ROUNDMAP™ – Transforming Growth https://roundmap.com Tue, 10 Mar 2020 11:43:09 +0000 en-US hourly 1 https://wordpress.org/?v=5.3.2 https://roundmap.com/wp-content/uploads/ROUNDMAP-Logo-Icon-100x100.png ROUNDMAP™ – Transforming Growth https://roundmap.com 32 32 The Trinity of Design Thinking https://roundmap.com/the-trinity-of-design-thinking/ https://roundmap.com/the-trinity-of-design-thinking/#respond Mon, 09 Mar 2020 18:04:38 +0000 https://roundmap.com/?p=18019 The inconvenient truth is that an estimated 93% of Customer Experience (CX) initiatives fail, while in 2016, according to Gartner, 89% of companies expected to compete mostly based on customer experience. So what went wrong?

As an article on CustomerThink explained, CX fails to help executives to ‘grow their business’. In other words, CX fails to produce actual business results. And as a consequence, Forrester is now predicting that 25% of CX professionals will be ousted in 2020.

A recent Confirmit study also found ROI a significant weak spot:

Only 20% of companies scored 9-10 for seeing a Return on Investment, with a significant 14% of companies scoring 0-2. This suggests a huge proportion of companies doing almost nothing in terms of proving the value of their programme.

In a statement, Claire Sporton, SVP CX Innovation at Confirmit said:

Very few [businesses] are able to link the CX program with financial results, which makes it much harder to gain support of the C-suite, set the right goals for the business and secure the desired improvements and culture change across the business.

To understand why CX-initiatives fail so bluntly, Paul Hagen, a former Forrester CX analyst, stated:

It points to a combination of strategy and execution [failures] as reasons for few CX success stories. On the strategy side, he says some Chief Customer/Experience Officers are coming into their jobs without training on design thinking. CEOs are giving lip service to CX, without really understanding what it means.

Without understanding what it means to be customer-driven or without actually producing tangible results, CX is sure to hit a wall.

Unless.

The Trinity

Mark Curtis, Chief Client Officer at Fjord (part of Accenture Interactive) told Adrian Swinscoe in a recent interview that businesses need to commence each design-initiative from three angles:

  1. DESIRABILITY ─ Will our customers desire it?
  2. FEASIBILITY ─ Can we make it?
  3. VIABILITY ─ Can we make money out of it?

For example, we may want to deliver groceries to our customers within 4 hours. Is it desirable? Yes. Is it feasible? It will take a huge investment. Is it viable? No. Don’t do it.

If we look more closely at the desirability of design-initiatives, Mark wants us to also consider the triple purpose alignment:

  • How do you align the purpose of the organization with the purpose of its customers?
  • How do you align the purpose of the organization with the purpose of its employees?
  • How do you align the purpose of the customers with the purpose of the employees?

The first is all about improving customer engagement and reducing customer churn. The second is about employee engagement while reducing employee turnover. The third is about improving customer-employee engagement, which according to Mark is most often overlooked. Research by Gallup had already confirmed that increased employee, as well as customer engagement, translates into 3.4 times ‘financially more effective’ companies.


Additionally, as suggested on Linkedin, companies may want to look at:

  1. SUSTAINABILITY ─ Isn’t it harmful to the environment?
  2. REUSABILITY ─ Can it be recycled, repurposed, or upcycled?
  3. CONTRIBUTORY ─ Does it offer genuine stakeholder value?
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Decoupling of the Value Chain https://roundmap.com/decoupling-the-job-to-be-done/ https://roundmap.com/decoupling-the-job-to-be-done/#respond Mon, 27 Jan 2020 20:30:57 +0000 https://roundmap.com/?p=17729

Professor Thales Teixeira from Harvard Business School took 8 years to write his book ‘Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption’. His observations of dozens of startups, tech companies, and traditional players led to an understanding of how business is being disrupted. We’ll discuss his findings while uncovering the question: Why now?

DECOUPLING OF THE CUSTOMER VALUE CHAIN

The publisher explains: “There is a pattern to digital disruption in an industry, whether the disruptor is Uber, Airbnb, Dollar Shave Club, Pillpack or one of the countless other startups that have stolen large portions of market share from industry leaders, often in a matter of a few years.”

“As Teixeira makes clear, the nature of competition has fundamentally changed. Using innovative new business models, startups are stealing customers by breaking the links in how consumers discover, buy and use products and services. By decoupling the customer value chain, these startups, instead of taking on the Unilevers and Nikes, BMW’s and Sephoras of the world head-on, peel away a piece of the consumer purchasing process.”

A customer value chain is a business concept that represents the creation of value for a customer. It is similar to the supply chain, which charts the various stages of production and supply from raw materials to the sale of the final good to the end user. The big difference is that while a supply chain often measures costs, the customer value chain is based on the increase in value to the end user.

This idea is somewhat similar to a ‘value stream‘. Value streams describe how a stakeholder – often a customer – receives value from an organization. As opposed to many previous attempts at describing stakeholder value, value streams take the perspective of the initiating or triggering stakeholder rather than an internal value chain or process perspective.

What Uber, Amazon, and Airbnb have in common is that they aim to make the customer’s job-to-be-done a lot easier. Uber made ride-hailing a breeze, Amazon made it simple to search for exotic books, while Airbnb made it effortless to find a cheap and fun place to stay. They all took the customer’s job-to-be-done as a startingpoint and created a service that significantly improved customers’ lives.

While Teixeira’s viewpoint does hold merit, what’s even more important is the question: Why is this happening now? How could these startups disrupt markets and industries that have been under the control of large corporations for so many years? To get to an answer, we need to look at another surge of decoupling ─ in particular, one that took place almost 100 years before.

DECOUPLING OF WORK AND craftmanship

Around 1890, Frederick Winslow Taylor was one of the intellectual leaders of the Efficiency Movement, a pioneer in applying engineering principles to the work done on the factory floor.

What Taylor described, often referred to as the division of labor, was, in fact, the decoupling of work and craftsmanship. Instead of having to hire exceptional people with a broad skill set, he suggested to break down work into smaller pieces. This allowed a factory manager to hire specialists that were much cheaper, easier to train and replace, more skillful, and therefore more productive.

Throughout the years we’ve applied the same scientific management principles, not just to factory workers but throughout the entire organization. Even today, people are compelled at a young age to make a choice of their area of specialization. Polymaths are not allowed.

While the division of labor raised productivity, complexity increased alongside it. To offset the operating costs and make a profit, companies had to expand their operation quickly. More production led to more stock and this drove companies to sell more products ─ leading to mass consumption.

Economies of Scale meant that only the largest operations were able to compete successfully on price, causing an evergrowing economic divide. Between 1978 and 2012 the share of startups relative to industry leaders dropped by as much as 44 percent, while employee wages remained almost the same. In 2012, Kauffman Foundation launched the ‘Startup Act‘ to incite people to start new businesses.

THE TIPPINGPOINT

Let’s go back to our question: Why is this happening now? How could these startups disrupt markets and industries that have been under control of incumbents for so many years?

As companies turned bigger, from attracting more customers, they grew more departments and divisions, sharing resources and capabilities that created complex interrelationships. While these provide benefits, they also cause restraints. Consequently ─ added to the bulky legacy systems ─ these corporates have a hard time coping with fast changing customer demands. Although most perceive themselves too big to ‘pale’, they are, in fact, most vulnerable to disruption.

With the rise of digital technology, the cost of market-entry has dropped significantly. Because most customers are centered around a few incumbents, it’s also much easier to identify them and offer them a better, cheaper, more convenient service by focusing on the customer’s job-to-be-done. Startups are known to do this without causing too much attention from the incumbents.

