Extending the Business Modelling Core course.
Classes 1-4, the Core Business Modeling course, provided the principles, frameworks and modeling skills to build the core of a Living Business Model for any enterprise. At the same time, we saw how some smaller models can be helpful on their own - the simple relationship between the Stock and Flows of customers and sales, for example, and the basic dynamics of staff hiring and promotion.
But we can go much further, and capture a range of important 'extensions' to those core frameworks and modeling principles. These extensions are often very useful on their own. We will see, for example, how to model changes in experience and salary cost for staff, how product development and the aging of costly assets work, and how to capture precisely the battle to win and sustain customers and sales - any of these would be a useful stand-alone model.
But each extension-structure may also be needed to enrich the wider business model. The comprehensive business models that result from this enrichment allow us to:
- design and bench-test any new venture, initiative or strategies under a wide range of assumptions and policy options, before risking real money or staffing
- quickly prove how the enterprise really works, to raise finance and other resources
- manage the business or challenge continually, week to week, month to month, anticipating with ever-increasing confidence the likely trajectory of key outcomes and making ever-improving decisions and choices
The following figure and paragraphs summarise the Extensions we will cover in classes 5-10.
Class 5: Resource Attributes Performance depends not only on the quantity of resources, but also on their quality - scale and profitability of customers, experience and cost of staff, appeal of products, output of capacity-assets. These qualities or “attributes” also change over time and impact on performance outcomes, so those qualities need to be managed.
Class 6: Resource-development We saw in part 1 how staff move from Junior to Senior levels and how customers move from a potential population to become active customers. But these developments often extend out over several stages, not just two. Products also move through stages as they are developed, released and discontinued, and physical assets also ‘age’ through a series of states. Each resource changes its contribution to performance of the wider system as they move from stage to stage, so this class shows how to identify and specify those stages and how to model accurately the movement of resources along those pipelines.
Class 7: Competition This comes in three standard forms, that vary in significance between different markets and successive stages of the market’s maturity [a] competing to win potential customers for a new product or service [b] fighting to steal existing customers from competitors (and stop them stealing ours!) and [c] struggling to capture and retain a larger share of sales to customer we share with competitors. Each form of rivalry follows specific, repeatable structures that can be modeled - and there are tricks for simplifying the complexity of multi-competitor situations.
Class 8: Policy
Class 4 already showed how to model a simple policy to control one decision (hiring) to achieve one performance outcome (service quality) - but modeling policy gets more complex when multiple decisions affect the same outcome, and when performance aims conflict.
Class 9: Intangible factors Three forms of intangible items are common ... [a] ‘state-of-mind’ items such as reputation and staff morale [b] information-related factors like data, procedures and organisational knowledge, and [c] quality-related Stocks such as product functionality or bugs. This class explains how to measure and model both the intangibles themselves and their impact on the wider system.
Class 10: Capabilities These are complex, composite features, made up of staff and their skills, the information needed for the task, and effective procedures that enable those staff to deploy that information (and any necessary physical assets) to do that task. Strong capabilities enable a business to do key tasks quickly, to do them well, and at low cost, and can therefore have a big impact on the strength of the organisation’s own development and its resulting performance. This class shows how to model these capabilities and the learning that causes them to grow.
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This introduction video for this section of the course is available for everyone to view.
This Business Modeling course is supported by a series of Worksheets – one or more for each class. These are provided as Sysdea software models. You will need a Sysdea account to use these models. For our shorter courses access to Sysdea is provided for the duration of the course. For our full price self-guided option a voucher for 2 months access is provided.
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