Schlagwort-Archive: Business model

More agile with platforms

It is not sufficient to have a promising business idea. There are many hurdles to overcome before the actual work begins. In the days of Henry Ford it worked out well, as soon as you mastered the entire value chain. Meanwhile, the pendulum is swinging in the opposite direction. Today, the one-hundred percent vertical integration is being replaced by a very low percentage – at the SMART plant in Hambach, France, it amounts to ten percent. Digitization will lead to even flatter vertical integration. These become possible, when the many tasks are spread across many shoulders. Platforms provide such shoulders.

It does not matter, whether we are talking about different platforms or one that contains all the necessary functions. With the following offers tomorrow’s entrepreneurs can focus on their actual business model.

  • Technology
    The fourth industrial revolution, Industry 4.0, is driven by the opportunities of network-based ICT – cyber-physical systems, big data, cloud services, 3D manufacturing, embedded technologies, etc. The use of these offerings cannot be avoided. However, you do not have to take care of all aspects anymore. These tasks have been taken over by platforms that provide these services in a user-friendly way.
  • Operating system
    The term was created in the field of IT. The operating system combines different components into a functioning whole. Under the slogan XaaS (Everything as a Service), today platforms are being provided in an application-oriented way – from infrastructure, to production facilities, to special applications that are used when required and paid only then.
  • Area of ​​Expertise
    In 10 main occupational groups you will find the different professions, each responsible for specific areas. The specialization of the individual areas provides today a vast amount of practical experiences that can be used without the need that one has to familiarize oneself with the respective area. The fourth revolution will lead to more and more platforms, where experts offer their deliverables as a service.
  • Network
    The current networks are websites where producers and consumers meet on a platform provided by a broker in order to offer a certain service – UBER, AIRBnB, Paypal, Ebay etc. In the future, exclusive biztopes will emerge, where selected participants support each other in their business. The Henry Ford of today shares his means of production on a platform with his competitors and stands out in speed, good ideas and versatility.
  • Market
    The place to trade has always been determined by the goods and services that have been exchanged, as well as by geographical features. An overlap of markets rarely took place. Today’s markets are just a click away from every user. Therefore on the one hand one is quickly at the point of action, but on the other hand one is also exposed to all offers. The benefits of the classic marketplace, with its reference points and regulations, are already being exploited by platforms where sellers and buyers meet at auctions – eg. Covisint, SupplyOn.
  • Niche
    The little sister of a market is the niche that forms in the corners, where big markets do not expect much revenue. Through the Internet, this niche is as reachable as the big market. Depending on the success of the niche, it can quickly develop into a market and cover with its platform more and more areas.
  • Business model
    In a modular world, the actual business models use pods (i.e. small, autonomous units that develop value-add) that are needs-oriented created and eventually resolved when they fulfilled their purpose. The required resources are drawn from the various platforms (see above) on an expenditures basis (pay-per-use). The costs are created by integrating the technology, the operating system, the area of expertise, the network, the market and one’s own niche. If the results are correct, then over time the users will optimize the interaction with the platforms.

Bottom line: The start of a new business model no longer requires the immense preparation by building the necessary technology, a coherent operating system, the experience of a specialist area, the lengthy development of a network, the development of a market or its own niche. Platforms allow start-ups or new businesses to focus on designing their core competencies. Platforms make businesses more agile.

Fractal madness

The world in which we live has only the categorization that we apply to it. For this purpose, outlines are developed from all angles, which organize the various aspects. One problem thereby is the question, on what level we are and how many exist. In addition, the facts can be described with differently fine details. Interestingly, similar questions are asked on each level, e.g. what’s happening? How is everything connected? Who is involved? As soon as similar aspects appear again and again, this is called self-similarity or fractality. The triangle that consists of triangles, which consist of triangles, which consist of triangles and so forth. The fact that there is no end to the detailing has been proved by the mathematicians, for example, with the Mandelbrot set. The self-similarity is sometimes unsettling. This fractal madness is, however, better treated with a skillful classification by means of viewing levels.

