Extreme overship

HOW U.S. NAVY SEALS LEAD AND WIN

Business leaders would agree that pushing past your comfort zone is often critical to success. For me, reading this riveting book was both emotional and inspiring. While my reality is far from a combat zone, the similarities between the set of skills of a good army commander that help his team accomplish the most difficult missions in combat and those of an effective business leader are surprising. The authors share their combat stories (winning and failed) and apply these leadership principles to businesses and organizations to help them build their own high-performance teams.

The authors start by highlighting the importance of selecting the right members for the team and the value of training in order to identify high-performing individuals. They go on to list the skills of leaders who exercise Extreme Ownership. These people are the backbone of the effective, productive and performing teams. Their key message being: there are no bad teams, only bad leaders.

Here are some principles to keep in mind:

1. A great leader takes the blame for his team’s loss. All responsibility for success and failure of the team rests with the leader. Good leaders do not look for excuses to justify failure. They take the blame and find ways to reach their goals. This way, everyone on their team learns to take responsibility and ownership.
2. The attitude of a leader sets the tone for the entire team. During training, the performance of Team 1 was terrible; they were losing over and over again. Then a new leader (from a high-performing, winning Team 2) took charge of them. The performance of the previously losing Team 1 started to improve and soon they scored their first victory. Meanwhile, Team 2, which lost their strong leader, still continued to perform well, powered by the winning culture of Extreme Ownership instilled by their original leader.
3. A good leader does not only give orders and push his team, he goes to the frontlines with them, he LEADS his people. A good leader lives the same reality, hardships and challenges as his team. He must support and help his team members.
4. Extreme Leadership is not determined by what you preach, but by what you tolerate. Even if you establish and promote high standards of performance for your team, but tolerate some less perfect results from some team members, the overall level of effectiveness and efficiency of your team will suffer.
5. A good leader communicates in simple, clear and concise terms. In high-stress situations, when things go wrong, complexity aggravates issues that can potentially spiral out of control.
6. In the context of stress and uncertainty, an Extreme Leader knows how to prioritize and execute. The three key components to remember that will help you stay in control without getting overwhelmed are RELAX – LOOK AROUND – MAKE A CALL. Trying to tackle multiple issues and numerous tasks simultaneously, you will likely head towards failure.
7. Decentralize the command. A leader can effectively manage four to six people. With clear definition of scopes of responsibilities and tasks, the concept of decentralized command becomes possible and efficient in achieving performance objectives.

I write this review in the most humble way, as I obviously have never lived the immense challenges of these combat-trained men and women, nor do I even try to describe their military background and stories out of my utmost respect for the authors. I invite you to read their extraordinary accounts that prove that strong leadership is essential to success, but above all show that Extreme Leadership is a matter of survival for them.

“EXTREME OWNERSHIP: HOW U.S. NAVY SEALS LEAD AND WIN” written by Jocko Willink and Le if Babin , 2015

 

Sylvie Grégoire, MBA, CRHA
President, Totem Performance organisationnelle

Adding the “Wow” factor to the purchase experience alone is no longer enough. Now, businesses must make the emotional aspect of customer service a prominent element of their approach at every touch point, including pre-sale and post-sale of products or services.

Numerous studies show that Quebec entrepreneurs will face with a major challenge: preparing their business succession. And the franchise world is no exception!

To error is human… we all know this saying. Even celebrities who are known for their success stories had their share of disappointments earlier on in their careers, for example…

• Walt Disney was turned down because he “lacked imagination”
• Steve Jobs totally missed with his Newton MessagePad idea in 1993 (iPad predecessor)
• K. Rowling and Stephen King were both rejected by several publishing houses

We are under so much pressure to succeed both personally and professionally that, for fear of disappointment, many people prefer to take no risks to avoid any potential failure. But in the business context, most of the time, experimenting and embracing failure’s lessons are needed to achieve success.

