Business model design & the democratization of strategy

AHA Business Model System                                                          ©Alison Heiser Associates, LLC

AHA Business Model System                                                          ©Alison Heiser Associates, LLC

I just read an HBR article on designing winning business models that I thought was very insightful, and rang true to my own experiences working in a variety of business contexts. Yet there was a hint at the beginning—and a more serious effort at the end—to explain the differences between strategy and business models. I have participated in more conversations than I care to count debating the concepts of mission, vision, strategy, plans, tactics. In my observation these debates are more about academic posturing, and frankly not very helpful for leaders charged with growing a business.

What has been incredibly helpful over the last ten years is the emergence of business model frameworks that provide a structure to articulate business choices in a handful of important areas. I absolutely love the choice-making language that Roger Martin has used to describe strategy. When you ask a team of people to describe choices, they are usually very good at it. And the simplicity of a visual model lends itself to conversations around the relationship of the choices that contribute to a robust or struggling business model system.

It’s the systems view of the business model that I find most relevant in considering alternative choices. Thinking about the system as interconnected decisions is a sophisticated method of strategy development. And somehow when I work with highly diverse teams—function, experience, mindset, culture—strategy becomes democratic: work that is strategic without calling it strategy.

A few years ago I had a conversation with Jim Keane, CEO at Steelcase, and we were talking about his expectations and preferred communication or formats for strategy development. He said very simply, “I can tell when the thinking is good.”

Today, I’m introducing a new framework to design business model systems. It’s a human-centered design, flowing from questions as opposed to definitions. It also explicitly includes topics, like opportunity space, that are often missing in other business models. To borrow a phrase from Jim Keane, it’s built to stimulate good thinking. Please use it to support your journey to find growth opportunities. It’s a free resource, licensed with Creative Commons to encourage sharing, and I hope that you do.  

Contact me for your copy.

It's a life, not a ladder

career ladder

On Tuesday, Fidelity Investments offered buyouts to employees who are at least 55 years old. The Wall Street Journal reported that the packages offer “associates who are considering the next phase of their life a generous financial package”. These packages can range from “six months of salary to more than two years” and “18 months of health-care coverage”.

It’s quite generous, even thoughtful, to respond to those older workers who would like to move on to other opportunities, isn’t it? Yet I can’t help feeling overwhelmingly distressed about it.

On the one hand, there’s the story of my friend Julia, who planned for a real estate career after General Mills, and was more than willing to be part of their cost reduction efforts. She’s a savvy woman, who saw the writing on the wall and chose to make the proverbial lemonade. She seems quite happy.

On the other hand, there’s the story of my former colleague Steve, who elected early retirement from Kimberly-Clark. He’s an enthusiastic sort of person, simultaneously cynical and optimistically moving forward with a renewed focus on a lifelong sideline of writing. But it is so clear that he misses it. The work, the camaraderie, the routine of it all. Oh, and the money.

Then there’s the story of my friend Holly, who along with her husband, moves from one low-paying job to another, long ago abandoning the notion of career. It’s all about family and making ends meet, trusting that God will provide. I asked her recently if she thought her parents – when they were in their 50s - knew anyone in their circle who found themselves looking for a new job. She stared at me, as if I’d hit upon a profound truth about what’s really changed for our generation. Nearly every family we know has been affected by job loss after age 50 – in fact it’s hard to think of a family that hasn’t.

The notion of a career ladder is pervasive and insidious at the same time. Over time, an individual builds skills and experiences that lead to increased income and opportunity. A tidy and predictable straight line graph. Except that life is not like that at all. We fall in and out of love, maybe get married, perhaps have children. We suffer illness, care for others, experience loss. And sometimes we love to travel and accumulate those frequent flier miles…while other times we can’t possibly be away from home. Our relationship with work is no different at all – we are the same situational human beings across all dimensions of our lives.

Imagine a world where employers and employees could have a completely transparent conversation about life and work. Where there are years when we are 150% committed and capable, some years we are productive but in more of a holding pattern, and other years where 50% seems far more reasonable than the alternatives. And both employer and employee abandon the ladder and its pay scale in favor of a more life-like approach.

There are growing signals of change: phased-in retirement, flexible work programs. Yet the unspoken assumption that we will have our highest contribution and our highest income in our final year of work is perpetuating the Fidelity-like programs we are all too familiar with. And also, I understand, a slew of employment law issues designed with the ladder in mind.

It’s a life, not a ladder, and it’s not working. Talk about an interesting design-thinking challenge – sign me up to develop a more human-centered approach.

Systems Thinking and the 4 Ps of Marketing

I flagged an HBR article a few years ago titled “Rethinking the 4 Ps”.    I suspect most senior marketing leaders have considered this topic at some point in their career – I know I have.

Probably the first reason to rethink Kotler’s model is that it’s so often glossed over in conversations about the marketing function.  “Marketing?  Oh yes, the 4 Ps.”  And then they can’t remember what the 4th P stands for – in my experience it’s usually Place that gets forgotten.  “Right – distribution – I remember now.”