Levels of detail always require a reference around which the levels are built. Let’s take our Milky Way as a reference point, then the surrounding universe is the macro, our Milky Way is the meso and our solar system is the micro level. The following bullet points describe these levels of detail, which are applicable for any magnitude.

  • Macro
    The macro level is always the coarsest view. It provides a general overview of the considered area. This level defines the entire scope of a system. At the same time it forms the basic structure for further refinements. Examples are the society as a whole, the earth with the continents, the value chain of a company with its essential functions and sequences. For further refinement, it is useful to completely describe the previously determined scope on this top level.
  • Meso
    The meso level successively spreads the elements of the macro plane across several levels, e.g. the continents into countries, landmarks, cities, quarters, streets, etc. On one level, the elements should be described with a similar degree of detail. The meso area consists of at least one level that is the bridge between the macro level and the micro level. Sometimes it may be necessary to build several levels. It should be kept in mind that the number of elements to be described multiplies with each level. Consider that each level consists of 5 elements; there are 5 elements on the first level, on the second level 5×5 = 25, on the third 5x5x5= 125 elements, etc. The purpose determines how deeply you detail. However, it is smart to resist the impulse to set up many levels, since the administrative effort increases exponentially – and ultimately kills any advantage.
  • Micro
    The micro level describes the lowest level of the model and offers the finest details. In addition, there are no further refinements. Thus, in a street, houses are found in which are apartments. In this case, there is no information about the number of rooms or the decoration or similar details of the apartments. Thus the micro level determines the barrier to further insights. If this granularity is determined beforehand, one can resist the pressure of further detailing. However, finer evaluations than those on the micro level are not possible.

Besides these levels of detail, there is a view from the outside. This abstract perspective of the whole describes all elements of the model, e.g. the micro, meso, and macro level as well as the properties, the relationships between the properties, and the logic for evaluation. The meta-layer floats above the content, which avoids self-reference and other model problems. The meta-level is always a part of the observation that facilitates the navigation in the system. Examples of meta-levels are standardized structures, e.g. society models (society, family, and individuals), economic models (markets, companies, and households) or business processes (value chain, processes, and activities).

Bottom line: Descriptions can be created in any granularity. In the interest of the processability of the content, the macro level provides an overview and outlines the overall system. The meso level arranges the large sub-areas and establishes the cohesion. On the micro level, the finest components are found. The starting point is freely selectable and is derived from the purpose of the observation. The fact that one can refine at any level, further and further, is sometimes confusing and leads to the pressure to describe an additional one, and another one – and just one other. However, this leads to frustration due to the ever-increasing effort for those, who have to create the further refinement. It is highly suggested to avoid the fractal madness of describing ever finer by resisting the impulse of the refinement and to simply perform the desired evaluations on the available levels.

Human – Machine – Business model

The main task of the strategy, the plan or the own initiatives, is to keep all aspects in line. It concerns the seizable products, facilities, storages, transport equipment, material as well as the immaterial, mental factors such as convictions and cultures. These mental aspects are very stable and prepared for long-term use. They change almost unnoticed in individual areas, so that there is sufficient time available to adapt to the new conditions. The life cycles of the physical aspects however shortened so that the development of a plan is nowadays a complex venture. What does this mean for humans, machines and business models?

komplexitaet

We learned that everything follows lifecycles – starting with the Kondratiev cycles that divide the last two hundred years into waves. The Gartner Group finally introduced the Hype Cycle for IT- solutions. Thus, we have a tool for a long time that arranges the elements of the business. The purpose of such curves is to make the business complexity manageable, in order to better justify decisions. Since nowadays all aspects can be described in such a way, we again have a complexity of lifecycles that can only be overlooked with difficulties. They function at the same time and affect decisions. Gary Hamel already predicted in 2000 that leading enterprises of the future are characterized by fast development and replacement of business models. Additionally, however, the interrelationships of humans, machines and business models must be considered.