Analyzing failure

“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”  Michael Jordan

Michael Jordan couldn’t have said it better. Accept your failure and discern the reasons in order to improve. So, why Québec companies find it so difficult to see mistakes in a positive way? Missing your target numbers could be spun off into better performance later.

A step ahead, the U.S. saw the launch of events like FuckUp Nights and Fail Camps that give entrepreneurs a platform where stories of failed businesses and projects can be shared, studied and embraced – all with the goal to learn from their mistakes. This movement is also starting to catch up across the Atlantic (FailCons, Conférence du rebond) to help lift the stigma of failure and replace it with freedom, confidence and support, but above all, to share tips and tricks to prevent similar mistakes in the future. It requires a healthy dose of humility from entrepreneurs, but they understand how constructive it could be.

Success and failure should be both viewed as results, one is positive and the other one is negative. They are both consequences of a process or a procedure and can become a learning experience. Hungering for success or fearing failure is of little use. The key is to reinforce a culture that counteracts the blame game, supports employees and prepares grounds for their success by gradually reframing our perceptions of success and failures and transitioning towards a work environment that encourages people to try as hard as possible, and by ensuring that the corporate culture embraces the right to make mistakes.

From failure to success

To optimize transition from failure to success, your organization could implement strategic or operational mechanisms that would 1) help its employees to effectively deal with issues they face, 2) encourage its employees to overcome their fear of failure, and 3) make sure that hits as well as misses become a learning experience for everyone in order to avoid repeating the same mistakes, promote initiative and cultivate successful efforts within the company.

Depending on your business expectations and corporate culture, there are several possible solutions, such as:

• Adopt a trial-and-error business strategy inspired by the “Great by Choice” book by Jim Collins, whereas successful companies test their strategies in a pilot project, tweak them till they either get a winning strategy to be then applied on a larger scale or abandon it if proven ineffective;
• Implement a mechanism for transfer of learning, e.g. appoint a manager who will gather information on the company’s missteps and failures, as well as its successes. The data will be applied in the organizational improvement strategy using successes and failures as levers of performance;
• Adopt measures to promote non-punishment of errors (e.g. Air France has formalized this principle in its Charte de non-punition de l’erreur humaine) that will help develop a culture that accepts the right to human mistakes.

These initiatives can be only useful if they are supported by:

• Tools to collect and analyze as many success and failure cases as possible, and to convert them into concrete actions for the company
• A corporate culture that promotes initiative, even if it means taking a risk
• A communication strategy that differentiates between a strategic mistake and a mistake caused by personal non-accountability

Benefits of valuing failure

Nowadays, mentality is changing, mistakes become accepted. Yet companies must find ways to boost initiative and to give confidence to their employees.

Businesses can:

• Strengthen employee engagement
• Maintain the creative momentum
• Value audacity, zeal and capacity to take calculated risks
• Stop over-dramatizing the risk of error or failure
• Launch innovation communication

To sum it up, learning from failure on a business scale is like playing chess: accept risks, build a strategy and anticipate your opponent’s moves. But it also means acknowledging the possibility that you may lose. Remember, everyone may fail, so do your utmost best to avoid disappointments.

Empower your employees to succeed. It means let them try and test their abilities, gradually building up their confidence to take on more complex tasks. It also means support and assist them throughout various challenges, helping them deal with issues effectively and efficiently. Encourage them and celebrate their successes. Finally, if you still think: “I’m lucky, my staff and I make very few mistakes”, ask yourself:

• Do we hide mistakes, consciously or subconsciously?
• Have we settled into a routine?
• Do we move on without ever taking a risk?

If you answered yes to at least one of these questions, our Totem team can help you to develop and implement strategic and operational practices to boost the efficiency of your business.

 

Sylvie Grégoire, MBA, CRHA
President, Totem Performance organisationnelle

THINKING INSIDE THE BOX FOR BUSINESS INNOVATION

Naturally drawn to innovative concepts, I was intrigued and captivated by this unique idea. The author suggests that we do not need to ‘think outside

the box’ in our pursuit of creativity, but rather we should rethink the way we look ‘inside the box’ in a very systematic way. Creativity is seen as a process accessible to everybody, not just the few creative souls among us.

