Business Modeling

30 06 2009

We spend a tremendous amount of resources on preparing financial models for the company.  Which is absolutely necessary, but we also need to model the operations as well.  For example, if we model the customer lifecycle we can begin to better understand each of the subprocesses within.

This leads to many different insights into the business:

  • Critical transition points within the process – target higher impact performance areas
  • Segment the customer by value – thus better alignment of product and services
  • Better communication of value to stakeholders
  • Enhanced sales negotiation

If we can build the formula around each of the key business processes, then we are providing more tools for the organization to use to focus resources and priorities.

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One response

1 07 2009
David Novick

Models are like maps, they identify where we are, were we need to be and, based upon our success criteria, how we should get there. If I’m in Denver and I want to travel to Durango (that’s my goal, anyway), I can either take the quickest route to getting there or I can take the most scenic depending upon my expectations of the trip.

Modeling to make customers experiences more successful for them is no different… there’s a goal (to get and keep more loyal customer’s no and into the future) and the path to getting there (understand that your customers are engaged in process with you and that their own expectations for successful outcomes will tell you the path to take).

The model (or map) needs to represent enough of the work your organization does to enable a successful customer outcome. I say enough because many firms will spend a great deal on fancy models, pages and pages of them, over weeks and weeks and when they’re done, the client’s universe has already changed. Enough means to discover very quickly and basically that you need to change. Enough means discovering with the same urgency what to change to. All of this measured around the expectations your customers have for their own success.

And, the model changes, constantly. In the era of continuous improvement to meet continually change markets, your ability to recognize answering the two questions: what to change and what to change to, has been compressed into weeks and months. Your organization must act more like a living organism than a rigid stone. The simpler, more agile your modeling capabilities, the easier to reach answers those to questions in light of what your customers are actually expecting.

So, recognize that your modeling is a map that guides you from A to B relative to what your customers expect from you. And, in doing so, learn when “enough” is just the right amount of information to know that you are taking the right route to get there, what to change about it, and what to change to.

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