As more and more customers prefer a startup’s offer over that of an incumbent, digital technology again comes to the rescue, allowing these startups to scale with unprecedented speed. TikTok, for instance, reached 800 million daily users in just two years while it took Facebook 8 years.

What's NEXT?

Although we are still in a transitional phase ─ in between two large s-curves, the cards will soon be reshuffled. Most incumbents will need to restructure, while some will disappear. As the next s-curve takes shape, new corporates will emerge, however, contrary to the current cohort of ventures, they will need to coexist in an environment that is far more cooperative, distributive, and regenerative.

As the population rises, our planetary resources won’t sustain the rising demand. In 1905, the average person consumed 4.6 tons of resources, today, that’s more than 10 tons. This exponential growth is not only causing environmental havoc, but it’s also depleting Earth. We need another form of decoupling: the decoupling of wealth and resources, to survive another century of consumerism.

As we’ve uncovered via the Business Model Matrix, the way to a more sustainable form of consumption is either through resource-centric or network-centric business models.

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Customer Carousel™ Blueprint https://roundmap.com/customer-carousel-blueprint/ https://roundmap.com/customer-carousel-blueprint/#respond Sat, 25 Jan 2020 00:44:49 +0000 https://roundmap.com/?p=17653

Customer Carousel™ is one of the outcomes of a 4-year discovery process by Edwin Korver and it turned out to be an amazing panorama, not just to help optimize the performance of the frontline operation but as a lens, through which to observe and engage mission-critical aspects of the business enterprise. In this post, we’ll cover the basics of the Customer Carousel.

MODERN FOUNDATION

Most firms consider customer creation to be a prime process ─ and they should. After all, management consultant and bestselling author Peter Drucker stated: “The purpose of business is to create a customer”. While the role of marketing was to identify a customer and initiate the value creation process, sales had to convince the customer to buy the product. High commissions were paid to salesmen who met their sales targets. Customer service was often regarded as a necessary evil, like paying taxes ─ a cost burden that needed to be contained as much as possible.

Then social media emerged and while customers discovered the power of peer-to-peer recommendations, businesses experienced the aggravation of public scrutiny. Customer satisfaction became a key performance indicator (KPI).

Shortly thereafter, the surge of software-as-a-service offerings drove suppliers to introduce pro-active customer service agents, now called customer success agents, to reduce churn. Their role is to assist
the customer to get as many benefits from the purchase as soon as possible, to increase the significance of the value delivered to them, which in turn drives customer loyalty.

This new ‘normal’ made us describe the customer development process as follows (notice that we replaced ‘service’ by the wider concept of ‘delivery’:

While the majority of businesses still don’t see the urgency of having a customer retention strategy next to having a customer acquisition strategy, we believe they soon will ─ venture capitalists won’t even invest in a firm if it can’t demonstrate a solid customer retention strategy.

Now add a color-coding to it. We use the colors blue, green, yellow, and red, following the dispersion of white light as it passes through a prism. Blue is ‘cold’ (distant), while ‘red’ is warm (intimate).

So there you have it: the modern foundation of the frontline operation. However, this representation still lacks detail ─ we’ll need to dive in a bit deeper.

CUSTOMER DEVELOPMENT PROCESS

To get a grip on the entire customer development process:

  1. We’ll need to consider all the steps involved, not just those related to customer acquisition.
  2. The process should now be regarded as cyclical, rather than linear (forget about 1-D funnels).
  3. Modern communications became a two-way process ─ their are two-sides to each story.

FIVE STEPS TO CLARITY

Ok, we’re ready to reveal how we got to the arrangement of the Customer Carousel.

Step 0

First, we placed the four departments of the modern foundation of the frontline operation on top of four corners ─ in a circular arrangement (clockwise, starting with marketing).

Regardless of the business strategy, we’ll need to identify a target group of customers to point our activities at. This is the startingpoint of the Customer Carousel: one common target.

Step 1

While each department has its own role to play and therefore received its own color-coding, we wanted to emphasize that it is crucial ─ with regards to the commercial performance ─ that these departments perform as one interconnected frontline.

We did so by representing each department as a piece of a puzzle. To prevent operational barriers we need to appoint cross-functional liaisons and implement cross-functional systems.

Step 2

The job-to-be-done of the sum of these four departments is to develop-a-customer, however, we need to break down the customer development process into four stages:

  • Customer Acquisition
  • Customer Creation
  • Customer Retention
  • Customer Extension (coined by us)

While most firms use hand-over moments (f.i. marketing to sales), we would advise against it: a handover implies that someone needs to let go. If we truly want customers to experience the value they expect, anticipate, and deserve, we’ll need to keep everyone involved in-the-loop.

Step 3

Now let’s take a close look at the customer’s journey. We added four known acquisition-steps, taken from the AIDA-model, and added four new retention-steps to complete the cycle:

  1. Attention
  2. Interest
  3. Desire
  4. Action
  5. Anticipation
  6. Honor
  7. Happiness
  8. Advocacy

We call these steps the Moments of Reflection™ or MoRe. To understand how customers react to our touchpoints we should observe their behavior ─ as long as we understand that what we are seeing is a mirror reflection of what they might be thinking.

Easy to remember by: AIDA-AHHA

Step 4

As mentioned before, the customer’s journey is just one aspect of the modern, bilateral communication between brand and customer. So we added another eight steps to represent the Moments of Engagement (MoE), the so-called brand-initiated touchpoints:

  • Attraction
  • Awareness
  • Consideration
  • Confidence
  • Exchange
  • Experience
  • Satisfaction
  • Significance

These touchpoints can be seen as the eight stages of a play the brand performs in front of the customer. In the ROUNDMAP™ system, we use arches to explain how the Moments of Engagement and the Moments of Reflection are seamlessly linked.

Easy to remember by: AACCEESS or double aces.

Step 5

When we perceive our touchpoints as the stages of a play, we need a prompter ─ someone who tells us what part to play on what stage. We’ve defined eight prompts:

  1. Purpose
  2. Promise
  3. Propose
  4. Persuade
  5. Purchase
  6. Provide
  7. Please
  8. Prefer

There is a whole story behind each step, however, we’ll explain that in more detail in our upcoming book. Some minor levels of detail can be found in the ROUNDMAP system. which by now ─ giving this blueprint ─ may seem less intimidating than it may have looked before.

FINAL SCHEMATIC

By removing the colors of the four departments we’re left with a schematic of the Customer Carousel, as it is currently incorporated in the ROUNDMAP system.

TRAJECTORIES

You’ll need to understand that while touchpoints are often intentionally created to influence customer behavior, we can’t actually see what happens in a customer’s brain. However, we can observe their behavior, which will provide some suggestion of what it is they are thinking.

The challenge today, especially due to dark social ─ the effect referring to the social sharing of content that occurs outside of what can be measured by web/mobile analytics programs ─ and a growing number of tracking blockers, is to attribute customer behavior to a specific touchpoint.

Therefore, the idea of ‘planning the customer journey’, as a series of logical steps, should be regarded as unrealistic. Instead, brands need to create touchpoints with three simple trajectories:

  1. Inside-out Trajectory ─ solution doesn’t fit a need anytime soon; say goodbye.
  2. Outside-in Trajectory ─ solution fits a need, however, the customer may need to be persuaded.
  3. On-target Trajectory ─ customer is ready to buy; so make it happen.

The job-to-be-done is to allocate valuable resources at trajectories 2 and 3 while respectfully dismissing the 1’s as soon as possible.

