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What is the difference between Business model and strategy?

So when I help companies to adapt their business models to the current environment, as when I teach the subject of creating a Strategic Plan for the Internet, I realize that my interlocutors confuse these two terms: Business Model and Strategy. Also they confuse strategy with tactics ... but clarify these last two terms in another article. In this we are going to focus on What is the difference between business model and strategy? With these two clear concepts in mind, we can advance the conversion of our existing business more easily.

To go straight to the point and if you do not want to read the whole article, succinctly, "Business Model" refers to the logic of a company, how it operates and how it creates value for its shareholders. Instead, "Strategy" is the choice of business model with which the company will compete in their market. That is, the business model you use depends on the strategy you wish to make.

We will now develop a little more two concepts to fit you clearer:

What is a business model?

The origin of the term "business model" is found in Peter Druker in the 80s, but the term has evolved a lot the last 20 years with the emergence of internet and the need to adapt to this new business environment. An updated definition is:

"Business Model is the representation of architecture value of a business that shows how a company or organization can offer a value proposition to certain market segments, how to define the structure of the value chain is needed to provide this proposal and how it defines mechanisms capture the value that the company or organization will use to generate revenue. "

For if you do not clear:

The functions of a business model are:

  • Articulate the value proposition of the company. So, define what makes you unique offer.
  • Identify market segments that the company wants to attack.
  • Define the structure of the internal value chain that will need to deliver the value proposition and estimate the cost of maintaining the structure. That is, and with plain words, you need to deliver your value proposition and how much it will cost.
  • Define the architecture capture value and estimate the benefits you get when you capture the value. So, how do you get income and what will be.
  • What is your position on competition.

From my point of view, the best way to represent a business model is a Canvas (foot attached and link to the article picture). Although part of the competition is a little lame on Canvas and better treat a part (link at the bottom of the article on how to analyze competitors).

Business model

What is a strategy?

It is creating a plan that will take you to achieve your goals. No es el plan, son las decisiones que deberás tomar para crear el plan. Estas decisiones también incluyen en plan de contingencia, es decir, qué harás en caso de que tu competencia haga algo o algo cambie. El modelo de negocio forma parte de ese plan. O sea, primero decides cuál será tu estrategia y luego eliges el modelo de negocio que más te conviene. Lo que pasa es que muchas veces es más fácil decidir cuál será tu estrategia cuando pones sobre un papel los diferentes modelos de negocio que puedes elegir, de ahí la confusión. También ocurre que a veces, las pequeñas empresas tienen modelo de negocio, pero no siguen ninguna estrategia (esto es malo, obviamente… pero así es la realidad).

I hope I've been helpful and you now have clearer What is the difference between Business Model and Strategy.

You will find more information on these links:

  • Evolution of Business Model definitions and components that form in this article Zott, Amit and Massa: What is a business model
  • My model of how to analyze competitors on the Internet: How to analyze competitors
  • On business models and how to use them to beat your competition in this article Ramon Casadesus and Joan Ricard: business models to compete
  • Link you will find a video explaining how to use a Business Model Canvas and a form for you to download it for free the official version of the model: Business Model Canvas

If you need personalized help to adapt your business model to strategy you decide, do not hesitate to contact me.

We talk to each other.

A hug.

Do you really know what you want your client? Just ask!

Why is it so important to create customer value

Seguramente te has preguntado alguna vez porqué hay empresas que triunfan de forma espectacular como Google, Facebook, Amazon, Apple, Booking para citar algunas, y otras empresas que tuvieron su momento como Nokia, Sony, AOL, Yahoo, pero que hoy en día, en plena era 3.0 y entrando en la 4.0 no han sido capaces de sobrevivir o están agonizando. El mundo está cambiando de nuevo. De hecho, está siempre cambiando, pero los modelos de negocio que fueron válidos en la era 2.0, la de las redes sociales, la primera década de los años 2000, ahora no son suficientemente robustos para retener a los clientes actuales, mucho más sofisticados y conocedores de las herramientas online y de las posibilidades de internet. No tenemos más remedio que evolucionar.

