What defines a great leader? Why do some businesses grow and prosper, while others get stuck and eventually disappear?

What’s the secret? Great Leaders differentiate their business in a crowded marketplace by intentionally designing a strategic “Business Model”.

At Awesome Journey we believe that a strategic “Business Model” has 4 key building blocks.

• Client Value Proposition (CVP): “Why should a client buy from you?”
• Profit Formula: “How will you create revenue and profit from your CVP?”
• Key Resources: “What resources do you need to deliver your CVP?”
• Key Support Structures: “People, Process, Practices and Tools that support the CVP”

 

1. Define Your “Client Value Proposition”

To understand your “Client Value Proposition”, answer the following questions:

• Who is your key target client?
• What type of relationship does your company have with your client?

Personal (face-to-face)

Automated (through technology)

• What is the job that the target client needs done?
• What is your product and service offering?
• What is your distribution method to reach your key target client?

Two key distribution methods are:

1. Direct Distribution – a sales team or web based
2. Indirect Distribution – through a franchise network, licensing agreement, partner stores and wholesalers

 

2. Define Your “Profit Formula”

To understand your “Profit Formula”, answer the following questions:

a. What is Your Revenue Stream?

How does your company create revenue streams from your value propositions to your clients?

• Transactional Revenue stream
• Product sale
• Recurring Revenue stream
• Rent
• Franchising
• Licensing fee
• Usage fee
• Subscription
• Leasing

b. What is Your Pricing Model?

Fixed Pricing Model

• List price
• Product feature dependent (dependent on uniqueness of your products)
• Client segment dependent (dependent on uniqueness to target market)
• Volume discount

Dynamic Pricing Model

• Negotiation
• Pricing is dependent on market conditions – Hotels room and airline seats – price depends on inventory and time of purchase
• Auctions – pricing is determined by competitive bidding

Specific Pricing Models

• Lowest cost through scale advantages
• Lowest cost through scope and replication advantages
• Premium prices due to unmatchable service
• Premium prices due to propriety product features

c. What are Your Cost Structures?

• Fixed costs?
• Variable costs?
• Economies of scale?

 

3. Define Your “Key Resources”

What are your key resources that are required to deliver the “Client Value Proposition?”

• People
• Technology
• Products
• Assets – Equipment, Mineral rights, Real Estate
• Reoccurring revenue streams
• Equipment
• Information
• Partnerships/Alliances
• Brand

 

4. Define Your “Key Support Structures”

To understand your “Key Support Structures”, you need to determine – “do we have the right”:

• People
• Processes/Systems
• Practices
• Tools

 

Once you have a clear understanding of your Business Model, then the collaboration begins! Bring your team’s creativity and innovative mindsets together and see how you can alter your Business Model to differentiate your business and stand out in a crowded marketplace.

 

Challenge:

Sit down with your leadership team and find 5 – 10 gaps in your current business model to differentiate your business.

 

References:

1. “Reinventing Your Business Model”, by Mark W. Johnson, Clayton M.     Christensen, and Henning Kagermann (HBR paper – Dec 2008)
2. “Business Model Generation” by Alexander Osterwalder & Yves Pigneur (Book – 2010)
3. “Are You Sure You Have a Strategy?” by Donald C. Hambrick & James W. Fredrickson (Academy of Management Executive – Nov 2001)
4. “Disrupting Beliefs: A New Approach to Business-Model Innovation”, by Marc de Jong & Menno van Dijk (Mckinsey Quarterly – July 2015)

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Effective Leaders generate ACTION. You can measure effective leadership by the quality of action generated to produce specific results. So, when a company, team or organization is not achieving its goals, fulfilling its promises or producing results, I assert that it’s a lack of leadership due to its inability to generate ACTION! Absent conscious action, we find leaders reacting, or engaged in a analyzing why there’s not action – lots of activity, but no action and few results. Indeed, most find themselves stuck and do not know it.

 

What causes Leaders to be stuck?

Leaders get stuck when they move from being empowered to being entitled. In fact, we say they’ve become a VERB. Listen carefully; it is easy to hear a VERB.

 

Example:

I arrive for a client meeting and I am told that they have mis-scheduled my appointment. I leave upset so I call my assistant and blame her for not confirming the appointment and wasting my time.

 

A VERB is an acronym – a way of Being. It is who we become when we get stuck.

A VERB is an acronym for:

V = Victim – (This is a persistent complaint; no one appreciates me)

E = Entitlement – (I deserve ___________)

R = Rescue Me – (Someone needs to get me out of this mess)

B = Blame – (It’s not my fault, something’s wrong with you, them or it)

 

VERBS are enforced by your perceptions of how things “should” be. That little voice in your head that says: “There is a way things should be, and when they are, things are right. When they are not that way, something is wrong with you, them or it!”

 

A VERB finds you STUCK in this reinforcing thought:

 

Why did this happen to me? – What’s wrong? – Who’s to blame? (someone else or circumstances)?

 

Breaking free of your VERB mindset requires transforming your reinforcing thoughts with a new ACTION language:

 

What happened? – What’s missing? – What’s next?

 

What Happened? – If you are committed to action, observe only what was said or what was done. Notice if you begin to ask “why” something happened. That leads to an interpretation, not a fact. Focus again on just “What Happened?” Be aware of your interpretations. They move you into a story “about the facts”. Remember, your story will keep you stuck. To generate action, focus only on what was observable. Stop, pause, and declare: What happened? Next, look at the facts and what was actually said.

 

Example:

You are excited to share an idea with your boss. You stop by her office to share your cool idea and she says, “Not now, I am too busy to talk. Get back to me later!” You leave dejected. Immediately you begin to think, “She rejected me, or I feel lack of appreciation.” You might also think, “Why bother? My ideas are not important to my boss.”

 

Notice that you are now thinking about “what this means.” Stop, pause and return to “what happened?” In this example, what happened is what was said: “My boss said she was busy and to get back to her.”

 

What’s Missing? – Here you are concerned not with what is wrong (which is where most leaders go when a problem or failure occurs), you are focused on discovering what’s missing, which has something to do with a key conversation. Yes, fundamentally, a conversation for action is missing. Key conversations for action include a Request, a Promise or an Offer.

 

Example:

So instead of getting wrapped up in your own story, you simply make a clear request to your busy boss and ask, “When would be a better time for you and I to discuss my cool idea about marketing to new potential clients?” And your boss comes back with a promise to meet you at 3pm this afternoon. You walk away feeling engaged to share your cool idea with your boss at 3pm. You are excited.

 

What’s Next? – Again, what’s next is always a conversation that will forward action. Email a clear request to ask your busy boss for a time to meet to discuss your idea, “When can we meet this week to discuss my idea?”

 

Your leadership depends on your capacity to communicate action and create conversations that move things forward. Here, you are focused on creating action rather than focusing on your story about your boss. Remember, your story constitutes you as a VERB. Instead, a conversation for action generates results. By practicing the script, What happened? What’s missing? and What’s next? – you will find you become decisive, proactive and able to transform stuck into ACTION!

How self-aware are you when you are STUCK?

 Homework: For the next day count how many times you get – “Emotionally Triggered” during the day. This is a key indicator of being STUCK.

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