When asked “How important is innovation and creativity for the survival of the company?”, we tend to automatically say “very important”. This book gives another view on finding new routes to success. I was especially interested to learn the scientific data on the impact of innovation on business performance results:

• The combination of ‘product’ creativity and ‘marketing’ creativity accounts for 77% of the market share change, 52% of changes in the financial results and has a 61% effect on customer satisfaction.

• Only between 5% and 20% of all new products survive the promotion phase. So there’s a clear need to do things differently. Why invest lots of money in product R&D if, in all probability, the majority of the products will never become actually profitable?

• There is a mathematical model that shows that employee happiness arises when work challenges and their skills are roughly at the same level. And the happier the employees are, the higher their creative capacity is. If their skills are not up to the task, they become stressed; if the task is no longer challenging, they become bored. In other words, their skills should more or less match the task at hand, otherwise personal creativity becomes impossible.

• The creative capacity and the creative result are most affected by: motivation at 25%, prior knowledge at 32% and corporate governance at 43% (too strict rules kill the creative spirit; insufficient rules jeopardize the results given the lack of focus on what is useful).

Key Tips to Boost Creativity

The author insists that everybody can be creative. The book provides exercises and tools to train your brain to become better at generating ideas. The author also points out that, besides individual development, the key is to implement a process to optimize the creative capacity. The book is structured around three key steps:

1. Shaking the box: Implement innovative strategies to rearrange and view the current business components from a different angle, e.g. by creating new products or services, or by finding new, unexpected ways of combining existing products or services.
2. Expanding the box: Business creative thinking is limited by the four walls: conventions and rules, common sense, physiology, and consciousness. The author offers tips to reduce, if not eliminate, the impact of these natural constraints.
3. Filling the box: Add even more knowledge and grow awareness of demographic realities to promote innovation.

In conclusion, “Creativity Unlimited” is packed with interesting techniques, numerous exercises and eye-openers that shake you up to become aware of pertinent changes and to implement them in order to optimize your company’s creative capacity and market performance.

 

“Creativity Unlimited: Thinking Inside the Box for Business Innovation” written by Micael Dahlén

Sylvie Grégoire, MBA, CRHA
President, Totem Performance organisationnelle

Organizations face increasing instability that sets hurdles to their effective management and attainment of performance targets. There are several solutions that could help your company improve its ability to achieve excellent results despite the turmoil: improve the efficiency and effectiveness of its people, optimize its production, etc. But any optimization strategy must be backed by a creative, innovative process that is, unfortunately, often neglected by too many businesses. By definition, creativity is the ability of an individual or a group of individuals to design or implement a new project, to create a new physical object, or to find a novel solution. Thus, companies can find the best strategy and tactics to stay ahead of the competition and to ensure their sustainability.

A STRATEGIC CREATIVE PROCESS

We often tend to associate business creativity with the skills and traits of the people within the company. Yet, more and more studies show that creativity is not reserved for the chosen few with special qualities. Researchers and leaders believe that creativity can be learned, mastered and controlled, and that there is a very strong correlation between business creativity and performance. Another good reason to formalize this practice is making up for the stereotypes leading managers to see supporters of the status quo as more effective. According to the authors of the article Plafonnés les leaders créatifs?[1], ‘creative types’ seldom get to the top management spots because, unlike ‘effective leaders’, they don’t crave stability and are often perceived as less reliable to ensure effective management. By implementing a formal creative process, companies establish a favorable framework for innovation thanks to a clear structure that offsets the natural inclination of the top management to foster a stable and secure environment, and thus optimizes the results.