The importance of generating value in the business model

In academic definitions of "What is a business model" that is found mostly an abstract concept that no one dares to define with specificity. Luckily we have Osterwalder (the same as in 2009 created the framework Canvas Business Model) that helps us clarify terms and business model defined as "the system that creates, delivers and captures value." On their website you will find more info about this model https://strategyzer.com/

So a good business model revolves around creating value and ability of the company to recover the value as billing and profit ... but how can we create value?

How do we generated value for a customer 10 years ago?

En la época del 2.0 había negocios que con solo formar parte de ellos ya se generaba valor, lo que se denominaba “las externalidades de red” (network externalities, en inglés). Eran el tipo de negocio de floreció desde 1998 hasta más o menos 2010 y que se regían por la llamada “Ley de Metcalfe” que postula que el valor de pertenecer a una comunidad incrementa al cuadrado del número de usuarios que forman parte de ella. Este es el caso de Facebook, de eBay, de todos los portales de citas, de Wallapop, y un sinfín más de negocios online. En 2004 escribí un artículo donde explicaba qué es la Ley de Metcalfe y qué es una Red de Metcalfe, si quieres leerlo lo encontrarás aquí: What is Metcalfe's Law.

The point is that in 2000 businesses operating in a network of Metcalfe are those who triumphed at that time and the value was generated by the market efficiency, the complementarity among the products offered, los lock-in’s who managed the sellers were faithful to the market and novelty posed this market. These are the keys to success SoloStocks, from Infojobs, from eMagisterTo name a few of the businesses that create from IntercomBut also the most online companies created in the early 2000s and had good life until 2010 approx.

From a time, which can be between 2008 and 2010, many businesses began to go into decline. At first it was attributed to the crisis ... wear brand ... but the truth is that the online world was changing and we were starting to get into the web 3.0: Mobile internet, pervasive, intelligent devices, augmented reality, virtual reality, big data and new business models, many of them based on e-commerce and social interaction.

How to create value in today's world?

This question has no easy answer. Each company must analyze how ... but there are several fronts on which we can create value:

In the product: making it reliable, with the exact features you need the client that is easy to use, ...

How to offer the product: a good marketing process, a good process sales, extraordinary customer service, a clear billing process, ...

How we relate to the client: resolution of incidents flawlessly, quality technical support, confidence in our company, ...

... Surely you're asking in your case you do not see clear ... read on ...

How do you know what your customers consider value?

There is a term that is becoming fashionable that is the co-creation ... How can we apply the concept of co-creation with the challenge of knowing what a customer wants? Well, by asking customers own! Something that previously would not have done that would have seemed a weakness of business or weak leadership and vision of the direction ... but now, at the customer has great power (... and knows it) makes perfect sense in the world we do participate in finding new ways to create value.

Here are some examples

LEGO - Example of co-creation of value creation product: through LEGO Ideas this company includes proposals to create new products and ensure that when the product reaches the market has accepted and at least a certain number of buyers will be with him. In addition, the person who proposed the idea gets a share of the profits and is cited in the boxes as the creator of the idea, and rewarding creativity and participation, while loyalty of users.

ALAIN AFFELOU - Example of co-creation of marketing value: This eyewear manufacturer has created Ideas4afflelou.es to propose challenges, receive new ideas and customer loyalty. The challenge today is marketing they have open and ask users how would like the "Black Friday" of Affelou this year 2018. Do you realize the change? It not that the marketing department does not have ideas, is that the ideas offered and voted by users ensure good customer orientation, while client loyalty and are innovative.

BANK SABADELL - Example of co-value creation from employees: since 2010 the Banco de Sabadell has BS Idea on the intranet of this entity, a community created by employees, regardless of position, they offer ideas for improvement to the bank's management. So far 21,000 have contributed ideas on evolution processes, product processing and new business lines.

So summarizing:

  1. The future of your company depends on your architecture value. That is, how to detect what your customers think it is worth, how you manage to generate that value and how you are able to recover as billing and profit.
  2. Forms of value creation on the internet that were valid 15 years ago, now they are no longer. We need new formulas.
  3. Do not cut and Ask your customers how think your company could generate more value for your business (if B2B) or how they think your company you might be more useful (if B2C) ... plus useful for loyalty, make this question is trendy.

We're going talking

Montse.

How to make money online - Business Models Network

On January 16 I have the pleasure of imparting a two hour lecture on business models that work on the network, at the Chamber of Commerce Sabadell.

