Uncertainty and risk will remain high. How can we deal with these difficulties? COVID-19 has influenced many industries and companies. Together with our customers, we discussed an approach to tackle this uncertainty. The key idea behind it is to make yourself familiar with several possibilities, for what the future might look like. What would this mean for your business model, and what it means with regard to identifying new business opportunities.
If you want to prepare your business model for the post-COVID-19 phase, following this 7-step process can help you to adapt your business model.
Step 1: Document Your Main Business Model
As an initial step, you need to document your main business model. We usually use the magic triangle for this: It always starts with the customer at the center of consideration: Who are your customers and what are the main customer needs? The next question to ask is: What do you offer to your customer? What are the products, what are the services you offer? What value do you create for the customer? The third dimension means: How is this value generated? What are the main tasks you need to do, what partners do you need to rely on? What kind of technology are you using? And the fourth dimension: Why does this business model generate profit? How can you capture the value for your company? This covers the revenue streams, describes the main cost drivers, and explains how the profit engine looks like? This first step helps you to get a 10-000-foot-view to understand and discuss which areas of your business model might be harmed or strengthened by different scenarios.
The four dimensions of the “Magic Triangle” help to summarize all important aspects of your business model.
Step 2: Update Your Business Ecosystem
The second step involves updating your business model, based on change drivers impacted by the pandemic. Some of the existing trends like digitalization are reinforced, some counter-trends could emerge. For example, the air travel industry where ticket prices have fallen dramatically in recent years. It is currently difficult to foresee how the world will look like in the years to come. If you have identified the main change drivers, you need to select the most important ones to be able to continue with the recommended approach.
Step 3: Develop Scenarios for Post-COVID-19
Focus on different scenarios by developing worst- and best-case scenarios.
Change drivers are important to develop scenarios. These scenarios will help you familiarize yourself with options for what the future might look like. You need to define a time horizon, for example, the next three years. We recommend not to go further than five years because this would mean too much uncertainty. Using the main influencing factors you previously identified, as well as the completed ecosystem map and derived assumptions, you can proceed to group these assumptions into scenarios. An example could be the enforcement or postponement of the Global Green New Deal. This will influence many industries ranging from mobility, energy, agriculture and hospitality. On the other hand, you also need to identify indicators that will help you to identify which of the scenarios will probably occur.
Step 4: Analyze Impact on Your Business Model
When you have selected the most important scenarios, make sure that they are not too similar, think in extremes, cover also worst- or best-case scenarios just to be prepared. Then you can work with these scenarios to analyze what that would mean for each of the dimensions of your business model. We have developed a business model evaluation matrix that helps you to go step-by-step into each dimension and to rethink for example: which of your customer segments will gain or lose; or how the scenario affects the key partners you need in your supply chain. This will help to decide whether the business model is viable in this scenario or if it requires adaptions.
Step 5: Identify New Opportunities
The scenarios and the ecosystem map will help you identify new opportunities. Focus on change drivers that lead to new or changing customer needs, where you can use your skills, as well as your resources to create offerings to build new business models around it.
Step 6: Develop a Post COVID-19 Vision for Your Company
Together with the analysis of the current business model and opportunities for new business models, you should think about a vision for your company for the post-COVID-19 world. That means, that you have to build on your purpose and mission statement and then project your time horizon into the future. You have to dream big and focus on success to describe in present tense what you will have achieved at this time. This vision will help you to communicate with your team, your partners, and your customers – in addition, it will also help you address hearts and minds too. It is vital to communicate and share your vision on how the future might look like. This helps you to navigate yourself and your partners in a positive, desired direction.
Step 7: Build a Roadmap for Further Procedure
Last but not least, you should develop some kind of roadmap for further procedures. Who will be responsible for which areas? Where is action needed? How do you want to track and monitor the indicators which will help you to find out which of the scenarios will occur? Also, you have to initiate projects which will help adapt your business model.
How to Prepare Your Business Model for the Future
The Business Model Navigator and the 55+ Pattern Cards can help to develop new business models.
To summarize: The main idea behind this approach is to go step-by-step, starting with your current business model, creating possible scenarios to become familiar with how the future might look like, analyzing what that means for your current business and identifying opportunities by envisioning a desired future, and lastly, capturing these necessary steps in a roadmap for action.
The Business Model Navigator is our proven methodology to adapting and developing business models. Download a free excerpt of the book or take a look at our free resources section. Feel free to reach out and discuss your challenges with us.