When I was a younger man, I had a long string of back problems that resulted in repeated episodes of injury, muscle relaxants and rest in an effort to live a normal life. It was only a relatively short time ago that I finally saw an orthopedic doctor and a physical therapist who found I have a deeper congenital issue that underlies the repetitive injuries I was having. By designing a clear and targeted plan of exercise, stretching and care, I have been very active and pain free for years.
The key was going deeper to the real underlying issues.
The same holds true in your organization, where well-executed business maps are like an MRI — showing you things that you only saw superficially before, but now with huge insights into causality and treatment. There are several popular ways to describe your business model, but the most pervasive is Alex Osterwalder’s open source community.
You can use a simple PDF of the nine box model to describe to a CEO on a napkin what the high-level structure of his business looks like. Unfortunately, that is largely where I see many organizations stop — and it costs them money every day. It is quite possible to take any profound tool and apply it at a high level and receive very little value, because it doesn’t cause anyone to truly reflect on a clear way and with any specific clarity. Like treating my back with muscle relaxants, only episodic improvement comes, at best.
Real learning comes when you realize that you have many interlinked processes masquerading around one business structure. In more mature businesses, untangling these interlocking patterns of product and service development and delivery leads to very significant breakthroughs that the back of the napkin approach will never illuminate.
A great example of this is the shift made by industrial tool maker HILTI in 2006. Facing the impending economic downturn and commoditization of the traditional “purchase and manage” model of construction tool ownership, HILTI built a model of “fleet management”, where a construction company contracts with HILTI to have the needed tools available on a given construction site, and HILTI keeps the tools on its balance sheet, managing the tools, location and availability as a value-added service. This has been a huge boost to cash-strapped construction companies, as well as a margin buffer for the core tools manufacturing business.
4 Keys to Achieving Great Progress
Here are four ways to apply this powerful tool so you get big value:
1) Get close to where the action is. The clearest view of what’s really going on is at runway level. Go to the loading dock, the factory floor, the receiving dock of your customer or the point of use of your product and put your eyes on each step. Then go back and update your map. Talk to people who actually handle your product — not the supervisor, manager or director. Gathering information at this level has a huge benefit: along the way you will meet many very creative and thoughtful people, partners and customers who have great ideas that they were just waiting to share with someone.
2) Go wide. Within each seemingly simple function there are usually multiple pathways. For instance, in sales, do you have house accounts? Do you have one-step or two-step resellers? All of the above? Each one represents a different business model and a different constituency. In the billing area, how many processes and types of contracts do you have? How complex is your pricing model?
3) Perform thoughtful mind experiments. Now that you have a real “as-is” map, you can begin to interrogate it with thoughtful changes. What if we eliminate a step, or deliver value in a virtual way? What if we deliver the device and let the customer grab the programming from the web? What if we just make the code and let the customer use open source hardware? What if we have only three platforms? And so on.
4) Test, Test, Test. Now that you have this useful new information in a way that it has never been assembled before, you can begin to do thoughtful beta testing on new and better ways to streamline and improve the core.
Why all this effort to talk about using these tools to optimize an existing business on an innovation blog? Two answers for today: first, the resources for meaningful investment in innovation will only come from an optimized core business. Secondly, many great breakout business ideas have come from the work we have described above.
What are your experiences with finding insights by going deeper in your organization? Please drop me a line or leave a comment below.