Esta es una charla que imparto muchas veces a lo largo del año en varios másters y postgrados, y que siempre gusta mucho a los alumnos. Sistemáticamente vamos repasando uno a uno los diferentes modelos de negocio que utilizan los sitios web. Analizamos todos los modelos publicitarios, todos los modelos que se aplican a mercados, así como otros modelos de negocio. Los alumnos disfrutan aun más, cuando llegamos a los nuevos modelos cómo el del pago por suscriptores de Youtube. Al finalizar la charla se tiene una idea clara sobre cómo utilizar un sitio web para obtener ingresos adicionales, o sobre cómo transformar el sitio web de una empresa para convertirlo en un negocio online.

In general, it offered a different view of how the Internet works and how to make a living companies that use the network to generate revenue.

This session will also take the opportunity to present the Digital Marketing Course of the Chamber of Commerce of Sabadell, Which will begin in February.

The talk is free, but seating is limited, so if you want to attend, please contact the Chamber par register: Internet Business Models

See you there.

A hug.

Review of "The next 30 years" by Alvaro Gonzalez-Alorda - Encourages Ed.

This is not a book of science fiction I write the review from time to time. This is a reference book that makes you think and whose reading is essential is.

As some of the essential other non-fiction books I've read lately, "the next 30 years" I was recommended by my former boss Antonio González Barros. The little blurb that made Antonio to recommend is priceless:

(...) An excellent and highly recommended book by a good friend, Alvaro Gonzalez Alorda. I consider it one of the 10 books that have contributed most to me. I think taking time to reflect on several of his short chapters. It is a concrete, clear, practical and extremely pleasant on how to approach our careers manual. And a book that has a carefully own web useful is: www.losproximos30.com with well-selected links and soundtrack. I enclose a literal fragment of the first chapter. "

It is true what he says Antonio, the book lends itself to after reading each of its chapters, even for a moment and reflections. The book makes you question the type of professional you are, the type of work you do, where and endless want to get more questions we should all ask ourselves throughout our career.

The book is narrated in a pleasant and can be read both on paper and through the website created by the author.

Por lo que a mí respecta, ha sido realmente inspirador. Tan inspirador, que voy a crear una nueva categoría en este blog: a partir de una de las ideas del autor, voy a crear una zona llamada “YouTube University”. Alvaro González-Alorda indica en su libro que más pronto que tarde, Google o algún emprendedor acabará por lanzar la “YoutTube Business School”, una escuela de negocios online que recopilará el mejor conocimiento y los vídeos de las mejores clases impartidas por los profesores más brillantes de todo el mundo, ordenándolas siguiendo el programa de un MBA. Yo no atrevo a tanto… de momento me conformo con crear una nueva sección en la que iré colgando todos los vídeos que vaya encontrando en Youtube y que sean dignos de una asignatura universitaria de Marketing Digital, que es mi especialidad, aunque para que luego no parezca que a veces me contradigo, me reservo el derecho de incluir otros, si lo considero necesario.

But back to the book is 100% recommended for anyone going to be active, professionally speaking, the next 30 years.

Tom Peters: The business excellence in a disruptive era

Tom Peters based their strategy to survive in the new era in which we find in 11 truths about leadership, explained during his lecture ExpoManagement 2004: Business Excellence in a Disruptive Age.

(This article I wrote in May 2004 to Noticias.com and had lost ... it public again because I think what Tom Peters told us in 2004 is still valid today for our companies)

It's been four days since the end Expomanagement. Now I start to digest everything that was said in Congress, because the truth is that after attending the 11 conferences of the main "gurus" of management was completely jammed with information and new ideas. I needed to sit down and write and make drawings, to begin to structure the chaos in my mind.

Of the 11 conferences, which struck me most was the Tom Peters. I was shocked not because say 3,000 people (mostly men), which should give power to women managers, not because we were screaming and "hitting fights" for a couple of hours, but by the turning of attending one of his lectures. You just replanteándotelo everything and salts determined to act to change the conventional structures.

The phrase that sums it all up:

“If you don’t like change, you’re going to like irrelevance even less”.

Let us begin:

The 11 truths of leadership:

1. Talent Management:

In the era of "added value" through the imagination, creativity and intellectual capital, the most important thing in a business is the recruitment, development and retention of talented people out of the ordinary.

