Insights

Rethinking a company’s business model

Steps to sustainable and scalable change

A well-designed business model defines how you go to market, interface with your stakeholders and react to market conditions.

The first step in improving your cost structure is to verify you have a well-defined business model. Serving as the blueprint for all future business activities, your business model should support your efforts to realign operational governance or restructure your functional service delivery mechanisms.

One upside of challenging global economic times and slow global economic recovery is the opportunity to either validate your current model or tear it down and build a new one. A key is to determine where to situate your company on the spectrum of business models – from decentralized holding company on one end to highly integrated operating company on the other.

Where is your company most likely to thrive while serving its markets, operating most efficiently, and ultimately providing the greatest return to its shareholders?

Even the best business models can eventually become obsolete. Yet we have found that companies are often reluctant to tinker with something so crucial to their business - particularly if it has served them well in the past. Instead, they pursue isolated improvements within a single area or function, only to find that the changes aren’t sustainable because of their business model’s inherent limitations. The usual result?  Much lower operational efficiency and effectiveness than a company should have.

To achieve sustainable and scalable cost improvements, you must carefully analyse your existing business model – and then adjust it to fit your company’s current and future needs. This should provide a blueprint for structural change.

A well-designed business model defines how you go to market, interface with your stakeholders and react to market conditions.

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