“Performance is 90% the system and only 10% the individual.”[2]

CRITERIA OF A GOOD CREATIVE PROCESS

Designing and implementing a creative process should not be taken lightly. If badly planned and poorly executed, its cost to the company will be higher than the actual gains it generates. Here are some examples of the criteria to respect:

Involve the Right People at the Right Time

It is important to involve the right people depending on the nature of the desired innovations and the stage in the process. According to researchers, it is possible to train and strengthen our brain to create new pathways that will enable us to be better at creativity.[3] But some people have a natural ability to generate ideas and to support creativity with winning tactics. They are at ease with risk-taking associated with innovations or hold information that is essential to generate ideas that are not only innovative but also useful to customers. A useless innovation will of course have no impact on the company’s performance. A creative process involves several steps, each requiring a different set of skills. Idea generation, feasibility analysis, idea prioritization and project finalization all call for distinctive skill sets. The process should involve people with complementary skills to ensure the success of the selected strategies.

We all had to deal at one point with creative leaders who lacked focus, thus making their teams lose a lot of time by continuously suggesting new ideas, yet never seeing any of them through. While such organizations appear highly creative and are skilled at generating ideas, they actually implement very few of them because these ideas are either refused or ignored or simply replaced by something new. The consequences can be disastrous because their key employees become demotivated and lose interest in the innovation and even in the company itself. The creative process helps to make the most of the incredible potential of all employees by structuring the process, thus allowing to maximize actual financial results. Having a structured process in place is proof that the senior management privileges innovation.

Mitigation Tactics and Tips to Improve Creativity

Creativity can be slowed down by several factors. A good creative process should include tactics that could mitigate, even eliminate, such factors.

• Conventions and rules: Our natural inclination to follow the rules leads us to associate certain qualities with the notions that we are familiar with instead of generating innovative ideas. For example, when we think of a brick, we automatically imagine a rectangular, somewhat flat object. And what if the brick were something else?
  • Tips:
    • If it is an object, ask:
      • What if a brick were not flat?
    • If it is a situation or service, state:
      • People would be angry if… we stopped offering service from 8:30 a.m. to 5:30 p.m. This opens your mind to other ways to serve the customer.

These two statements make it possible to open the door to new ways that go against conventions.

• Common sense: Our mind typically refers to a single solution that we regard as the only possible solution. For example, if we are stranded on the side of a road with a flat tire and no lifting jack, we automatically try to find a jack instead of thinking of other ways to lift the car.
  • Tips:
    • Ask yourself:
      • If the jack did not exist, I could still solve my problem by…
    • Try to find a solution using Six Thinking Hats, a system designed by Edward de Bono which helps the thinking and creative process by applying a number of distinct ways to see certain aspects of issues under consideration (e.g. purely the facts, pessimistic judgment, optimistic response, gut feeling, etc.).

• Physiology: Research shows that we use only between 3% and 30% of our brain capacity. Opinions are shared as to the functions of the right and left hemispheres. Some say that one hemisphere is detail-focused, while the other one gives a global vision. New studies show that the brain works as a whole, with the two hemispheres working together as a system. Whatever the thinking pattern, everyone agrees that creating new pathways between the neurons in our brain promotes creativity.
  • Tips to mitigate this limitation are based on destabilizing the brain:
    • Train your brain to create new pathways: use the other hand to pick up the phone, get out of bed in a different way, etc.
    • Find word associations between notions that seem to have nothing in common.[4]

• Consciousness: Our brain favors known thinking routes and, like electricity, it tends to take the shortest path to solve an issue.
  • Tips to mitigate this limitation appeal to creativity techniques:
    • Use reverse or frugal innovation technique to filter, trim, eliminate, make sustainable and find ways to do more with less.[5] This concept is perfectly in line with the increasing importance of sustainable development.
    • Map out unexplored areas: take a fresh look at the value chain.
    • Focus on the one thing your company does best and apply it in the new marketplace (the Hedgehog Concept by Jim Collins).
    • Create by analogy to adapt the know-how or previous experience to a new problem (the inventor of Velcro got the idea from the burrs that clang to his dog’s fur).