Great leaders rely on the talent of his team. The mission of a leader should be to develop and manage talent of his team.

He quotes from David Ogilvy: "Our business needs a massive transfusion of talent, and talent, I think, it is usually between nonconformists, dissidents and rebels.”

For Tom Peters, companies should not "manage career"Of its employees. They must offer them opportunities to develop their own personality, so that they can handle themselves direct their own career. Life should be seen as a project for each person, step by a company must be part of a personal project. The company should help carry out this project.

2. Metabolism management of a company:

The interaction between entrepreneurship, competition and invention, each time moves faster. The mission of a leader is to increase and manage the ratio of this interaction in your organization.

Tom Peters suggests that to improve this ratio, strategic business meetings are conducted several times a week instead of several times a year.

Quote from Mario Andreotti: "If things seem under control, you're not doing it fast enough”.

3. Technology Management:

Internet and other technologies associated with the network, are changing everything. The leader of a company should be directly responsible for the implementation of new technologies in your business (boring it).

4. Management Barriers:

Cita de Frank Lekanne Deprez & René Tissen "The organizations we created have become tyrants. They have taken control, keeping us chained, creating barriers that slow us rather than help us in our business. The lines we draw on our precious organization charts, have become walls for no one can climb, penetrate or even see what lies beyond.”

With this appointment, Tom Peters illustrates what for him is one of the main problems of today's companies: bureaucracy and processes.

In his view, the only solution to survive in the new era in which we live, is tear down these barriers and completely redesign the structure and business processes. To this it suggests that the eBusiness implementation at all levels of our organizations can help greatly to achieve this goal.

5. Management of Oblivion:

The new competitive reality, you need to give back to those and everything that brought us here. Every leader needs a formal strategy, to forget what he has learned.

Cita de Dee Hock: “The problem is not how to have new lines of thought in your mind, but how to let go of old.”

6. Management Metaphysics:

new values ​​are emerging. Every time we move further into a world where products and services are ethereal. A leader must be aware of these changes.

Tom Peters suggests that the leader of a company is also the MIC of the company ( "Metaphysician-in-Chief”).

Quote Kjell Nordstrom and Jonas Ridderstråle (Funky Business): “The 'surplus society' has a surplus of similar companies, employing similar people, with similar education, with similar ideas, producing similar things, with similar prices and similar quality.”

Tom Peters argues that many companies have defined "best practices" now all act the same way.

For Peters the secret is to focus on the experiences that our client gets acquiring our product. To my knowledge this is the most important part of the conference. The "philosopher's stone" of the new era: focus on experiences, not products.

For Harley Davidson (lecture by Richard Teerlink, President of Harley Davidson) and it became clear that the strategy for the conversion of Harley was based on selling experiences, not products "We focus on giving the customer reason to go on a motorcycle"... And the way you sell a bike, but the important thing is to convey all that emotionally get when driving a Harley.

Transmitting Harley experience "Rebellious lifestyle

What we sell is the ability of an accountant of 43 years of dressing in black leather, driving through small villages and get teenagers afraid of him.”

Peters illustrates this with other examples:

  1. Selling Toys: Focus on communicating the care of children. Sales of sportswear: focus on assisting sporting events. Sale of flatware: focus on the experience of eating out.
  2. Selling garden tools: Focus on landscaping services. Car sales: focus on repair and car maintenance.
    The secret is to emotionally connect with the customer and focus on differentiation focused on customer experiences. Obviously you have to have a good product, but what management intends Metaphysics is that you focus on experience rather than the product.

7. Opportunity Management

There are 2 groups both forgotten all marketing strategy and product: women and people between 45 and 65 years. These two segments offer great opportunities for the leader who knows how to reach them.

Opportunity 1: Women

Según datos mostrados por Peters, las mujeres toman la decisión de compra del 94% de los productos que forman parte de un hogar, del 92% de los destinos vacacionales, del 66% de los ordenadores personales domésticos, del 68% de los coches. En líneas generales, las mujeres toman la decisión de compra del 83% de todas las compras. Pero son las grandes olvidadas de los directores de marketing. Según datos de Martha Barletta, de Marketing to Women, el 91% de las mujeres piensan que los anunciantes no las entienden y el 58% además se sienten disgustadas con los anuncios que ven.