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Ride the waves of business https://roundmap.com/ride-the-waves-of-business/ https://roundmap.com/ride-the-waves-of-business/#comments Sun, 19 Jan 2020 00:21:05 +0000 https://roundmap.com/?p=17617

About ten years ago I started to notice a pattern in economic trends. One day, while discussing my perception with my accountant, he suggested to look for ‘Kondratieff’ (or Kondratiev). Indeed, Kondratieff confirmed what I had witnessed and since then my view of business incorporates historical context. And it helped me, not just to account for today’s events but also to foresee the future of business.

BUSINESS CYCLES

Nikolai Dmitriyevich Kondratiev was a Soviet economist (1892-1938). He is best known for proposing the theory that Western capitalist economies have long term (50-to-60-year) cycles of boom followed by depression. These business cycles are now called “Kondratiev waves” or K-waves.

To provide proof that capitalist economies were subject to spontaneous and recurrent depressions and recoveries, Kondratiev did extensive price analysis of goods in the German, British, and French economies. Among the prices studied were raw materials and output products, interest rates, foreign trade, wages, and bank deposits.

Economist Carlota Perez would later attribute these long waves to technological revolutions, in effect applying the theory of creative destruction by economist Joseph Schumpeter ─ also known as disruptive innovation as it was coined by Harvard Professor Clayton Christensen – to economic cycles.

If you take a look at the figure to the right, representing Kondratieff’s business cycle and its four stages (expansion, crisis, recession, and recovery), you may even recognize the layout of the ROUNDMAP.

Let’s have a look at two books, both covering a similar subject: What makes some companies perform better than others? And let’s place them in context of Kondratieff’s long wave.

In search of excellence (1983)

One of the first management books I read was the bestsellerIn Search of Excellence” by Tom Peters and Robert Waterman (1983). The authors identified 8 basic principles to stay on top of the heap ─ based on an index of 43 companies that were deemed ‘excellent’ ─ which meant that on average they outperformed the Dow Jones Industrial Average and the broader S&P 500 index by as much as 25%.

During the time the book was published, America was still suffering from a recession combining high unemployment coupled with inflation. Major industrial companies like Chrysler had to be bailed out, the oil crisis concentrated wealth among Arabian plutocrats and the threat from a seemingly dynamic Japan seemed insurmountable (just-in-time production, kanban and manufacturing resource planning).

To put the eight principles (lef) in a more contemporary context, we’ve added a second list (right):

Eight Principles of Excellence (1983):

  1. Bias to action
  2. Stay close to the customer
  3. Promote autonomy and entrepreneurship
  4. Productivity through people
  5. Executives need to be hands-on and values driven
  6. Focus on the business the company knows best
  7. Keep a simple form and few layers of management
  8. Foster tight adherence to values and high tolerance for employees accepting the values

Eight Principles of Excellence (today):

  1. SMART goals or Goal-Setting Theory
  2. Customer-focused (erroneously called customer-centric)
  3. Self-steering teams
  4. Autonomy, Mastery and Purpose Framework
  5. Servant Leadership or Action Centered Leadership
  6. Three Horizons of Growth
  7. Team of teams
  8. Corporate culture

These findings provided American executives, that were desperately trying to break free from years of depression, in an economy that was already on the rebound, with some useful guidelines.

EXPONENTIAL ORGANIZATIONS (2014)

In 2014 the book Exponential Organizations appeared, with the subtitle: ‘Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it)’. According to the authors, Salim Ismail, Michael Malone and Yuri van Geest: “In business, performance is key. In performance, how you organize can be the key to growth.”

The core notion is simple: Rather than increasing human capital or physical assets, the most successful 21st-century companies leverage information and technology to achieve rapid expansion in pursuit of a
“Massive Transformational Purpose” (MTP). In doing so, they’re able to scale their business strategies, culture, organizational frameworks and purpose at the same rate as the technology, i.e. one that follows an exponential curve.

“An Exponential Organization is one whose impact or output is disproportionately large — at least 10 times larger — compared to its peers because of new organizational techniques that leverage accelerating technologies. In other words, it grows faster, bigger and cheaper than its competition because it has a Massive Transformative Purpose and scales as quickly as tech does.”

“The Massive Transformative Purpose is bigger than a mission statement; it’s why you do what you do, why you get up in the morning and why your organization exists. It’s a higher, aspirational purpose, and it’s about thinking big. Radical transformation is its goal. Examples of some great MTPs include Boston Children’s Hospital (“Until Every Child is Well”); Best Friends Animal Rescue (“Save them All”); TED (“Ideas Worth Spreading”); and Google (“Organize the World’s Information”). These are big, ambitious, grand challenges and the directional north star for their respective organizations.”

Again, we need to place this book in its proper context: we had just left behind the financial crisis of 2007-2009 while most companies were still suffering the consequences. We believe the financial crisis was mistake, caused by a mark-to-market bookkeeping rule, however, the market appearantly still needed a correction and took another nose dive, following the May 2000 dotcom bubble-burst.

While the suggested approach may still be valid ─ as described in “Where to find future growth” ─ we feel it should not be regarded as a medicine for “disproportionately large growth rate”, rather as a cure to survive the upcoming economic crisis and mitigate possible core business disruption (see figure below).

The book In Search of Excellence (SeO) was published shortly after the bottom-out of an economic crisis, Exponential Organizations (ExO) appeared just before it ─ we are mere months away from what may be the most devastating economic crisis ever. Both books hero a series of companies that stood out from the crowd based on either their structure or their scalability.

CONCLUSION

Regardless of the recommendations found in both books, it will always be about creating the right value, at the right price, delivered to the right group, using the right channels, and to capture enough value in the process to make a profit. Whether your firm is capable of executing its mission with ‘excellence’ or is able to scale ‘exponentially’ may not be the first thing to worry about.

If we have learned anything from multinationals like SONY (walkman-successor debacle), Kodak (celluloid-film blunder), or Blockbuster (video-rental disruption) that drove these companies to ‘bite the dust’ of their now-absolete technologies and business models, is that no competitive advantage offers enough assurance to survive in an era in which many of the current technologies, developed in the previous century, are now being replaced ─ and eventually displaced ─ with alarming speed.

To cope with these complex circumstances, companies need to diversify, start new initiatives, not by improving the past but based on a vision of the future. This may lead to some complete misses but this is part of the times we live in: we can’t afford to be penny-wise, we need to be pound foolish.

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Where to find future growth? https://roundmap.com/where-to-find-future-growth/ https://roundmap.com/where-to-find-future-growth/#comments Tue, 07 Jan 2020 05:05:48 +0000 https://roundmap.com/?p=17352

The big question on every executive’s mind is: Where to find future growth? Whether the question is an urgent one or driven by a regular strategic planning cycle, without future growth a business can not sustain for long. In this post we’ll look at growth horizons and venture design while introducing the Ark of Commerce™ and providing context to the ROUNDMAP™ framework.

Horizons of Growth

You may remember the image (below) when we discussed Growth Activation™ ─ to illustrate how multiple horizons of growth will help plan for sustained growth. To warrant short-term growth (horizon 1), we’ll need to defend and extend our streams of revenue while managing the core operation.

Before these revenue streams become restrained, we’ll need to make sure new lines of business can emerge (horizon 2), often relying on the existing core. Additionally, we’ll need to explore viable business options ─ even if these require an entirely new core (horizon 3).

However, some companies have responded to these turbulent times by introducing a transient growth strategy: they’ve developed the capacity to launch a new line of business every 1 to 1.5 years and work relentlessly to mature these into viable ventures, causing growth cycles to overlap. This approach is known to as venture design, based on transient advantage.

This is how growth cycles of a venture-design business looks like:

Regardless if our lines of business depend on fleeting competitive advantages derived from a single core (first graph) or from transient advantage derived from multiple cores (second graph), we’ll have to take into account the causalities and interdependencies that exist within each core.

WHAT's AT THE CORE?

