DESIGN A STRATEGY

The Matrix Business Model

Outline the model on how the business intends to create value for its clients / stakeholders.

MATRIX TYPE: Unlocked
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PROCESS

  1. Describe the overall proposition or value we bring to our clients. Summarize it in no more than 5 words. E.g. We own your technology problem.

  2. Segment your clients in groups with similar needs. Explore the needs deeply and underpin the segmentation with analytics. Demographic or socio-demographics are in today's competitive world no longer sufficient. Needs based, lifestyle based or life stage based are providing better base for target propositions.

  3. Describe your value proposition for each segment. If they do not align to one overall/company-wide proposition, each business model will vary and you are likely to implement independent divisions to manage these. Hence the chosen value propositions may lead to reconsidering your corporate structure.

  4. Describe the relationship you want to have with each client group. Be clear on being pro-active or reactive, personal face to face or impersonal, guiding or self-selection, "always on" or "business hours", directly involved or outsourced.

  5. Describe the channels you use to reach and deliver to these clients - this links to the relationship you want with the customer. Options are e.g. own sales force, franchises / resellers, agents, retail distribution, call centers, digital, home services.

  6. Understand where your revenue streams come from - yes, product sales but there are other opportunities such as margins on delivery service, maintenance services, annual increases, 3rd party advertising on your website, add-on features and product extensions.

  7. Decide on the things you do not want to do yourself but are vital in the supply chain. These are your key partnerships in the business model.

  8. Describe the critical and unique activities that will enable you to successfully deliver the value proposition to your target segment.

  9. Set out the specific assets you need to own and execute these activities well.

  10. Understand your key cost drivers in relation to the established delivery mechanisms. The cost to own the unique assets, cost of channels, cost of promotion and cost of outsourcing to key partners versus the revenue streams. What are the ratios you can afford?

  11. Review the map looking for inconsistencies between the elements. Be clear on your focus and priorities, i.e. what is your main channel to market, your main revenue source versus, your Top 3 activities and partners, your key asset and most substantial cost driver.

  12. Assess your current state versus the identified business model. Define initiatives on how to close the gaps.

TIPS & TRAPS

  • Research "Business Model Canvas". They have great knowledge to further support you.

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