3223 Lake Ave. Unit 15-C #307
Wilmette, Illinois 60091
708-829-7470
Understanding your business model is crucial for evaluating the ability of the company to support a new product idea. Too often we see companies taking on a new product development project, only to discover late in the process that the company is missing key infrastructure, such as the appropriate distribution channels, expertise in key technologies or the ability to finance large product purchases for customers. This post will help you decipher your business model in 10 key steps.
Before we get started on those 10 steps, a brief definition of a business model: It describes how a company creates and distributes a compelling value proposition that customers are willing to pay for at a price that yields an acceptable profit for the company.
OK, now for the 10 steps to developing a business model. Throughout the process, stay at a fairly high level and focus on the most important attributes. It’s easy to get lost if you get into every little detail.
If it’s not evident in the activities or resources identified you’ll need to take another pass at it. It may take several iterations to get something you are comfortable with.
Repeat for each customer segment, noting similarities and differences with the previous segment(s). You may find it helpful to arrange your findings for easy reference in a diagram like the one below.
The business model is one of the most powerful, and most overlooked, tools of the product developer. New products must fit the existing business model, unless the company is expressly willing to adapt its model to support the new product. Evaluating fit with the business model early and often throughout the development process helps prevent costly mistakes and improve new product success.
Strategy 2 Market helps companies increase growth and decrease complexity. Questions: Mary Drotar mdrotar@strategy2market.com 312.212.3144
© 2015 Strategy 2 Market®, Inc. All rights reserved. – 29 N. Wacker Dr., Suite 701, Chicago, Illinois www.strategy2market.com 312.212.3140 info@strategy2market.com