“A person who never made a mistake never tried anything new.” Albert Einstein

An Open Mind at the Core of Innovation

Before, most of innovations used to be about improving or adding business services and products. But not anymore. Nowadays, the innovations that are often the least costly and the least risky to implement are those dealing with, for example, the originality of the business model. Indeed, a recent survey of 4,000 senior managers by the Economist Intelligence Unit found that 54% favored new business models over new products and services as a source of future competitive advantage. For example, rethinking how products are offered, how resources are used, or radically transforming the business model (such as the case of a company in a declining industry sector) must certainly be supported by a solid, sound process. Here are some real-life innovations that prove that fundamental changes can be very profitable for their organizations and especially useful for their customers.

• Distribution: A grocery store launched Grocery Click&Collect that brings groceries closer to the customer by offering a possibility to order products at convenient locations like metro stations (from the list of images on the wall, products are purchased online and delivered directly to your home).
• Needs analysis: GeniCan invented an intelligent device that makes your garbage can smarter by scanning items as you throw them away to automatically create customized grocery lists, saving customers time, hassle and money.
• Customer experience: A shopping mall introduced Slow and Fast Lanes to manage foot traffic, separating fast walkers from those who simply hang out or enjoy a bit of window shopping.
• Supply: Camso, a tire and rubber track/track system manufacturer for off-road vehicles operates its own foundry and goes right to the source of rubber (a vertically integrated business model).
• Production and distribution: MyFab is an online furniture store, similar to the e-commerce business model run by Dell and Zara, which provides a way for customers to buy goods straight from the source, eliminating all costs and expenses related to warehousing, staff and sales facilities, delaying production costs till the items are sold, etc., thus transferring the risks.
• Risk transfer: A call center that uses freelance agents who work from home at peak hours, when needed. This business model offers such advantages as scalability and redundancy, eliminating costs related to paying inactive employees during idle periods.
• Skills transfer: Intuit has created and hosts a community of users who help each other to find answers to various issues, and adopted a culture of problem-solving through discussion forums, resulting in a 10% reduction in the cost per contact compared to standard call center costs.
• R&D outsourcing: Natura Cosmetico, a Brazilian cosmetics giant, outsources its R&D, which allows launching 150 new products per year with 150 staff members only, compared to l’Oréal that employs 3,000 people.
• New use for a strategy: The medication that Pfizer initially studied for use in hypertension treatment became a new product, marketed under the brand name Viagra. And 3M found a new application for a failed super-strong adhesive. An accidentally created weak adhesive was used to launch the Post-it note.

Reward Innovation

To foster a creative environment and to highlight the importance of innovation in the business strategy, organizations need to design and link a rewards and recognition program in order to raise the awareness and motivate employees to pursue creative and effective ideas.

In conclusion, it is important to support the organization through a creative process to ensure that sufficient time and resources are dedicated to innovation and that the investments turn into revenues.

 

Sylvie Grégoire, MBA, CRHA
President, Totem Performance organisationnelle

[1] Magazine Premium #10: A study of 364 employees at a refinery, whose jobs required them to find innovative solutions
[2] Jules Goddard: Experiments in Management: Business Strategy Review
[3] “Creativity Unlimited: Thinking Inside the Box for Business Innovation” by Micael Dahlén
[4] William Duggan, researcher and senior lecturer at Columbia Business School
[5] Adrian Wooldridge, Management Editor for The Economist magazine

So many consultants, books and articles have been touting the importance of using key performance indicators (KPIs) to measure business success. However, if misused, KPIs become ineffective when it comes to optimizing company performance, even harmful in the long term. The Totem team decided to investigate the positive and negative aspects of KPIs. As a result, here are several tips to help you avoid some blunders.

FOCUS ON THE QUALITY, NOT THE QUANTITY

Our first tip sounds rather simple and straight-forward. Today’s managers on average measure 25 to 40 key performance indicators compared to 5-7 in 1955, when only some management teams applied such metrics. So, do we progress or regress? What is the optimal number of KPIs? There cannot be a one-size-fits-all answer since individual needs depend on the actual context. However, we see a trend: companies tend to add new KPIs based on their circumstances at the time. The system gets heavier and more complex. No doubt, KPIs are a key factor of success, but at the same time, you must make sure that you build and optimize your KPI dashboard in accordance with your strategic objectives. This means you must take a step back from time to time to analyze your KPIs and to keep only those that are actually relevant to your current business. Choosing to target and monitor only specific KPIs saves valuable time for your managers. Yet, if one or several of your KPIs do not produce the expected results, then breaking them into several smaller KPIs would help you identify the exact area for improvement.