Following the creation of the ROUNDMAP™, we wanted to describe how the body of knowledge relates to the business operation at large and to show that ROUNDMAP isn’t just an instrument to improve customer performance, rather an essential part of an integrative framework: from mission to strategy, to planning, to product design, to realization, and ultimately to sustaining growth.

If you look at the ROUNDMAP™ logo, you may have noticed a compass needle. This needle represents the purpose of the mission, i.e. the group of customers for which the business intends to create value. However, to reach this target audience, and to be able to respond effectively to changes in demand or adversarial forces, the business operation has to be able to ‘maneuver’.

This led to the idea to describe a business as a vessel, sent out on a mission to fulfill its purpose.

The Ark of Commerce™

So, we perceive the entire business operation as a boat sent out on a mission with the bow pointed towards the target customer. We named it the Ark of Commerce™:

WHAT DRIVES THE ARK

To explain what drives the ark forward and allows it to maneuver, we consider three frameworks:

  1. BUSINESS MODEL – What value to create?
    A business model describes the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts.
  2. OPERATING MODEL – How to create and deliver that value?
    Operating model is both an abstract or visual representation of how an organization creates and delivers value to its customers or beneficiaries as well as how an organisation actually runs itself.
  3. REVENUE MODEL – What and how much value can be captured?
    The revenue model is a framework for generation revenues. It identifies which revenue source to pursue, what value to offer, how to price the value, and who pays for the value.

EXECUTIVE COMPONENTS

Ok, now let’s look in more detail to how we’ve arranged the components of the Ark of Commerce:

FOUR STAGES OF GROWTH

Firstly, we distinguish between four stages of growth (click on the image above; from left to right):

  1. Growth Scenario ─ Determining the strategy, objectives, and tactics to reach a rallying goal, a goal we all commit to ─ aligned with the corporate mission, vision, and purpose.
  2. Growth Distribution ─ The timely allocation of constrained resources (assets/people) and capabilities (technology/skills) needed to reach the aspired goal.
  3. Growth Activation ─ The way to effectively and efficiently put the allocated resources and developed capabilities to good use, i.e., to create the value we intend to deliver to our customers.
  4. Growth Realization ─ Deliver and capture value; measure actual growth against aspired growth.

Growth Planning and Growth Activation are separated by the Functions that need to perform the jobs ─ the primary and secondary activities, arranged in units (groups, departments, or divisions), also referred to as the value chain.

The Operatives

Secondly, to plan, activate, and realize business growth we’ll need to consider five Operatives:

  1. Resources – What is needed to do the jobs?
  2. Capabilities – Which jobs need to be done?
  3. Functions – What unit(s) do the job? (= the value chain)
  4. Processes – How is the job done?
  5. Services – How is the job admitted?

Each of these Operatives is linked to sub-operatives. Processes are determined by Policies and performed through Roles while Services are determined by Products and performed through Channels (of communication and distribution). And so on.

A special word of thanks to Mihai Ionescu for his valuable feedback.

PLAY THE ADVANTAGE GAME

A regular operation may consist of one Ark of Commerce, however, a typical venture-design business may have several smaller arks ‘in the water’, side-by-side, each one competing for profit and growth.

Experts noticed that when markets become more volatile and therefore unpredictable ─ due to fast emerging innovations ─ competitive advantages tend to flee faster. However, most incumbents tend to believe that any early-stage technology, process, or product won’t be as effective as something that’s been honed and polished for years. This proved to be a misconception ─ a superiority trap. If the upstart innovation matures, and in many cases it will, the incumbents are often too late to respond.

Instead of betting against the notion that sustainable competitive advantage is now the exception, not the rule, firms do wise to mitigate the risk of becoming disrupted by launching multiple ventures with speed and frugality. Until the new winners have emerged from the dust and the race for the best quality, with the best service, at the lowest price resumes.

This is how we would like to represent the two strategic advantage playbooks:

To the left is a single-core business operation, battling to defend its market position against new markets entrants, changing regulations, global competition, and technological disruption. To the right might be the best answer: starting a series of new ventures, each based on a vision of the future.

Is this response to market turmoil unique in history? Ofcourse not. According to the authors of the bestseller “In Search of Excellence” (1983), companies like Hewlett-Packard and Texas Instruments in the 80’s also formed small separate teams with a high level of autonomy, to launch new products with ‘speed and frugality’ ─ similar to venture design today.

How to use the ARK OF COMMERCE?

We believe the Ark of Commerce can be used as a playbook:

  1. By describing the current business model, operating model (resources, capabilities, functions, processes, and services) and revenue model.
  2. By describing any alternative business model, operating model (resources, capabilities, functions, processes, and services) and revenue model.
  3. Assess the gaps beween current and alternative growth scenarios (1 -/- 2).
  4. Decide which alternative growth scenario(s) to further explore as ventures.
  5. Assess the ventures based on short-term, mid-term, and long-term potential.
  6. Decide whether to spin-in or spin-out the ventures.
  7. Decide what to do with the current business model, operating model, and revenue model.

The best way to perform this exercise is by using a spreadsheet. Please contact your ROUNDMAP™ Certified Professional for further details.

"What business needs now is design. What design needs now is making it about business."

Beth Comstock, Vice Chair, General Electric. Tweet

Ark of Commerce VERSUS ROUNDMAP

Let’s see if we can bring the two, ROUNDMAP and the Ark, together.

Firstly, you now understand that the purpose of a business operation is to deliver value to a specific group of customers ─ the group of customers it sets out to target ─ and capture some of that value as profit.

Secondly, we’ve described on many occasions that the ROUNDMAP represents the frontline operation, which is the part of the operation that actually targets the customer.

As such, the Ark of Commerce™ is perpendicular to the ROUNDMAP™ (you may have noticed the blue and red line at the bow of the Ark) and therefore the two can be represented like this:

"Well over half of executives from across all industries say that their main competitor in five years will be a different company than it is today."

TESLA | GROWTH PAINS

Tesla’s mission is to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible. In 2013 Tesla stocks were believed to be overrated, implying Tesla would have to reach ‘321,000 vehicle sales a year by 2020, a 48% CAGR’ (growth rate). By introducing the Model 3, Musk was able to get the production numbers past the 321.000 vehicles mark, one year prior to what was perceived to be impossible in 2013. Allocating the required resources and acquiring the capabilties needed for large scale car production did prove to be a challenge while most of the processes and services today are still way below-market standards.

BONUS: Ways to Achieve GrowTH

Growth can be achieved in many ways, often combining several methods. In the example of Tesla, growth was achieved through segmentation: by developing a more expensive car for more-exclusive customers (at scope) and a cheaper model for customers in a lower price range (at scale).

These are 10 ways to achieve growth (there are more):

SCALE UP

Exploiting market potential by increasing the scale of the operation ─ based on Economies of Scale.

SCOPE

Exploring various product lines simultaneously; using the same operating line ─ based on Economies of Scope.

SELECT

Focusing on a select group of customers while exploring the opportunities to fulfull more of their needs ─ based on Economies of Sale™.

SHAPE UP

Improving (or shaping) the current operation to expand and extend growth through innovation and change-initiatives.

SHIFT UP

Transforming the current business model towards the next elemental business model ─ referred to as business model shifting.

SIDESTEP

Exploring various product lines simultaneously; using one or more operating lines.

SPECIALIZE

Be one of the few suppliers that are capable to perform the job with excellence.

SPREAD OUT

If you have a converting offer, international expansion could be a quick way to grow.

STEAMROLL

Achieve market share fast by accepting operational losses to gain first mover advantages or to determine the overall playing field: the Amazon-way.

SWALLOW

Acquire other businesses to grow your own business more quickly.

