes were analyzed with a focus on efficiency.  Today, companies are just beginning to look at these processes not only to increase efficiency but with a sharp eye for creating customer value.


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