The “SAVE” model developed by Richard Ettenson and his co-authors proposes substituting value for price, access for placement – exactly the substitutions I considered as well.  He then suggests substituting solution for product, and education for promotion.  Those, however, didn’t resonate with me, and I set aside the journal thinking I might develop some alternatives.

I re-read the article this week and noticed that Motorola implemented the “SAVE” model and reorganized the marketing organization to focus on each aspect of the model.  That’s when I realized I’d missed the root cause of my desire to rethink the 4 Ps.  It’s taught as four distinct activities – and often practiced in the same way.  Yet the most progressive marketing leaders I know are systems thinkers, with a deep understanding of customers and an underlying ambition to find growth opportunities.  They think about the 4 Ps, yes, but also culture, macro trends, relationships and experiences…and appreciate the smallest discovery that leads to a big insight.

So I’m not going to rethink the 4 Ps – it’s still the king.  I will however, encourage a different dialogue with marketing teams, pushing against the superficial and celebrating the profound.

The (Merger) Road Less Travelled

I read the news about the Johnson Controls/Tyco merger with interest this week.  I’ve worked with people at JCI since my early career at Michelin, and more recently with the innovation team in their historic Third Ward location in Milwaukee. 

Here are two quotes from the Wall Street Journal that caught my eye:

“…Monday’s deal…comes as both companies look to boost their stock prices in the face of slowing industrial activity.”

“The companies said the merged entity would save at least $150 million a year on taxes and at least $500 million in costs over the first three years after the completion of the deal.”

Contrast this with the news of Royal Dutch Shell’s acquisition of natural gas producer BP Group.  Here’s what Shell had to say:

“Shell’s move isn’t just a $50 billion bet on gas but also a wager against crude oil as the energy industry’s future, Maarten Wetselaar, the chief of Shell’s newly created gas division, said in an interview.

‘We’ve been looking forward to being able to say we destroy our business with a new business,’ Mr. Wetselaar said.”

Shell investors weren’t crazy about the deal – nearly 17% of shareholders voted against it, with one large investor calling it “value destructive.”  I certainly don’t have all the facts, but I am so impressed with the strategic intent of positioning Shell for a future where oil will undoubtedly face mounting challenges - climate change among others.  How many companies – how many leaders – have the courage to destroy their business with a new business?

I would love to think that the smart, inventive people at JCI have some ideas that could change the future of their growth prospects.  Most likely those ideas are underfunded and face a mountain of challenges competing with the core business.  But investors aren’t usually patient, and $650 million in savings sounds too good to pass up.  I find this situation so regrettable, and yet all too familiar.

I take heart from Shell, for taking the road less travelled.

Four Things I Learned During March Madness

I'm ready for the Final Four - I have three teams left standing, and I've put my faith (and $15 in the family bracket pool) in Wisconsin to win. I've put together my own "final four" list of observations from the tournament. I invite you to comment and share your own!

1.  Objectivity is an illusion. 

Just try and watch a game with total dispassion about who wins.  If it's your alma mater, we know you can't (and won't) be objective.  It's far ranging - the refs of course, but also player attitudes, behaviors, quality of the play - we simply want to believe the best in them.  (until we get disgusted and give up...more on the Illini in another blog...) 

But what's really interesting is to watch how people behave when it's not their alma mater - not even their bracket pick - and how at some point in the game you pick a team you want to win.  Think about your organization's list of key projects...have you mentally made your own list of the ones that will succeed and the ones that will fail? 

2.  It's no fun to cheer for the leader. 

You have to feel sorry for Kentucky.  They're so good, and so talented, we just need them to lose.  Even if you picked them to win in your bracket, you won't feel terrible if you go down...because it was such a formulaic choice to begin with.  What's fun about that? 

Remember what a kick it used to be for a Mac user?  Apple is just not the same now that they're winning at nearly everything.  In fact we're starting to develop a soft spot for Microsoft.  Admit it, it's true.  I wonder what strategies your organization might use to have your customers cheer for you - whether you're a leader or an underdog. 

3.  Deadlines, breaks and scorecards. 

I think we like basketball games because there are rules.  And they are written down and published, with referees hired to make sure they are followed.  And we all understand that you have 40 minutes to play.  And at the end of that play SOMEONE WILL WIN.  The clarity is just so cool.  

 When young people enter the workforce, they are leaving the world of rules and scorecards, semester beginnings and endings, getting A's and getting C's.  And getting a fresh start every few months.  What can we do to build in more finish lines?  Breaks?  Wins and losses?  Somehow building in moments of relief to counter anxiety and tension in the workplace.  It's worth thinking about. 

4.  Showing emotion is A-OK. 

It's refreshing to see emotions laid out for all to see - the emotions that take the players to incredible highs and devastating lows.  The hugs - the hand slaps - the screaming - the jumping up and down - and yes even the crying.  Basketball is a place where players bring it all in plain sight.  And when they get out of control, we forgive them for it.  Because their emotions are part of what make them great. 

It just seems impossible to win without passion - without emotion.  Look at Coach K on the sidelines this weekend and ask yourself if he's an emotional leader.  No doubt the magic lies in figuring out how to harness those emotions...and not to let them control you.  But the point is that emotions are essential to humans.  I suspect that there is an unwritten code of conduct in your organization that governs emotions - are they A-OK?