Always be aware of the interrelationships between resources, capabilities, functions, processes, and services, especially if you plan to share elements between multiple units or divisions. These interrelationships may provide economic benefits, however, they could also lead to higher cost of coordination, compromise, or inflexibility (Porter).

There are many causes for not achieving the aspired growth, some of which we’ve addressed here ─ research demonstrates that a mere 20% of firms succeed in achieving their growth projections.

"Growth created complexity and yet complexity is the number one killer of profitable growth."

KODAK | FADING MEMORIES

Kodak was the first to explore the opportunities of digital photography. Millions of dollars were invested in developing the first digital camera while Ofoto was the first website that allowed customers to store and share their digital photos. Due to the enormous pricetag attached to a digital camera, Kodak did not expect digital photography to take off anytime soon and therefore kept its focus on celluloid films. A huge error of judgement. Merely 4 years after the introduction of the iPhone, the company had to file for bankrupcy. Kodak had not only failed to understand that the opportunities provided by digital, to share photos amongst peers on the fly, would displace traditional photo printing, but was also wrong to assume that their competitive advantages with regards to celluloid film would prevent them from being disrupted.

kodak-fading-memories
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Right on the Money https://roundmap.com/right-on-the-money/ https://roundmap.com/right-on-the-money/#respond Tue, 31 Dec 2019 01:42:59 +0000 https://roundmap.com/?p=17302 Since the early 1960s, Silicon Valley is known for its many tech-startups. The birth of the Internet in 1995 meant that information, experiences, opinions, and knowledge could now spread beyond physical boundaries, rapidly advancing technological developments. Driven by fierce competition and limited funds, tech-startups found a way to establish product/market fit quickly and cost-effectively, allowing them to convince investors to help them scaleup the operation and disrupt markets.

This mode of operation became known as the Lean Startup Movement, inspired by Steve Blank and Eric Ries. The ongoing disruption of products and markets shortened the lifespan of most products while the rise of the Internet meant that customers became much better informed – dramatically shortening the buying cycle (in some cases even down to seconds).

Before the rise of the Internet, customer acquisition was key to most businesses while customer retention lagged far behind. Nowadays, due to a remarkable shift from as-a-product to as-a-service business models, customer retention is one of the most critical aspects of any operation.

While the need to quickly establish product/market fit had led to so-called ‘agile’ product development methods, the customer creation process hadn’t changed much. Most marketing teams still use a funnel-analogy, taken from the 1950s, and focus almost entirely on marketing and sales initiatives.

However, given the fact that most value propositions are vulnerable to disruption and buying cycles are turning ever ‘darker’ ─ what can be measured ─ firms really need to engage customers beyond the moment of purchase, by pro-actively onboarding customers to make sure customers’ needs are met. If firms fail to do so, those that will are bound to take their place.

We were astounded to find that existing models ─ marketing and sales funnels ─ were oblivious with regards to activities that occur post-purchase. Because we were convinced this was a huge omission in customer relationship management, we decided to fill in the blanks. After having described the delivery-related activities, we found that to forge strong customer bonds firms needed to look even further, beyond the moment of satisfaction. And so we added a fourth department, Customer Success, to the Customer Carousel™.

The lessons we learned is that to be right on the money, firms need to capture a 360-view of the customer to deliver relevant products and services that will satisfy their needs while delighting them in the process. To achieve this, firms should consider all frontline activities as one integrated process aimed at getting the customer to experience, consume, or utilize the purchased value, sooner rather than later, to instill a perception of future value. This perception of future value is the only intrinsic motivation that will drive customers to extend the relationship with the brand beyond the initial purchase.

Markets will continue to change. Technology will further advance. And others will still try to disrupt your revenue streams. But if you succeed, as a collective, to create and deliver meaningful value with compassion that is perceived as significant to the lives of your customers, you’re sure to stay right on the money for times to come.

SIDE by SIDE

To understand how the ROUNDMAP method relates to the aforementioned ‘Agile method’, let’s first have a look at the traditional methods:

ROUNDMAP-Product-Customer-Traditional

Waterfall (left) is a tried-and-true method for project management. It requires that, before advancing to the next stage, the previous stage should be finished. A typical Waterfall process could take up many months or even years while it is almost certain that during this time the conditions that led to the development will have changed. The traditional marketing funnel (right) typically ends in a moment of purchase while loyalty seems to appear out of thin air.

Although in some cases the Waterfall method may still be applied, it doesn’t mitigate well against the risk of developing for the past. The traditional sales funnel may still be used, provided the firm’s emphasis is solely on acquiring customers, however, most businesses today can’t sustain the costs involved with customer acquisition if they stand to lose these newly acquired customers at the backdoor.

Now let’s have a look at how ‘agile’ development compares to ROUNDMAP’s integrative development method:

ROUNDMAP-Product-Customer-Modern

Instead of developing a final product in one stretch, the agile method (left) consists of a series of short development cycles (sprints). The method suggests to create a minimum viable product while asking for customer feedback on a regular basis: Are we on the right track? Is this what you mean? It may take several iterations to reach a product that matches actual demand, but contrary to the traditional method, the outcome is a sure fit.

The ROUNDMAP™ integrative method (right) works in pretty much the same way: customers are nudged and persuaded until they feel confident enough to commit themselves to a purchase. Purchase isn’t merely a sale, it is the Moment of Commitment™. To satisfy the needs of the customer, aligned with their expectations, is the first step in retaining a customer. The second step is to make sure that the purchased value is and can be utilized by the customer ─ before trying to expand the purchase amount (deep sell, up-sell, cross-sell) and/or extend the customer lifecycle (return/revisit/repurchase).

Now let’s see what happens when we combine these two methods:

ROUNDMAP-Product-Customer-Total

Isn’t it amazing to see how the two methods interrelate and how feedback from the customer development process drives effective product development?

Again, don’t make the mistake to merely focus on creating customers. You’ll need to be able to prove to them that your primary mission is to make them flourish, thereby providing them with a good enough reason to return or refer. If you fail, you won’t be able to thrive.

By using the words ‘right on the money’, we also mean to say: be fair and just to your stakeholders ─ consider their interests in all of your endeavors.

For your convenience, this is the link to the PDF, containing the figures above.

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Mind the Growth Gaps https://roundmap.com/mind-the-growth-gaps/ https://roundmap.com/mind-the-growth-gaps/#comments Wed, 25 Dec 2019 21:33:25 +0000 https://roundmap.com/?p=17202 You may have heard the words “Mind the gap” as an audible or visual warning phrase when you entered or left a train, to take caution while crossing the horizontal gap between the train door and the station platform. It was first introduced in 1968 in the London Underground in the United Kingdom.

However, we’ve adopted the phrase to express our conviction that while growth aspirations provide teams with an evolutionary purpose to help them reach the firm’s mission, Growth Activation™ is the real challenge. As such, identifying which gaps deprive teams from reaching their growth aspirations is critical to the success of the entire operation.

Growth Gap

Growth aspirations incite to seek new opportunities for growth while providing each and everyone in the organization with an evolutionary purpose. Aspirations express the level of ambition, however, it requires dedication and commitment to reach these goals. If not, why would you bother expressing aspirations in the first place? So, if we fail to reach the aspired growth, where did we go wrong?

An athlete who aspires a gold medal at the 2020 Olympics in Tokio has a purpose. To reach the aspired goal (gold medal) the athlete anticipates that he/she will need to run the 100 meters in at least 09.75 seconds. With a personal best of 09.95 seconds in 2016, the athlete wll need to peak in 2020 ─ running 0.2 seconds faster than ever before. This will require enormous dedication and commitment. The growth aspiration is to run 5 seconds faster each consecutive year. If the athlete fails to reach the aspired year-over-year growth, the gold medal will surely be out of reach.