  • Human
    Despite all the technological developments, people become more and more important for the alignment and control of business procedures. As soon as you have to make decisions outside of the routine, it requires people with their convictions, creative abilities and their sense of duty. The advancement of these attitudes is an essential task of everybody. For smart deployment, it is important to know the ways of thinking and the talents of the employees. Skill profiles and the understanding of the mental states are the basis, in order to be able to assign the suitable employees to the tasks.
  • Machine
    The machine includes today not only the physical cogs that keep production moving, but also digital aspects that represent the physical and contentual parts in the virtual space. This covers all equipment, including the computers with their programs, databases and networks as well as all interconnected sender-receiver-systems. Together they represent the machines that keep today the momentum of the business. Each individual component has thereby its own life cycle that does not only result from the technical advancement, but also from the economic interests of the manufacturers. Unfortunately all components are in another phase of the life cycle. As soon as fundamental technologies begin a new cycle, they also carry away dependent components, which again drag others along and so on. The simplest example is the operating system of the computer. A new version of Windows requires new printer drivers, requires new printers, requires new ink cartridges … For this reason today the Enterprise Architecture management (EAM) is an important IT-task to illustrate the current and the future IT-landscape in a model and to create a framework for decision making with a roadmap.
  • Business model
    The business model bundles the business components. This includes the following elements. The deliverable concept contains the extended business idea. The earning model describes the prepared income sources. The value creation determines the procedure of delivering the products and services. The organization is the internal network. The partners extend the internal network to the outwards. The customers are the target groups, which give the cash-flow to the enterprise, in order to act. Resources are the means that the employees need for producing the deliverables. Communication covers the channels to all involved parties. The coordination specifies the control mechanisms.
    The complexity of the business model results from the different life cycles of its components and their mutual dependency. At the same time the feasibility is determined by humans and the machines. The competition takes place on the level of the business model. Customers buy the deliverables that cover their needs best. For this reason it is an important task of the leaders to develop a business model as viable and competitive as possible that is not only attractive to the customers, but also to employees and partners.

The art of the strategizing coordinates the asynchronous life cycles of humans, machines and business models. The joint initiative only succeeds, if planning is accomplished holistically and the components are manageable. It is not enough to develop visions for the machines, or social ones, or economical. The viable conception of the future evolves, if all areas are considered with their interactions. The development of the various elements requires at the same time the overarching expansion of the company. The purpose of the company should lead and not the general, technological development.

Bottom line: The business delivers the desired results, if it is based on a holistic plan that considers people, machines and the business model. Humans are thereby the mobile, formative variable that makes the machines and the business model to become real. You only have to create the appropriate conditions – capable humans, effective functions of the machines and a viable business model.

Chicken-and-egg – the ideal metaphor for unclear causes and effects

Regularly we buy eggs, which were hopefully laid by happy chickens. And sometimes the egg is used, in order to let hatch out another happy chicken. Actually the cycle of laying and hatching is turning without interruption. If you would like to go back to the beginning of this cycle, it is hard to define the starting point. Apart from religions that simply answer this question with a creator, a logical starting point is missing. An egg is laid by a chicken, which, in turn, slips out of an egg. Thus, chicken-and-egg is an ideal metaphor for unclear causes and effects.

henneei bw

Actually the chicken-and- egg problem is solved – in the beginning was the egg (John Brookfield). This is valid, if you accept the argumentation of John Brookfield that the genetic make-up of an animal does not change during lifetime. The change from the nonchicken to the chicken can only happen in the egg. And anyway, eggs existed a long time before the chickens. Let’s transfer the problem to our everyday life.

