SYSTEMIC PERFORMANCE EXCELLENCE -STEP 2
SYSTEMIC PERFORMANCE EXCELLENCE - CLARIFY BUSINESS MODEL Organisations are complex systems where many elements come together to enhance or inhibit performance. At Gallus we have developed an approach to creating systemic performance excellence; a performance environment that everybody can believe in. This is the third in a series of insights that examine the approach. In the first insight of the series we outlined the model and basic elements of the 7 STEPS TO PERFORMANCE EXCELLENCE and the 4 PERFORMANCE ENABLERS, and in the second we looked at the critical factors required to CREATE A SENSE OF PURPOSE. Over the coming months we will consider each step in detail and explore the practical steps you can take to move towards systemic performance excellence in your organisation. This insight focuses on how to CLARIFY THE BUSINESS MODEL‌..
A believe-able organisation.... Our approach is centred on creating a BELIEVE-ABLE ORGANISATION. In times of growth, change and challenge, belief is the fundamental factor that provides the resilience and tenacity to succeed. In good times, belief is what makes the difference –belief in the purpose, belief in the destination, belief in an approach, belief in the contribution that an individual feels they can make and belief in the ability to succeed..
Our 7 STEPS TO PERFORMANCE EXCELLENCE are designed to take the organisation through a process of co-creation that drives belief, facilitates a thinking and planning process, enables everyone in the organisation to perform to the best of their abilities, and ultimately drives the organisation and everyone in it to be the outcome they are aiming to achieve.
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GALLUS CONSULTING Lay the path.... When talking with people in successful, fast growth organisations about their route to success, most of them reached a stage where it became imperative to explicitly define the business model – the mechanism through which the business achieves its purpose and creates value. Some instinctively knew that this would be a powerful exercise whilst others, floundering part way through their journey, realised that a critical positioning and framing piece had been missed. A structured discussion leading to alignment of all to an explicit business model creates a lens through which plans, activities, capabilities and people can make the right decisions and be active in purposeful ways. The exercise provides an opportunity to ensure that the entire organisation has a solid understanding of the value proposition and how individual roles, activities, processes and decisions contribute to it; providing the ‘big picture’ for people to identify with and align to.
Clarify the business model… So, how can you best clarify the business model and talk about ‘how you plan to be successful’ in a way that encourages people to think about profitability and the creation of long-term value? Challenging assumptions is a major part of any planning process and, in this context, it is important to challenge assumptions regarding what the organisation gets paid for, what the organisation will do, and what the organisation won’t do. Assumptions relating to the present can be challenges via data analysis and observation; assumptions regarding the future can be challenges through the use of scenario planning. The conversation is a complex one, viewing the organisation through multiple lenses and asking probing questions to arrive at the desired TARGET OPERATING MODEL (TOM).
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• What space does the organisation want to be operating in?
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• What is the product / service mix of the organisation? • How will you define and differentiate your offering?
CONTEXT CUSTOMERS
PRODUCT COMPETITORS
• Who are they now? How do you keep them? • Who are target customers? How do you reach them? • What do they value? What value do you deliver? • What problem do you solve for them?
• Who are they? • What value do they offer? • How are they stonger / weaker than your organisation?
• What are the business capabailities that will deliver success? • What enabling capabilities are required in their support? • What strengths will you use to differentiate the organisation in the market? • What weaknesses do you need to protect and plan for?
TECHNOLOGY
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• How does the organisation’s infrastructure support your objectives? • How does the infrastructure need to evolve?
• What are the critical ones? • How can they be optimised? • Who owns them? • What space does the organisation want to be operating in? • How will you generate revenue? • What is your cost structure? COST • what is your target profit margin?
PROCESSES
CAPABILITIES
VALUES
BEHAVIOURS
ASSUMPTIONS
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• What does your organisation stand for? • What does it not stand for? • How can people engage with the brand and the cause? • What feelings do you want to create in stakeholders? • How do you need to behave to generate revenue, build the future organisation and protect the organisatons assets and reputation? • What assumptions have been made in the generation of the TOM?
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SYSTEMIC PERFORMANCE EXCELLENCE -STEP 2
Ultimately, there will be a set of parameters agreed upon that can be used as a framing device for the path to be taken. Any remaining assumptions will be made explicit through the process and so risk identification and quantification is also enhanced. Innovation can be targeted, decisions can be accelerated and performance can be amplified through the alignment created. The TOM provides clarity of purpose and approach, and explicitly defines a framework to inform policy choices, asset choices, governance choices, value chain incentives and manpower planning.
The business model canvas... Using a business model template is a powerful way to frame the required discussions. The BUSINESS MODEL CANVAS created by Alexander Osterwalder is a good example of a foundation framework that can be brought to life visually as discussions progress. The BUSINESS MODEL CANVAS consists of 9 core areas fundamental to the generation of a clear TOM.
KEY RESOURCES
CUSTOMER RELATIONSHIPS
VALUE PROPOSITION
COST STRUCTURE
CUSTOMER CUSTOMER SEGMENTS SEGMENTS
CHANNELS
VALUE
EFFICIENCY
KEY KEY PARTNERS PARTNERS
KEY ACTIVITIES
REVENUE STREAMS
Firm Foundations... Support the agreed TOM with the 4 PERFORMANCE ENABLERS to drive that all important COMMON SENSE OF PURPOSE and accelerate the creation of a SYSTEMIC HIGH PERFORMANCE ENVIRONMENT….
ENTERPRISE MINDSET
GAME-CHANGING LEADERSHIP
LEVERS TO LEVERAGE
METRICS THAT MATTER
• Create an integrated,
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• Define Game-changing • Identify, optimise and • Targeted metrics and leverage the most effective analytics that focus on the cohesive and collaboleadership in the context of things that make the levers for performance rative organisation that the organisation and difference. excellence across the considers every situation ensure that leaders are • Create a performance system every time. with the bigger picture in Committed, Capable, • By pinpointing the levers guidance system that mind. Aligned, Consistent and enables dynamic decisions for change in an organisaEnterprise Mindset ensures Courageous. and provides the rigour for tion, efforts can be aligned that architecture, systems, • The capability of existing strategic loops. and amplified more processes and leaders leaders, coupled with the effectively. Identifying and consider the ambitions, ability to identify, attract, aligning the most impactful needs and capabilities of retain and develop the levers towards the desired the entire organisation and leaders that are needed for outcome creates a clarity of constantly maximise the the future is vital. focus and minimises synergies available to distractions and counter accelerate the achievement productive messages. of results.
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www.gallusconsulting.com
GALLUS CONSULTING CLARIFYING THE BUSINESS MODEL is a complex task that demands commitment to a structured thinking process and a willingness to face challenges and assumptions in an objective way. Done consciously and robustly at the right time, the process will greatly develop the leaders of the organisation and the output will provide an element of structure to an often ambiguous and uncertain and volatile growth journey. Is there an explicit TARGET OPERATING MODEL in your organisation – could it do more to create STRUCTURE and generate MOMENTUM through DIRECTION towards SUSTAINABLE PERFORMANCE EXCELLENCE?
Gallus build sustainable, high performance environments that everybody can believe in. With particular expertise in leadership capability and alignment, organisation design, business transformation and enterprise risk management, Gallus challenge assumptions, cultivate belief and drive positive change by making performance excellence systemic. An established business with Headquarters in Northampton, UK and offices in London, Manchester and Aberdeen, Gallus work with ambitious organisations across the world from a wide range of sectors. Find us at www.gallusconsulting.com or call +44(0)20 3751 6345.
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