Given the example: when current growth lags behind aspirational growth, we’ll need to identify the causes. After all, we are on a mission!

Experts use a Gap Analysis to examine what possible gaps may have caused the growth gap ─ between the current growth rate and aspired growth ─ to occur.

A Gap Analysis looks at (amongst others):

  1. Aspiration Gap ─ when aspired goals and growth conflict with stakeholder interests.
  2. Capabilities Gap ─ when performance falters due to insufficient or inadequate capabilities.
  3. Communication Gap ─ when promises are made to customers that are not met.
  4. Customer Gap ─ when one of the previous gaps drives customer dissatisfaction.
  5. Delivery Gap ─ when what brands deliver doesn’t match customer expectations.
  6. Feedback Cap – when a brand fails to respond to customer feedback.
  7. Image-Identify Gap ─ when a brand is perceived differently from what it thinks it represents.
  8. Knowledge Gap ─ when brands fail to understand customer needs and expectations.
  9. Performance Gap ─ when a capability doesn’t match the desired performance.
  10. Policy Gap ─ when rules and regulations don’t match the intentions of the business.
  11. Positioning Gap ─ when markets get excluded due to product or service characteristics.
  12. Process Gap ─ when processes fail to deliver the desired outcomes.
  13. Service Gap – when customers feel customer service isn’t a priority.
  14. Usage Gap – when customer demand differs from what is being offered in the market.

Aspiration Gap

Goal setting is very much a subjective matter. The management team of a company may aspire to reduce the company’s waste contribution from the packaging by as much as 50% per year, however, if this means brand signaling will be less effective and revenue is likely to drop by 15%, stockholders may oppose the idea. Even at an individual level, aspirations may vary to such a degree that the alignment of the company and the overall commitment to achieving these goals becomes at risk.

Capabilities Gap

One of the main gaps that may frustrate a firms’ performance is a gap between required and available business capabilities. Capabilities define what an organization needs to be able to do, to successfully achieve the outcomes that are defined as part of the corporate strategy, while a process describes how it gets done. For instance, a capability could be to ‘refund a customer’ while it is performed through the ‘customer service refund process’. Capabilities and processes are a part of the business architecture.

Experts use a Capabilities Map as an exercise to reveal what capabilities are available, rated above or below average, or missing. It is a framework that provides the necessary structure for stakeholders, such as the scope and context under which to effectively align organizational projects. It can be used to highlight what is most important to the business and channel efforts in the right direction.

To deliver products, a business needs a set of capabilities for which it needs resources. Capabilities impact value through increasing or protecting value (value capture), reducing or preventing cost (value creation), improving service (value delivery), achieving compliance, or positioning the company for the future.

After assuming the position of General Manager at a large ISP in The Netherlands, I was informed that we may soon face a cashflow problem. While looking at the level of outstanding invoices, which was huge, one customer in particular drew my attention. I decided to pay them a visit. The customer told me that he had been waiting for a credit note for over a year, however, the ISP had failed to send him one. The debate was over a 20 euro invoice while the outstanding amount was almost 100.000 euro. I went back to the financial manager and confronted him with the issue. He told me that the bookkeeping system, which was an in-house development, could not create a credit invoice.

He had raised the issue with IT several times, however, it was never perceived as a priority. Without the capability to create a credit invoice, the customer refund process was broken. So, I walked over to a secretary, asked her to type a credit invoice in a word processor and sent it to the customer per e-mail immediately. The next day the outstanding amount was paid in full and the cashflow problem was solved. When I discovered that the same issue prevented a rather large group of customers from paying their invoices, the creation of the credit invoice capability became the highest priority of IT. In the meantime, by creating manual credit invoices, almost 600.000 euro in outstanding invoices were collected in two weeks time.

Delivery Gap

Bain Delivery GapMost companies assume they’re giving customers what they want. Usually, they’re kidding themselves. When Bain & Company surveyed 362 firms in 2005, they found that 80% believe they deliver a “superior experience” to customers. But when Bain asked customers, they say only 8% of brands are really delivering. This delivery gap doesn’t exist because businesses fail to recognize the importance of their customers: more than 95% of surveyed management teams say they’re customer-focused.

Bain found two reasons for the gap. The first is a basic paradox: Most growth initiatives damage the most important source of sustainable, profitable growth ─ a loyal customer. To increase revenue and profits, businesses do things like raising transaction fees that end up alienating their core customers. Efforts to pursue new customers compound the problem, distracting management from serving the core. The second is that a good relationship is hard to build. It’s extremely difficult to understand what people really want, keep your promises and maintain a dialogue to ensure you meet customers’ changing needs. Even initiatives to “better understand” customers can backfire, drowning firms in a sea of data.

Feedback Gap

A recent study by Cone Research revealed that 78% of consumers appreciate management responding to reviews. Replying to reviews, positive and negative, can bump up your customer conversion rate and revisits. 9 out of 10 customers now see online reviews. Cone Research found that 4 out of 5 customers reverse their decision after reading a negative review. By addressing your reviews, you ensure to minimize the damage of your negative reviews and maximize the benefit of your positive reviews.

Image-Identity Gap

To nurture and sustain a brand effectively, you must be constantly in touch with what your stakeholders (consumers, users, members) think about your brand and what you (your organization) think of your brand. Brand image is defined as the set of actual associations the customer has with a brand; Brand identity is defined as the set of aspirational associations the organization would like to have of its brand. The gap between what you would like the brand to represent and how it is perceived by customers may interfere with your growth aspirations.

Knowledge Gap

Understanding your customers is vital to be able to offer relevant solutions. Research by Pegasystems revealed that while 87% of companies are convinced they know the customer well, only 23% of customers acknowledge that brands know them as a person and understand their demands. This huge gap of knowledge may prove to be quite the deal-breaker.

Performance Gap

Capabilities can be assessed to identify explicit performance expectations. When a capability is targeted for improvement, a specific performance gap can be identified. The performance gap is the difference between the current performance and the desired performance, given the business strategy.

Positioning Gap

The product gap — also called the segment or positioning gap — is that part of the market a particular organization is excluded from because of product or service characteristics. This may be because the market is segmented and the organization does not have offerings in some segments, or because the organization positions its offerings in a way that effectively excludes certain potential consumers — because competitive offerings are much better placed for these consumers. This segmentation may be deliberate and result from policy. Segmentation and positioning are powerful marketing techniques, but the trade-off — against better focus — is that market segments may effectively be put beyond reach.

Process Gap

Process gaps are inefficiencies and failures that make a business process less than optimal. For example, planning failures may lead to overproduction. Or tasks that rely on a single resource doesn’t happen when someone in on vacation. Or some processes may stall due to slow or overburdened resources. Or a process is too complex to be executed effectively.

Service Gap

Bad service is something other companies deliver – not your organization, right? Think again. When it comes to delivering outstanding customer service, your brand may be falling behind. In 2019, outstanding service is speedy, personalized, and proactive – and customers expect nothing less. In fact, they demand it.

According to Pegasystems research though, too many companies have failed to get the memo. With regards to offering excellent customer service, 40% of brands believe that is what they offer, however only 10% of consumers have witnessed it. When asked, 88% of employees regard customer service as a top priority, yet only 11% of customers have experienced customer service as pleasant. Of those, 63% prefer cleaning a toilet over having to contact a brand’s customer service.

Usage Gap

The usage gap is the gap between the total potential for the market and actual current usage by all consumers in the market. At some point, a gap emerges between what existing products offer and what the consumer demands. The organization must fill that gap to survive and grow.


Just remember: every gap harms the desired outcome that will not go away until it’s identified and properly dealt with.

