Chris Lonergan Regional Head of Business Consulting at Haines Watts South East Midlands, recalls a recent business trip where the main topic of conversation was how to build a business model that beats your competition.
Clients frequently ask us how can they beat the competition when faced with larger (more powerful with more resources) or smaller (more nimble with lower costs) opponents. In this instance, we were brokering a new business relationship for a specialist, owner managed business, and visited a multinational company which was trying to outsmart even larger global corporates and saw value in partnering to offer a differentiated business offering through a new business model.
As this was in the technology world, we were facing, by turns, huge R&D budgets, sophisticated marketing and distribution chains and efficient procurement and cost management systems. And our chosen play was to offer a cheaper solution based on service, which at first hearing sounded ambitious.
Six people then spent several hours locked in a room and designed a business model which:-
1. Picked customer segments and focused on what they want – not what we could provide
2. Highlighted specific value propositions for each segment – to provide what customers wanted
3. Understood how customers want to be reached – the right communication and service channels
4. Understood the kind of relationships customers want – standardised or customised
5. Understood how customers want to pay – and how we could profit from finance
6. Established the business resources we needed to deliver what customers want
7. Explained what we need to be really good at in order to deliver what customers want
8. Identified partners we could work with to enhance our customer experience and/or business model
9. Established our cost base and financing requirements
10. Stress tested that we would all make money
All in all it was a very positive trip but it also got me thinking about scale and that for almost all companies there’s always somebody out there bigger with more resources, wider distribution channels, and better people. Nevertheless, there is always an angle to use to beat the competition and it starts with finding a problem which would respond to an innovative solution not vice versa.
Is this new? Well, no, it’s really a modern-day take on what Rank Xerox did in 1957 when it invented the photocopier leasing industry based on a pay-per-page model because customers could or would not pay for its capital equipment outright. Or 40 years later, in 1997, when Google figured out how to monetise a free internet search engine.
If you would like to discuss how to review, design or stress test your business model to give you an edge over your competitors give Chris a call on 07766 602737 or email him at clonergan@hwca.com