KNOW THE DOWNSIDE OF YOUR PERFORMANCE INDICATORS

There are two sides to every indicator. On the one hand, it allows to evaluate the performance of a specific element that you judge important in your business. On the other hand, it may lead to actions on the part of your employees that are not necessarily in line with your other objectives. For example, measuring your sales in dollars per month may result in loss of motivation among your representatives once the monthly targets have been achieved, thus striking a blow to your annual sales, or it may tempt them to offer excessive discounts to inflate the sales numbers, ultimately reducing your business net income.

Here is a real-life example showing how things can go really off-track: one police force introduced KPIs to measure its performance. As a result the chief pressured his team to prioritize burglaries of multiple-occupancy households, instead of their gravity or date, because the system would count each occupant as a separate solved crime and therefore give the appearance of a better performance.^[1]

This does not mean you should stop using KPIs. But you must question the pertinence of your selection to make sure:

• KPIs are aligned with your business strategy and actually help, not hurt, your company;
• KPIs measure various aspects of your company;
• KPIs are supported by other mechanisms to offset the adverse effects (e.g. individual performance management).

                                          “People do what their management inspects, not what it expects.”^[1]

DARE TO BREAK THE PATTERN

Following the KPIs, which you have meticulously selected, properly measured and effectively presented in a dashboard, seems like the right thing to do. However, remember that your KPI dashboard should remain flexible. Often out of habit, we keep using the indicators that focus on our strategic objectives towards our vision – we measure our process, our staff efficiency, etc. – however without questioning the pertinence of the initial plan altogether. Sometimes, you need to be able to step aside from the dashboard to evaluate the current context and, if necessary, to update your plan. Today’s economy is evolving at a rapid pace, which dictates the need for an adaptable tracking tool that would make sure that noncurrent indicators, once their associated targets have been achieved, do not give a false impression of success.

STAY AWAY FROM THE TRENDS

Resist the temptation to choose your KPIs based on the top 10 performance indicators of 2015, like “The proven metrics of business success”, “The best and worst KPIs”, etc. OK, we invented these titles, but they are representative of the numerous articles on the subject.

Your business is unique! A KPI that is perfect for one company may not be suitable for another. We customize our products, our services, our communications, what not… So why not customize our performance measuring tools based on our organizational context?

DARE TO BE DIFFERENT

Assurant Solutions, a U.S. company providing specialized insurance products, dared to address KPIs in an innovative way. Trying to get a better perspective on the performance of its call centre, the company called on mathematicians and actuaries to examine the data using a modeling tool. However, they focused only on facts and rules-based analytics, ignoring basic management principles. So the company turned to a model-based system that analyzed the attributes and variables of calls to measure such metrics as the retention rate of unhappy customers or those shopping around for a better deal, as well as the call wait time. Initially, the marketing team assumed that shorter call waiting would translate into a higher acquisition rate. Instead the analysis showed that:

• Some customers were much more profitable for the company than others. Losing a lucrative account while retaining a client who brings very little income is not good for the company in the long run. The current metric for the customer acquisition rate did not consider the quality of the customers. The company decided to reduce the overall acquisition rate, but specified the desired customer profile.
• Some customer service representatives had a much higher top customer acquisition rate. The company modified the call routing process to better match the skills of the representatives with the client profile, resulting in a significant increase in the customer acquisition rate.
• Customers were willing to wait up to 39-42 seconds without becoming impatient. That allowed their representatives more time to create affinity with “profitable” customers, thus increasing the acquisition rate. The initial target of 80% of calls with a 20-second or less waiting time proved inappropriate. The company updated it to 80% / 40 seconds, allowing their representatives more time to convince customers.

