To find out what you need to do to keep your business model relevant in a fast-changing world, check out this article: How to Break Out of a Sales Slump: Getting from Stuck to Success
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Why the Best Business Plan in the World Won't Help Your Business (and What Will)
We’ve all been led to believe that a solid business plan, complete with a genuine vision and values, is the secret sauce you need for business success. How wrong we were.
OK, if that’s not the secret sauce, how about points of difference? Wasn’t it Phillip Kotler or some other Marketing 101 guru who said that’s all you need for successful marketing?
Wrong again.
The best visions and values in the world and the greatest points of difference won’t mean a thing unless you’ve got something else in place first.
A customer who gives a hoot about your product or service. A customer who cares enough to hand over good money for it. Without that, you’ve got nothing. Except for nice vision and values statements, that is. Many a company has gone down in a screaming heap after spending days, weeks, months meticulously crafting these statements and brilliant 198-page business plans.
Even a point of difference doesn’t count if it’s not a point of difference that customers want or need.
What’s the solution?
There are two – a VP + CS. Value Proposition and Customer Segment, that is.
The Value Proposition must be something about your product or service that customers actually care about. The essence. The X-factor. The sharp end of how an organisation creates, delivers, and captures value. Call it what you like, but get it or perish.
The Customer Segment is not just any old customer, but the customer who cares most about your VP and has the most money to pay for it. Your most important customer.
Without a Value Proposition and Customer Segment, you may as well go home and go to bed.
So next time you’re embroiled in a business planning meeting, don’t waste time discussing mission and goals. And don’t waste oxygen by only inviting the marketing team or the HR Manager. Invite the customer. Maybe not in person, although more and more companies do. Invite the customer as a kind of constant metaphysical presence that says, “Without me, you don’t have a business.”
Your Business Plan is not your Business Model
Because the Value Proposition and Customer Segment put the customer front and centre of your business model planning process, they are arguably the most important parts of the business model. This was illustrated in the Business Model Canvas developed by Swiss business theorist and entrepreneur Alex Osterwalder to help businesses describe, design and analyse their business models.
So the business model forms the foundation and encompasses the core idea of a business, while the business plan serves as a detailed roadmap for the implementation of the business’s strategy over time.
At this point, if you’re thinking there’s no point in reading further because your business model is doing just fine, thank you – remember that nothing lasts forever.
Even the most successful business model. Look at Kodak, the world’s leading photography company – until it wasn’t. Look at Blockbuster, the world's largest chain of video rental stores – until Netflix came along. Many of us had Nokia phones when everyone had a mobile – but Nokia missed the boat when everyone switched to smartphones.
And there are thousands of other cases of companies which thought they had bulletproof business models– until they didn’t.
Want to know more about the difference between business models and business plans? Like to learn how to generate the ideal business model for your business? Download this free ebook Why We Use the Business Model Canvas Rather Than Other Strategy Tools
Sometimes it takes an objective outsider to see the strategic opportunities available to your business. As an entrepreneur and business manager and strategist, I have been at the forefront of innovation and change in industries as diverse as retail, construction, F&B, finance and technology. I invite you to contact me for a free no-obligation consultation about your business or franchise.
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