  • E-Mobility
    Electric cars are not bought yet, because there are not sufficient charging stations. As long as there are not sufficient charging stations, electric cars are not bought. What comes first? The politicians believe the electric cars and therefore want to subsidize the purchase. If you consider the metaphor, another approach would be to install NATIONWIDE at the existing gas stations charging possibilities (of course as well as EVERYWHERE else) – in the beginning are the loading stations.
  • Social Networks
    A social net offers advantages for the users, as soon as the right number of contents is available. However contents are only sufficiently shared, when the necessary number of users is connected. What comes first? The providers of the social nets avoid this dilemma by concentrating on the programming of the platform. They hope that an interesting platform lead to appropriate numbers of users, who will also provide contents. If you consider the metaphor, everything starts with the contents available. For this reason a sufficient number of articles should be provided in the beginning, so that the user numbers pass quickly the tipping point. Afterwards the contents of the users will lead to additional users – in the beginning the real focus are the contents.
  • New businesses
    New shops are opened up, if sufficient customers are available. However, customers are only won, if the business offers its deliverables. What comes first? If you consider the metaphor, the market is defined by companies that offer their products and services. Namely before the first customer can go to the shop. Therefore you cannot avoid launching an affair with the faith that sufficient customers will buy the deliverables. The success of the trade will be seen subsequently – in the beginning stands the launching of the firm.
  • Families with children
    Two lifetime partner want to have children, as soon as they can afford it. But they believe that they can only afford children, if somebody takes care of the children. What comes first? If you consider the metaphor, then families of different incomes always had children. The desire for having children results in a dramatic break-down of the family income on the one hand because one partner stops working for taking care of the children or because of the cost for the childcare. For this reason the family starts with the first child, since thereby the requirements adapt automatically to the new conditions – in the beginning are the children.

Bottom line: This metaphor helps finding solutions more easily for some of the chicken-and-egg problems. Fundamental changes always mean change from one into another condition. When deciding on the best solution the look at the history of the two alternatives helps, since changes have always similar forerunners. That way you find the smartest solution. The chicken-and-egg problem is the ideal metaphor for unclear causes and effects.

Penniless managers are worth nothing

After the ghost of planned economy collapsed, large-scale enterprises evolve to huge centralistic administrative bodies. After years of lean management, culture, hierarchies rigidify, which undermine their intended claim for a flat structure with the subordination of equal levels. The return to functional organizations covers the inability to base the organization on processes. The cross charging of deliverables create an internal market in which specific amounts are negotiated and paid with the transfer of budgets – wooden nickels from the left to the right pocket. The degree of bureaucratization can be seen via the necessary reports and guidelines. More and more employees serve an overhead of project, planning and budget reports. At the same time, the guidelines evolve to one entanglement of regulations that cannot be conveyed or obeyed anymore. The crucial error is however the new approach to realize savings, namely to decide right at the top any outward cash flow. Yet it is forgotten that leaders are worth nothing without financial means.

Mittellosemanager01

What do doers need in order to fulfill their tasks?

  • Apart from the personal characteristics that constitute leaders, like integrity, decisiveness and customer focus, the following tasks should be fulfilled: Self-management, conception, coordination, communication and cooperation.
  • The tasks, authority and responsibility specify the scope of action. The tasks describe the activities that are to be mastered. The authority determines the decision, directive and action powers. The responsibility obligates the superior on the decided approach and the goals. On this basis the personal evaluation and remuneration are done.
  • The allocation of a cost center and the equipment with sufficient budget is an important part of the authority. Like the fuel tank of a car, the available funds limit the scope that a decision maker can cover. Penniless leaders have actually no chance to contribute value-adding results.
  • Bosses as entrepreneurs in the enterprise need a comprehensible business model. Within the business idea, the target audiences, the deliverable portfolio and the clearly outlined scopes are specified.
  • An important function of the executive is the indication towards a positive future and the measures for reaching it. The strategy should provide the employees a seizable framework for the realization.

As soon as these components are missing, the leaders are worth nothing and it remains noting else than eliminating these positions.

Bottom line: The leadership tasks require a large spectrum of abilities, in order to be able to perform a task meaningfully. However, as soon as the leader is guided on a short leash, without budget, even the best characteristics go pop, because penniless managers are worth anything.

