What has business model definitions to do with management, one might wonder? Isn’t this blog supposed to be about making management good for people?
Well, it has everything to do with it!
One of the fundamental steps in any business is to know the purpose of it, regardless if you’re working with web development, aerospace design or baking bread. That gives a common goal and damage prevention to any reveries that can come from the people involved in a project, from the intern to the CEO, and at the same time it can give more flexibility to improve your product or services. Not to mention that having a shared goal while understanding the capabilities of the business can nurture camaraderie when done correctly.
I’ve worked in places where innovative concepts were constantly created, but the business model was so rigid that embracing new products wasn’t possible and good opportunities were lost. And I have worked also in the opposite scenario, where the business model was so flexible that the company stuck only with creating experimental projects and also lost good business opportunities. But does that mean that both cases were a waste of time? Well, not necessarily, it depends on what each one wanted to achieve with their business model.
Using metaphors is my “bad habit”, so here goes one for you, also using food as an example:
Imagine that we have two companies, and both are bakery shops that sell cookies. The first one is more rigid one only sells chocolate cookies, while the second one is more flexible and invent new flavors of cookies constantly, never has a fixed menu. In both cases, if the administration and the workers are not properly aligned with the business model, that can lead to frustration of the team and even bankruptcy if they can’t adapt to their clients demands or even the market fluctuations like we saw in the 2020 pandemic.
Knowing your business model gives you a goal to follow, and in the case of B2B companies, it’s important to also understand your client’s business model. But how to make this accessible? Traditionally defining a business model and even understanding it required extensive (and boring) documentation of every aspect of the business, which from the legal and bureaucratic side can be useful, especially to behemoths of the corporate world.
But what about the people? How do we translate all of these perceptions into an easy way for anyone to understand your business and contribute to its development? That’s where my favorite approach to start any business or project comes in: making a simple Business Model Canvas of it, in particular the Lean Canvas Model.
Through it you can have a clear and accessible definition of the business that helps your company, your project, your client and, most importantly, your people. So let’s break them down a bit with a couple of examples:
Business Model Canvas
For this and the following example I have used the free tools at the Canva.com website, where you can find different boards and visual communication templates, including the Business Model Canvas and the Lean Canvas. Both formats are valid and easy to use, I'll start with the Business Model Canvas since it’s the more traditional way of visualizing or defining a business model with speed.
I had my first contact with the Business Model Canvas back in Brazil when doing a series of entrepreneurship and administration trainings. Over the years, I’ve used the template for dozens of times to define the main scope of a project and to realign the business model of where I worked, helping to shift back the focus on priority solutions.
For a demonstration, I’ve used the following template from the Canva.com to create a resume of the Chocolate Cookies bakery. Each field is a significant aspect that, when combined, creates an understandable and fast visualization of the fundamental pieces of the business. It’s ideal for briefing and pitching a business to anyone, can be your team, an investor or even yourself.
The model presents to us that the Chocolate Cookies bakery business is focused more on creating a single flavor of cookie, but distributing it on a large scale to different brands. This means that the business model is more focused on a Business to Business (B2B) approach instead of selling directly to the final customers (B2C). A manager knowing this information should then focus on refining the existing model, facilitating the delivery conditions and also improving the product quality, fortifying the brand position in the market.
For the next example, we’re gonna cover the Lean Canvas, a modern approach that focuses on the problems that the business aims to solve instead of its overall structure. I’ll be using the following model from the Canva.com. I particularly find this model more appropriate for cases where the business is not so clear or even established, defining its intentions first and only later thinking about the overall structure or needs.
I’ve now based the following Lean Canvas on the second example of the Mixed Cookies Bakery, which sells different flavors of cookies and seemed to be more “lost” with the business focus since it kept reinventing its menu.
What is defined in this Lean Canvas above is that the main business approach of the Mixed Cookies Bakery is creating new cookie flavors, testing them out with their local public and, if successful, licensing the recipes to bigger brands or distributors.
You can also notice that the bakery isn’t aiming for industrial scale production, quite the contrary, they want to be the right size too keep their welcoming and warm approach to the consumers, but structured enough to test and validate new products to license.
The variety of cookies can attend both the customers but also the companies through licensing.
So, in summary, the core is supporting a strong B2C business with their local and loyal public and only then attending the B2B field, by establishing a good infrastructure to support the requirements of licensing to bigger brands. All of this was identified in 15min through the Lean Canvas, and you can do it to for yours or any business out there.
If you read this far, you have my appreciation. To conclude the post, here’s a few comments I want to reinforce:
I'll cover a more in-depth approach about documentation and communication in the next posts, telling more about the briefing and organization process of a new project.
Until we meet again!