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Youngest Generations Succumb To Pressure https://roundmap.com/youngest-generations-succumb-to-pressure/ https://roundmap.com/youngest-generations-succumb-to-pressure/#respond Sun, 22 Dec 2019 12:07:55 +0000 https://roundmap.com/?p=17105 Employee disengagement is one of the reasons why companies fail to achieve their growth aspirations. However, underneath it, lies a much greater problem: “Half of Millennials, 75% of Gen Zers Have Left a Job for Mental Health Reasons”. The youngsters in the workforce largely succumb to pressure from peers.

A friend on Linkedin pointed me to a video by filmmaker David Hoffman, a baby boomer with 274.000 subscribers on Youtube. In it, David expresses his concerns for Millennials in particular with such compassion that I wanted to share it with you. Despite the fact that David mentioned that ‘75% of Millennials have left a job for mental reasons’, which is in fact Gen Z (even more alarming), his concerns are very real and the numbers should speak to us all.

Underneath the video, you’ll find some links to research in the US that support these startling numbers.


Supportive Research

Research MSP/SAP revealed that ‘half of Millennials and 75% of Gen Zers have left a job for mental health reasons‘.

From CNBC: “The Mind Share Partners, SAP, and Qualtrics study also shows that the younger generations suffer more from mental illnesses. Younger people dealt with a mental illness at about three times the rate of the general population. The findings are corroborated by another recent study, which shows that while the amount of serious psychological distress increased across most age groups, the largest increase between 2008 and 2017 was among adults ages 18–25, at 71%. For adults ages 20–21, the figure was 78%.

Research by Gallup (2016) revealed that ‘71% of Millennials are disengaged in their jobs‘:

It’s a sad fact but the majority of employees are not engaged and haven’t been for a long time. In 2016, only 29% of Millennials in the United States were engaged. Many are starting to realize and to pioneer the use of mobile technology as a way to communicate with and engage with a disparate workforce that is not beholden to desktop computers, but carries an Apple or Android mobile device with them 24/7. The study showed that companies in the highest quartile of employee engagement are 17% more productive, suffer 70% fewer safety incidents, experience 41% less absenteeism, have 10% better customer ratings, and are 21% more profitable compared with business units in the bottom quartile.

Research by Pew Research Center revealed that ‘1 in 5 American children ages 3 through 17 have a diagnosable mental, emotional or behavioral disorder in a given year‘:

The Centers for Disease Control and Prevention reports that 1 in 5 American children ages 3 through 17 — about 15 million — have a diagnosable mental, emotional or behavioral disorder in a given year. Only 20 percent of these children are ever diagnosed and receive treatment; 80 percent — about 12 million — aren’t receiving treatment. Recent research indicates that serious depression is worsening in teens, especially girls, and the suicide rate among girls reached a 40-year high in 2015, according to a CDC report released in August.

All very disturbing numbers that should be carefully considered by HR and management when supervising these youngsters in the corporate workforce.

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Thesaurus of the ROUNDMAP™ https://roundmap.com/thesaurus-of-the-roundmap/ https://roundmap.com/thesaurus-of-the-roundmap/#respond Sun, 15 Dec 2019 15:16:32 +0000 https://roundmap.com/?p=16968

During the development of the body of knowledge of the ROUNDMAP™ 4-dimensional framework, we found that existing words or concepts ─ often originating from a 2D/3D world ─ did not cover our 4D perception while more contemporary concepts needed more elaboration. So, we decided to develop our own classification system.

After a customer has commited to a purchase  ─ the exchange of value for money ─ he/she enters into an Understanding of Trust™, requiring the company to deliver on promise and satisfy the need of the customer within the realm of their expectations.

If the company succeeds to satisfy their needs, the relationship may develop into an Alliance of Trust™, provided that the customer has a perception of future value or aspires to the meaning attached to the brand.

The Ark of Commerce™ is a metaphor for the entire business enterprise, consisting of three key aspects:

  • Directives
  • Operatives
  • Contributives

Directives determine the goal, strategy, objectives, and tactics. Operatives determine the resources, capabilities, functions, processes, and services. Contributives determine the purpose of the business, offering value to customers at a profit.

A framework in which we’ve mapped all four elemental business models, Product Centricity, Customer Centricity, Resource Centricity, and Network Centricity, into one two-by-two matrix while adding a fourth dimension, Network Orchestration, to Tracy & Wiersema’s Value Discipline framework.

References: + Business Model Matrix

According to John P. Kotter “Any company that has made it past the start-up stage is optimized for efficiency rather than for strategic agility. The very structure we have created to operate efficiently and effectively today gets in the way of what we need to do to innovate for tomorrow.”

Growth has a natural tendency to decline, unless we manage to extend it, through adaptations or innovations, or endure it, by transforming the business. ROUNDMAP provides serveral insights into how to shift or regenerate a business model, or respond to disruption.

We’re developing the Business Model Compass™ into a canvas-like tool.

A four-step framework, originally identified by Steve Blank, to discover and validate that you have identified a need(s) that customers have, have built the right product to satisfy that customer’s need(s), tested the correct methods for acquiring and converting customers, and deployed the right resources in the organization to meet the demand for the product.

References: + Steve Blank

We coined the phrase in 2014 when we needed to describe the fourth step in the customer development process: customer acquisition, customer creation, customer retention, and .. customer extension.

Customer Extension focuses on organizing customer behavior to get customers to return more often and spend more over the course of their customer lifetime.

Compare: A product extension in the computer software business could be an upgrade or revision, and other possible product extensions are product repositionings and additions to existing products. Or a brand extension, pointing to using the samen brand name in a different product category (spin-off).

All economic growth comes from the process of ‘creative destruction’, as stated by economist Joseph Schumpeter, which he and others described as ‘business cycles’.

We created a model to describe how technological innovation disrupts existing technology, leading to social disruption of incumbents, and ultimately, requires social innovation.

To help critically assess the customer’s business in a way the customer hasn’t fully appreciated on their own, and help them identify new ways to grow, to make money, to save money. Allowing you to build a business case and articulating a business case to your customers for why they need not buy your solution, but why they need to change their behavior in a way that’s going to improve their business.

References: + Gartner Research

The leverage that occurs from a customer-centric business model, implying a focus on a select group of customers ─ typically 15% ─ for which you are able to fulfill more of their needs and as a result are likely to spend more with you ─ expressed by their Customer Lifetime Value or CLV. Additionally, research confirms that it costs five times as much to acquire new customers than to grow revenue from your existing customer base.

ReferenceS: + Infographic customer retention, + Book Customer Centricity

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale. At the basis of economies of scale there may be technical, statistical, organizational or related factors to the degree of market control.

References: + Investopedia

What made us create the ROUNDMAP™ can be captured in one word: EQuitability. It means being fair, just, and honest. We believe businesses have a social responsibility to their stakeholders, which may include employees, customers, patients, viewers, fans, shareholders, animals, and nature. Profit is good, if good is done.

We are strong advocates of EQuitable Growth: growth aspirations that do not extent beyond what could reasonably be perceived as honest, fair, and just towards the company’s stakeholders.

Experts use a Gap Analysis to examine the gap between the current growth rate and aspired growth. Provided that the growth goals are achievable, closing the growth gap often involves examining a series of gaps that could occur throughout the business operations.

A growth gap is a revenue shortfall that challenges the organization to consider its growth aspirations, to assess the current growth activation initiatives, to fix hidden gaps and to create new growth.

The Growth Gap ─ the gap between aspired growth and current growth ─ may be related to inadequate considerations of the opportunities (attainability), the capacity or capability of the organizational infrastructure to support successful execution (serviceability), adversarial forces inside or outside the organization (Porter’s Five Forces), or caused by a series of hidden gaps througout the enire operation. To understand what causes the growth gap an extensive examination may be needed.