EMPOWER YOUR PEOPLE

How do you explain the fact that many companies ask their management to rigorously measure their KPIs, but do not give them the power to act? If the decision-maker or the team does not have the means or does not feel concerned by a certain metric, it is better to avoid adding this KPI to the dashboard. Otherwise it will create clutter and discourage the management. An indicator is a performance measurement tool; it is not a guarantee of success. An indicator must come with concrete steps to bring the process in line with the objectives. Give your employees freedom to act instead of burying them under endless approval processes that only delay your goals.

Performance indicators alone do not guarantee success. The strategic selection of indicators based on your strategic objectives, as well as the measurement process and the decision-making process associated with them will greatly impact the performance of your company.

The Totem team can provide assistance and support:

• To identify your top organizational challenge;
• To define a success strategy and, subsequently, to choose helpful performance indicators to enhance – not harm – your performance.

 

Sylvie Grégoire, MBA, CRHA
President, Totem Performance organisationnelle

[1] Bernard Marr, a bestselling author, keynote speaker and leading business and data expert, in his blog “Caution: When KPIs Turn To Poison”

A MUST-READ HANDBOOK TO OPTIMIZE YOUR BUSINESS MODEL

From the very first pages, I was seduced by this book’s avant-garde, minimalist style. It is a practical, inspiring work that explains the complexity of a business model in clear, concise terms. It teaches innovation techniques to understand, design and implement a new business model or analyze and optimize an existing one.

The book explains a business model through the relationships between the nine building blocks of a company, all in the form of a simple diagram, stripped down to the bare essentials. It shows how to get a global vision of your business, but above all how to optimize it in light of the changing economic context, evolving customer needs and profiles, varying availability of resources, etc.

The Nine Building Blocks of a Business Model

• Customer segments: For whom are we creating value? Whom should we serve in the future? What will the future customer look like? Who are our most important customers?
• Value propositions: What value do we deliver to our customers? What are they willing to pay for? Which of their problems are we helping to solve for them? Another book, equally interesting and relevant, was specifically written to help define the value propositions to customers: Value Proposition Design.
• Channels: Do our current distribution channels work well? Do they support the needs of our company and of our customers? Which distribution channels would work best to meet the needs of the future customer? Which ones are most cost-efficient?
• Customer relationships: What type of relationship does our customer expect? How can we actually “connect” with the customer? Is the preferred customer relationship understood and integrated across the company?
• Revenue streams: For what are our customers willing to pay and how much? How are they currently paying for products and services? What will change in the future? How much does each revenue source contribute to overall revenues?
• Key resources: What key financial, physical, intellectual and, of course, human resources are required to deliver our value propositions, desired customer relationships, distribution channels, etc.?
• Key activities: Which are the most important actions a company must take to deliver on customer needs and expectations, i.e. efficiency of production, problem solving, network/platform, financial analysis, etc.?
• Key partnerships: Who are our key partners that we cannot do without? Do they have too much power or is it a win-win relationship? Are they the right partners for what we want to accomplish?
• Cost structure: What are the most important costs incurred in our business model? What are our cost optimization opportunities? Are we at risk regarding cost trends of certain resources?

Simple? Obvious? Indeed, that might very well be your first reaction after reading this book that gives such a clear, straightforward explanation of a business model. Yet many leaders are still getting tangled up in intricate business plans for their projects. Mapping out your business model is a great way to structure your understanding, to optimize each element and to help you evaluate the efficiency and profitability of your investments (Return on Investment).

“Business Model Generation” written by Alexander Osterwalder & Yves Pigneur

 

Sylvie Grégoire, MBA, CRHA 
President, Totem Performance organisationnelle

49% of business leaders perceive a gap between strategy and execution; 64% lack confidence in their company’s ability to narrow it. So imagine how complex the implementation of efficient business processes might be for a network of independent entrepreneurs at the regional, national, even international levels.