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New Normal Business Model #2 - Channels and customer relationship

It is indisputable that everything we are currently experiencing as a result of the events linked to the Covid-19 will leave a deep mark. It will not only affect companies, but it will impact them through people’s and customers’ behavioral change.

After this hard time (even if it is premature to talk about it yet), the sign that all this will leave will be all about people's behavior, their habits, their scale of needs.

At this moment in history there is only one certainty, which has become an obligation: we must keep our distance.

While waiting for a vaccine or effective therapy, we are facing the challenge through social distancing.

But how will social distancing impact on a company's business model?

If we ask this question about a company's business model, it means talking about channels and customer relationships.

In this regard, the much-loved (at least by me) and the much explanatory Business Model Canvas by Osterwalder is useful.

New normal business model

The boxes that are most impacted by this requirement are therefore the channels and the customer relationship.

Coronavirus will transform or has already transformed everything: it is necessary to invent other channels, maybe never thought and never seen before. New approaches with the customer.

When it comes to customer relations, the idea behind the actions must be trust. Or rather, what has changed is a new concept of trust, which arises from the new needs dictated by the historical moment. Now I decide who to go with, who to meet and maybe when to meet someone.
Trust is fundamental, it was already fundamental before, but it is more so in this situation.

Which company do I trust, or can I trust? Who do I trust? Why trust you, as Alice Cooper sang in 1989 (hard rock genre, but do not worry, we'll finish this chat with another kind of music...trust me).

Working on the two canvas boxes, channels and customer relationship, leads you to review your service model. Maybe this will lead to a return to the essential (back to basic). Or, for some people, it will allow them to reinvent themselves, through defining a new value proposition.

Many start-ups and established companies are trying to compete on new technologies, products, services and price points. In fact, the world's most successful companies are competing on superior business models.

These business models are in turn based on configurations and combinations of different building blocks of the Business Model Canvas to strengthen a company's overall business model. This is the secret formula behind their success. Understanding and acting accordingly with these elements help entrepreneurs and business managers to create better and more resilient businesses.

A model is an arrangement and a combination of various elements to create a certain result. It is the methodological approach that a designer follows and that has given birth to design thinking in a company.

Architects or designers repeatedly use certain schemes because they lead to superior results.

Each model and each different composition of its elements help us to go beyond traditional means of competition on products, services, technologies and prices. Each model helps us focus on a different way to achieve a superior business model.

However, business models are still underused today. Many companies focus on one or two elements of a business model and not on all the building blocks and their potential configurations.

Many companies have difficulty thinking about the business model and the interlocking of the different boxes of the Business Model Canvas. Therefor it will be difficult for them to design high-performance business models.

Companies are used to think about plans or business plans. They have plans for everything: sales, M&A, hiring, etc..

Often the plans are not respected, leading the company into crisis, because not having a plan "b", it is not even able to redesign its organizational and business model to face any crisis. One is not used to think about business models and to understand that plans are derived from these models and not the other way around.

Former heavyweight champion Mike Tyson once said, "Everyone has a plan until they take a punch in the mouth."

He was right. The only chance we have at this moment in history is to question our business model. Our DNA as a company. Our M.O. Our organization. Our beliefs.

According to management guru Peter Drucker, the twenty-first century leader is a conductor who, on the basis of a predetermined score, is able to obtain excellent performances from his orchestra, even without necessarily having extraordinary musicians.

It is enough for everyone to give their best and rehearse and practice the same piece until the first violin is able to play it as the orchestra director feels it. This is roughly the philosophy of Dave Alred (for those who knew him), great performance coach of rugby and golf champions, who educates players to discomfort making their training much more stimulating and "uncomfortable". But at the base of it all there is the obsessive repetition of the same attitudes in training to reproduce them in a natural way during competitions or matches.

With all due respect to the great Peter Drucker, to whom I owe everything thanks to his teachings, but perhaps the metaphor of the orchestra director does not consider the enormous ambiguity and turbulence that even before the new coronavirus characterized the markets and that now more than ever will characterize them.

Then perhaps the best metaphor is that of an extraordinary form of American musical art called jazz. And here I keep my promise made earlier.

In jazz there is improvisation, of course, but it is not an improvisation in and of itself. It's creativity that brings added value, harmony and the desire to keep listening to it because curiosity leads us to ask ourselves: "how will the band close the piece?”

Improvisation allows you to discover links between dynamics taking place within an organization. Older organizations based on command and control models are obsolete, outdated. Now even more so.

We need models made by different experts who participate in a chaotic and turbulent environment in corporate life. We need them to make rapid and irreversible decisions, strongly interdependent with each other. They need to be innovative and creative. All this is in jazz. All this is jazz.

I remind of a book I read a few years ago called Harmonic Disorder. Leadership and Jazz by Frank J. Barrett (which I recommend reading) which also talks about this.

How do you learn jazz and, even more so, how do you bring the qualities of a jazz musician into a business organization? The rule is simple: by observing gestures, imitating and repeating; by listening and observing patterns.

This is achievable. All this is related to a deep knowledge of Business Model Canvas.

All this goes from a (re)analysis, (re)discussion of channels and customer relationships, before anything else. And then moving on to the other Business Model Canvas boxes.

But this will be the subject of the next episode.

 

Read New Normal Business Model #1 - How to become or create an invincible company?

Read New Normal Business Model #3 – Key activities and key resources, are they equally important factors?

 

Luca Pulli  - Partner RSM - Business designer