A purchase isn’t just a sale, it is the Moment of Commitment™ in which both parties, buyer and seller, commit to the exchange of the anticipated value for money. A purchase should never be perceived as an end, rather the start of a relationship of trust and to make sure that the actual or perceived value ─ from promises made during the acquisition stage ─ is delivered and that the customer can genuinely experience, consume, or utilize that value.

The Growth Gap ─ the gap between your firm’s growth aspiration and growth activation ─ may be related to inadequate considerations of the opportunities (attainability), the capacity or capability of the organizational infrastructure to support successful execution (serviceability), or adversarial forces inside or outside the organization (Porter’s Five Forces).

To understand what causes the growth gap in your situation, you’ll need to assess the entire operation.

We are strong advocates of EQuitable Growth: growth that is fair and just to a firm’s stakeholders ─ directors, employees, customers, environment, community, government, financers, creditors, suppliers, and shareholders.

The third Essential Business Model™ of the Business Model Matrix™, based on a service-driven resource that meets a certain customer’s need, and then trying to get as much of that resource utilized. Success is measured by the average percentage of the maximum capacity used over a period of time. In competitive terms, this would represent a share of utilization.

With a 97% brand awareness, Denny’s is a household name for restaurants in the US. The 65 year old brand was a digital laggard but managed to transform itself into a digital-aware business: “Our goal was to not only get our relevance back, but to become significant again in the lives of consumers.”

Relevance is about catching a prospective customer in the moment as they are looking to fulfill a want or need. Significance is about forging a strong relationship with a customer driven by the meaning attached to the brand or some other perception of future value.

References: Story of Denny’s

After a customer has commited to a purchase ─ the exchange of value for money ─ he/she enters an Understanding of Trust™.

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Digital Business Transformation https://roundmap.com/digital-business-transformation/ https://roundmap.com/digital-business-transformation/#respond Tue, 03 Dec 2019 15:36:10 +0000 https://roundmap.com/?p=16820 Digital Transformation has become a prevalent topic on the boardroom agenda, however, according to BT most CEOs aren’t that confident that their company will be able to profit from it. But there is another issue left untouched: digital can’t transform a business, only people can.

According to the findings of a global survey amongst 400 CEOs in 13 countries by BT, ‘Three-quarters of global CEOs are confident about their digital strategy but inflexible technology, lack of skills and security concerns cited as biggest barriers.’

There is a high level of confidence that their specific programmes will help them achieve their strategic objectives, which include making operational efficiencies, improving customer service and innovating for the future, with security as a key differentiator. Despite this, 86 per cent of CEOs encounter challenges in delivering the ideal infrastructure on which their digital programmes rely.

They identify inflexible technology (43 per cent), lack of technology skills (40 per cent) and security concerns (39 per cent) as the main obstacles in building better digital infrastructure. CEOs highlight better integration, reliability, security and cost effectiveness as being the most critical factors needed to deliver the infrastructure which will build the digital business of the future.

There appears little to no attention for barriers caused by human behavior, behavioral adaptation, siloization, corporate culture, employee engagement, or anything related.

Gartner CIO Agenda

Research by Gartner through their CIO Agenda survey of 2018 stated that ‘It has undeniably become a reality for many in 2018 as digital is a top priority across all industries.’

Of the 11 of the 15 industries participating, CIOs ranked digital business/digital transformation among the top three business priorities for 2018. “This shows an increasing digital urgency across industries,” says Lowendahl.

In particular, CIOs from the banking and investment services (26%), telecom (25%) and government (18%) sectors are placing digital business/digital transformation as their number one business objective in 2018.

McKinsey Study

However, a recent McKinsey study revealed that 70% of Digital Transformation initiatives fail, indicating a humongous amount ─ 900 billion out of 1.3 trillion USD invested in 2017 ─ of money and time wasted, let alone the opportunity costs. McKinsey identified two core problems:

  1. Teamwork is forgotten in business transformations

Transformation success is completely dependent on employees working together to achieve the program’s goals. The whole company, not just a few people on the same team, must unite to drive success. Unfortunately, most organizations are siloed, with functional areas and business units struggling to communicate, coordinate and collaborate in relation to transformation initiatives.

The second one is referred to as ‘having no (centralized) system of record for work’. It goes beyond the scope of this posting, but we’ll mention it anyway:

This siloed, inefficient, late-20th-century approach of tracking work across thousands of spreadsheets, emails and point solutions is common across organizations of all sizes and industries. The problems with this approach are numerous, chief among them that centralized reporting on critical initiatives is impossible. This means course corrections cannot be applied to in-flight work in real time because there is no visibility. The result? The organization’s financial performance for the fiscal year is a lagging indicator instead of an actively managed outcome.

People First

Again, let’s set aside the second finding, and focus on the first one which is about people and how they (should) collaborate to drive the value orchestration processes. According to McKinsey, digital transformation stands little chance of succeeding without also transforming the organization ─ the people that live in and off it.

ROUNDMAP_Efficient_CreationMcKinsey suggests that organizations should, therefore, ‘understand the modern assembly line’:

Today’s knowledge workers comprise the assembly line of the 21st century, but we support them with outdated 20th-century tools and techniques. We still treat employees as artisanal craft workers — siloed individuals, manual handoffs, old tools — instead of integrating them into an enterprise team with platforms that provide visibility across the entire assembly line and automate individual and cross-functional work. Leaders need to learn how their teams actually deliver and remove friction from that work experience.

This is what we’ve been advocating for the past four years now and what made us create the ROUNDMAP™ in the first place: companies do well to integrate the customer creation process, across the functional silos, engage employees, and remove collaborative friction.

Digital Sugar Coating

Added to the disenchanting McKinsey findings, Rob Llewellyn, founder of CXO Transform and author of the booklet ‘Transform 2.0 – How to shatter the illusion of fake transformation and thrive in the digital economy’, is clear about it:

  • Most so-called ‘digital transformations’ are in fact ‘digital change’ initiatives ─ doing the things we do better, cheaper, faster, but not fundamentally or irreversibly different.
  • Transformation requires leadership to transform the business into one that’s fit to thrive in the new digital economy.
  • There is an epidemic of companies thinking they’re transforming because they’re using digital technology.
  • This ‘Digital Sugar Coating’ (Anand Swaminathan) leads to creating a better version of the past ─ implementing new technology, or thinking business transformation is only about digital marketing ─ but it will not protect them from disruption nor will it empower them to disrupt others.
  • Digital Business Transformation requires a vision of the future, without the constraints of the past.

ROUNDMAP

As part of the ROUNDMAP framework, we recommend assessing market circumstances first to comprehend the (need for) optimization, innovation, change, or transformation initiatives. Because it makes no sense to try to improve operating revenue if the cause of lagging performance is due to disruption or a certain growth gap.

Be wise not to adapt to yet another digital tooling to try and fix what may no longer be mendable. Assess your competition. Assess your business model. Assess your value position. Assess your distribution channels. Assess your partners. Assess your products. Assess your value proposition. Assess your customers. Assess your culture. Assess your people.

And if you find that the future of your business has fallen at the mercy of disruptors, ask yourself these questions:

  • If we could start all over again, what would we do differently, start, or eliminate in business?
  • What is our vision of the future and how are we going to create it?
  • How do we get from where we are today to where we want to be tomorrow?

Situational Analysis

TROUNDMAP_Situational_Analysis_Copyright_Protected_2019_samplehe image to the right is how we perceive the four options a business has, depending on whether the business is actually under siege or not:

  1. Optimize by raising productivity
  2. Innovate by raising agility
  3. Change by raising robustness
  4. Transform by raising resilience

You’re welcome to contact us if you would like some help with the aforementioned assessments.

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