For Tom Peters, the essence of marketing to women is to be aware that a woman does not buy a brand, adheres to a brand becomes part of it. The main thing for a woman is the connection with other women, and this can make it through a brand.

Peters's advice is: "first connect women among them and then connect them to the brand". (When you ask a girl "How was school? ", It's natural to tell you chapter and verse how he has gone on and tell you about all her friends. When you ask a child, simply replies "I went well.”)

My personal opinion about it, as a woman and marketiniana is that we are indeed a forgotten target. Forgotten even by ourselves. Because I confess that in the marketing plan Noticias.com no special actions are included to capture women, just think globally and act. And that is precisely the error that Peters commits the vast majority of planners. And therefore, it is a great opportunity for those who know her. (I take good note and promise to correct).

Opportunity 2: between 45 and 65 years old

The figures Peters offers to illustrate this opportunity, say it all:

Between 2000 and 2010, the segment of people between 18 and 44 years will decrease by 1%. The segment of over 55 years of age will grow by 21%. Moreover, specifically, the segment of people between 55 and 64 years will increase by 47%.

Paradoxically, even though those over 45 will be a major segment and with great purchasing power (all mortgages are paid), almost no products (other than pension plans) that target them specifically.

Peters sees here a great opportunity for those leaders who know how to use it. His advice to do is focus on innovations and systems of delivery of the goods.

8. Portfolio Management:

We must think of each of the parties mentioned in the above (our talented employees, customers, suppliers, leaders, projects, initiatives, etc ...) in terms of portfolio. The key question is: "It is our portfolio as strange as these strange times demand? ". The leader of a company must think like you would a venture capital firm: creating and managing diverse portfolios strategically, not realizing an overall strategy for all parties involved.

Mark Twain quote that illustrates this point: "The best swordsman in the world should not fear the second best swordsman in the world; not, who should fear is an ignorant antagonist who has never had a sword in his hand; It not is acting as it should, so the expert is not prepared to fight him; It does things that just should not do and surprising the expert and beating him.”

Transposing this quote to the business world would come to tell us that to grow a company needs to break vicious circles of competition and imitation. Tom Peters proposes to ask ourselves if we used rare enough to represent the rare society. also it proposes to establish a coefficient of rarity in our company with a scale of 1 to 10.

9. Error Management:

To err is more important than ever in the age in which we live. The error rate is the best indicator of the rapid adaptation of a company of its time. A good leader must "manage"Processes of error (literally said it).

Cita de C. Northcote Parkinson: “Perfection is achieved only in companies that are about to collapse.”

That is, in times where innovation is one of the pillars of the company, should encourage people to take risks and therefore make mistakes. Of these errors will encourage knowledge and creativity at all levels end up finding what really makes the difference and will catapult us to success.

10. Case Management:

A good leader creates a "cause", not a business. The business will operate from the time that all employees, suppliers and customers to work for a common cause.

Cita de Richard Brandson: “I've never thought of myself as a businessman. What has always mattered to me is to create things that I feel proud.”

Cita de Howard Gardner (Leading Minds: An anatomy of Leadership): “The key (perhaps 'The Key') leadership is effective communication of a story.”

11. Management of the Passion:

The passion can move mountains. This became clear to us in exposing Peters and also in the rest of speakers ExpoManagement. If something is important in business it is the passion of their leaders and their employees.

Quote Napoleon "A leader is a dealer in hope.”

Enthusiasm is contagious, there's no doubt. And Tom Peters exuded passion for the nearly two hours of your conference.
And finally, I include this little scheme that belongs to one of the slides in the presentation of Peters:

The 12 truths of business success

  1. Talent is the lack of respect for tradition Passion to irrationality.
  2. Believing in "What we're doing here."
  3. Not believe in the "normal behavior of the industry."
  4. Obsessed with the "Action" ... and contempt for those who "do not get it".
  5. devilishly fast speed.
  6. Go up and out.
  7. I hate bureaucracy (red tape hate with passion).
  8. Total customer orientation.
  9. Rewarding errors.
  10. Punishing the poor triumph.
  11. Courage to fight alone against the forces of the "conventional wisdom /".
  12. Clear understanding of the power of the brand.

I hope this article will be as profitable as it was for me the conference.

A hug.