July 28, 2010
Below are the primer “think questions” from the newsletter. Please invite yourself to pose more questions and comment:
Recent American business news reveals that the financial situation in many companies resembles that foreseeable for many organizations in Compression. Revenue down; costs down; profits up; big cash pile, but no investment in future growth; unsure when growth will resume.
Consequently, companies are not hiring in large numbers. Economists fret that without employment picking up, consumer spending won’t either. Seeing the economy waffle sideways, some speculate that it is undergoing structural change. That is, business models and work skills are shifting. Lots of people seek jobs, but many jobs go unfilled because few people have the skills to fill them.
Business leaders call this everything from “reset” to “retrogression.” All phenomena of Compression have not emerged, but this situation is good fodder for the business model aspect of Compression Thinking. Some questions to reflect on:
1. A cash buffer helps any organization weather down periods and transformations, including preparations for Compression, but if it amasses more cash than seems prudent for all of this, what does it do? (Give it to owners, obviously, but then what do they do with it?)
2. If we don’t need larger stocks of housing, roads, vehicles, and other infrastructure built, what happens to all the people and organizations engaged in that? What is a job? What is work? Etc.
3. When asset values and incomes drop, so does the tax base of governments, but many government services must continue, so what’s a dedicated, but politically savvy politician supposed to do?
4. If your company is not growing and can’t survive much longer at its present size using its present business model, what do you have to do in the short term? In the next decade?
5. Much of the middle class is devolving into a low-wage class. How can your company help them improve their quality of life by means other than “the Wal-Mart model?”
(Sorry for the small print and skewed format alignment below, but it straightens up when downloaded.)
Business Model Worksheet (“expansionist” model)
Key Partners
- Suppliers?
- Supporters / backers
- Why is each essential?
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What We Must Do
- What we must do well
- Value stream maps
- Special skills?
- Time to learn in detail?
- What to stop doing?
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Value Proposition
- Customer wants and needs you can satisfy
- What will they pay for?
- Do they need you? Why?
- What we can do that others can’t
- Gaps we need to fill
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Customer Relationships
- Personal contacts
- Trust building
- Timely feedback
- Customization?
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Marketing
- Awareness
- Customer education
- Competitive analysis
- Product line coverage
- Promotion
- Brand image
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Execution of Plan
- Communication
- Hoshin roll out?
- “Alignment” of all stakeholders to plan
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Resources
- Human skills
- Equipment
- Marketing power
- Capital
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Competitors
- Strengths
- Weaknesses
- Threats
- What we know that they don’t
- What they know that we don’t
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Channels
- How many?
- Service each performs
- Mark up in each one
- Who dominates each?
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Countering Competitors
- Neutralizing their claims
- Lobbying, legal, and standards wars
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Cost Structure
- Fixed vs. variable costs
- When will investment be recovered?
- Financing arrangements? Costs?
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Revenue Streams
- How and when do customers pay?
- Who sends you cash? When?
- Financing of purchases necessary?
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Business Model Worksheet (in Compression)
Stakeholders
- Relationship with each
- How to sustain trust
- How to factor in the interests of each
- Active supporters
- Passive supporters
- Governance
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Migration Plan
- What we must do well
- Life cycle maps
- Mass energy balances
- Process improvement
- Special skills? Details?
- Stages of change
- Next stage concept
- Implementation plan & “hoshin”
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Social Mission
- Why are we necessary
- How & when to revise
- Supporting goals
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Value Proposition
- What induces customers to value services or outcomes over “owning a possession?”
- Marketing quality-over-quantity propositions
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Supply Chain
- For Information
- For physical movement
- Take-back logistics
- Life cycle service
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Transition
- How to become so proficient that one is no longer consumed by competitive tactics or regulatory compliance.
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Performance Measurement
- External effects on us
- Our effects externally
- Physical measures of performance more than financial ones
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Behavioral System
- Necessary behavior
- How to implement
- Methods to sustain
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Learning System
- “Learning language” (like PDCA)
- Archival system
- Discipline to use
- External sources
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Cost Model
- How to regard cost as a process specification?
- Processes to “engineer” cost reduction
- Financial stability; financial support “in a pinch”
- How to keep a big margin and avoid leverage effects
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Revenue Stream
- Who pays and when? Revenue collection process?
- Financing of customer purchases/payments
- Cash to cash cycles
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