Management of others starts with oneself

In the past, the management of the staff was defined by the structural organization. Selected people were assigned to substantial tasks and the leadership of employees. Today, guidance without the structural formalization is part of projects, workshops and teams. This leads to the fact that more and more employees are entrusted with the control of groups. Apart from the leadership tasks conception, coordination, communication and cooperation the self-management has a crucial role, because the management of others begins with oneself.

SelbstmanagementThe stability of the own personality, i.e. the physical and psychological resilience, is the prerequisite for an effective control of the employees. For this purpose, one should have the following three areas under control.

Who am I?
The coherent self-image is the sum of the possibilities that one possesses in total. For this purpose, the following questions should be answered. Which roles do you have? Which interest groups do you have and where? Which actions do you execute? Which abilities do you have? What is your orientation framework? The better the aspects of the self-image fit together, the easier is the execution of a role and the more reliable you become for your stakeholder.

What do I do?
Most of us will pursue only one business model at a time. Exceptions arise e.g. as a result of the reinforced work in projects, new organization styles and more and more cooperation. What is the real business idea? Which value discipline is located in the center? Which benefit promises do you give to partners and customers? In which markets are you operating? Which products and services do you offer? How do you generate earnings? How does the complete value creation look like and which part is the most important for you? Who are the involved partners and customers? Which resources are required? How do you communicate and coordinate? The more people are working together, the more important is the description of your personal business.

Where do I want to go?
The strategy substantiates the direction, in which you want to develop. How does your vision look like? What is the mission that you have to fulfill? What are the internal and external critical success factors? Which value discipline is the most important in the future? Which strengths, weaknesses, opportunities and risks have to be considered? In which direction do you want to develop? Which are your long-term goals? What are your future core deliverables? Which core competencies will you need? Which will be your core processes? The clearly described strategy is the prerequisite for fruitful cooperation between frequently alternating partners. Thus, it ensures that all pull in the same direction and fewer friction losses evolve.

As soon as you have your three pillars consistently under control, contradictions are settled and all aspects fit to each other, the leadership will become much easier. Your possibilities mutually complement, a consistent picture becomes visible, and your self-confidence is reinforced.

The first 100 days

Personal changes result from the search for new challenges, the getaway from unwanted tasks or simply due to organizational change. Everybody is affected. People, who take over the responsibility for a team, a new department or a new company, ask regularly, how to start the new task – especially within the first 100 days.

100 Tage Radar

By far the most important thing is to suppress the urge of wanting to act immediately. On the one side, before the start the overview of the new area is missing, even with best preparation. On the other side, the employees, partners and other stakeholders expect that the new boss introduces as a start her-/himself and have them explain the current circumstances. Blind actionism leads to unsustainable results. It prevents the opportunity to become familiar to the new task and creates even resistance. It would be a mistake to assume that this time might be wasted. Quite the contrary. This radar provides insights in the first three months that will help in the long term to fulfill the new tasks. The following activities require full attention.

1)       Identifying the expectations of the stakeholders
These internal and external stakeholders influence the new tasks. The best solution is to create a list of the stakeholders to ensure that nobody will be forgotten. Expectations are then discussed in personal dialogues. This creates at an early stage a relationship that will be an advantage in the future for both sides.

2)       Describe the business model
Each team, department and company has a business model (including the deliverable concept, the earning model, the value creation process, the involved network of people and organizations, the resources, as well as the communication and the coordination). The first 100 days will potentially be the last opportunity for performing a walkthrough of the business model.

3)       Plan the communication
The structuring of the internal and external reconciliation and exchange of information has a huge influence on the results of the following months. For this purpose, respective measures should be planned (i.e. what, with whom, how, at which frequency will be communicated) that cover all channels – publications, events and regular meetings with superiors, employees and partners.

The basis for accomplishing the new task during the following months and years is created within the first 100 days.

Support for the first 100 days you find here: First100.