Complex Business: The Future State Business Model

Stop Chasing the Silver Bullet to Maintain Simplicity

We have two conflicting pressures in business today.  The first is the need for companies to be successful managing a complex business model – products, software, services, and professional services – in different segments and markets. The second is leaders’ interest and comfort with simpler businesses.

Today’s business leaders matured in straight-forward business structures. For example, we sell copiers and service them.  You can see the pull toward a single business model today in companies that want to become a software company or XaaS business. These companies are hoping to find a silver bullet that will allow them to return to growth and simplicity.

For a moment, let us suspend this silver bullet mentality by viewing the world from a “share of wallet” and “most valuable accounts” point-of-view and letting that drive our future state business model.  At the 30000-foot level, this is widely accepted and understood. Everyone wants to do more with their key accounts and/or important segments.  They want to drive intimacy and create more value for customers.  Many companies have achieved sporadic success with this approach, like Xerox did when it introduced “managing print cost”.  But few (if any) are breaking through, viewing and, therefore, managing their businesses this way.  Do they understand how to create an integrated portfolio that works across an account journey to stay relevant and intimate? Are they able to drive more value for the account and value for themselves?

Accenture is an example of a company that is working in this way. They understand how to maximize their business in key accounts with target account values and impact. Their ability to operate this way is likely because they grew out of an advisory company that understood how to stay relevant.  But, for the most part, the significant B2B companies are failing at this, causing many of them to stagnate or even lose ground.  How many great companies have faded away?

Let’s take a deeper look at managing a complex business. Because companies grew a certain way (i.e., they had a breakthrough product that allowed them to build critical mass), therefore their muscle memory is all about that model.  Their profits may have moved from the product to the related services, but it is still the same basic business model.

To truly get a view of their business, they should look at their offerings against the current and future key account business spend, strategy, challenges, and opportunities.  The first challenge to understand is the following:

Do we truly understand our key customers’ businesses? This understanding goes beyond what we sell to the market and its related impact. If we understood the key customers’ businesses, we might see how insignificant we are to the most important customers; that is why we often deal with purchasing instead of with top executives.

We recently had a client that wanted to understand their opportunity in a segment of their market – small and mid-size banks/financial institutions.  The client did well with large financial institutions, but they struggled with small and mid-size banks/ financial institutions. This small and mid-size banking segment is in a quandary of how to compete with larger financial institutions and new entrants to the business – competitors that do not have the expense of physical locations.  The market does know what to do about technology, what their branch strategy should be, or how to convince the tech-savvy generations to work with them. In short, this segment needed a partner to lead them and provide tech in a whole different way – to be their true partner and provide the guidance to allow them to survive. But, instead of stepping up to change the whole paradigm of the relationships, our client decided they wanted to be a software company. Though they have billions in revenue from non-software sales, they are seeking a simple business model that they can understand and, therefore, operate.  Someone will take that market and provide the kind of relationship that is needed.

Again, a place to start is by viewing a segment or key account the way they view themselves, and then organizing around how to become indispensable to that segment or account.  This is out of most organization’s comfort zones.  A simple tool to use is Account Journey maps. Where are we trying to get an account to buy? Where do we make money today and in the future?  How do we get so involved and intertwined with accounts that they become the sole source for that product or service?

To accomplish this, companies have to become true problem solvers (including helping customers to take advantage of opportunities).  They must work at the executive level on the topics that truly matter to the customer or segment.  They must connect those services to their broader account journey map and have products and services to offer across the continuum.

In future blogs, we will take this concept through its components and discuss why companies must become true problem solvers of executive-level challenges and how to get there.

Written by: Dean McMann

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About the Author: Dean McMann is a Founding Partner at McMann & Ransford with 35+ years of experience in consulting and professional services.  He is a sought-after expert and speaker on topics of: B2B differentiation, professional services best practices, and overcoming commoditization.  In addition to his extensive experience in the Professional Services space, Dean also serves on the board of various non-profit organizations.

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