Business Model Alignment
Business Model Alignment is a strategy to keep all functional areas, like sales, marketing, R&D and manufacturing, aligned with the nature of the business, as the industry life-cycle progresses. It establishes a logical connection between customer needs, market offerings, organization structure, and the asset network, with the objective to improve both top and bottom line results.
Business Model Alignment can cope with the commoditization of specific market segments by offering differentiated products and services, though differentiated channels, by differentiated supply chains and organizations. Although this may sound complex, the solution is often simple and results in a more agile, responsive and lower cost model.
Our Business Model Alignment framework consists of 4 steps:
1. Understand the nature of the business
In many cases, organizations lack a full understanding of how customer buying behavior has changed over time, still serving the market with a model that worked well in the past but for which customers are no longer willing to pay. We will help you understand what customers truly value in a product, and how they make their buying decision. This will enable you to define not only what is required to succeed, but also to understand what you can and cannot afford to serve specific segments.
2. Benchmark your current model
Once you understand the changed nature of the business, benchmarking against industry leaders, and target costing to achieve acceptable margins, will reveal the gap between your current performance and what is required to sustain a healthy business. This requires a real understanding of your current cost position, an area that is often blurred by misleading accounting and transfer pricing policies. We can support you by providing relevant benchmarks, based on our industry knowledge, and by assisting you with the data analysis required to understand your current state and improvement potential.
3. Design the new business model
With the information from the above steps, designing a new business model is usually quite simple, because it is so logical. Yet many companies are so stuck in their current structure that they never see or dare to see the better alternative. After all, the consequences can be severe: the existing business unit structure may change, sales, marketing and R&D effort may be redirected, assets may be reassigned and planning rules may change. But the benefits can be huge: a more responsive, agile and lean organization that is better able to meet the needs of the future.
The final decision to implement the new business model is typically based on a more detailed validation of impact on customers, products, people and assets.
4. Implement the change
Implementing a new business model is a major change effort, requiring careful execution to avoid the pitfalls of poor project and change management. Strong and active leadership involvement, dedicated project management, and proactive communication and mobilization efforts are all critical to success. We can help to set up and run a project office to manage the change so that the benefits for the company, the customers and the employees will materialize as soon as possible.