The 6 stages for business advantage


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The business advantage model, stages of a business life

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The 6 stages for business advantage

  1. 1. The 6 stages for creating and managing Advantage in the life cycle “Doing the right things, at the right time, in the right way” A roadmap for entrepreneurs & business leadersWhy focus on Advantage?Whether you are starting, scaling or resetting a business your Advantage is what makes you different anddelivers value to your stakeholders (Customers, Employees, Shareholders, Suppliers, and Partners etc.). In my33 year career in business as a manager, leader, employee and advisor I observed that those that focus ontheir advantage and manage it continuously are the most successful performers and those who either do notfocus, or lose sight of advantage perform below average or ultimately fail, because they are not “Doing theright things, at the right time, in the right way”. This led me to research and develop “The BusinessAdvantage Model™ (BAM™)” a comprehensive and detailed Framework for entrepreneurs and businessleaders to minimise risk and maximise returns.What is Advantage? Advantage is being in a position which is favourable or superior. In business we often discuss “our competitiveadvantage” which describes where we have a superior position to the alternative choices (often ourcompetition). But to consider competitive advantage alone as it is generally understood, is misleading as itoften leads to a myopic focus on one external market advantage , rather than understanding the totalcompetitive advantage that makes your business the choice, and all the things that enable that deeplyembedded advantage you want to leverage and develop.The 6 Stages (Phases) of business evolution relating to advantageWe use a simple model basis of “Advantage” in particular competitive advantage but not exclusively, becauseif we focus on creating advantage in every part of our business as part of the culture and process, aligned withthe target market advantage then we maximise the value we create within the business and for ourstakeholders. In addition understanding the sources of advantage and managing those sources ensures asustainable approach to the delivery of market advantage. There can be many sources of advantage (access tocheap finance, skills, competencies, location, raw materials, process etc.)As business leaders we usually have limited resources and constraints, and also our experience cannot prepareus for every situation and/or role, so it is important we do “the right things, the right way at the right time “.The 6 stages of advantage are as follows:- 1. The potential Advantage 2. Creating Advantage 3. Proving Advantage 4. Protecting Advantage 5. Leveraging Advantage 6. Changing AdvantageTo skip any stage runs the risk of dilution and/or loss of advantage, so whether we are a start-up, scaling orturnaround entity each stage needs to be considered in sequence, otherwise we may miss somethingimportant and do something that reduces the potential to create value. In each stage there are two centralaspects: 1. The Progress Deliverable & 2. The Planning Deliverable.Strategic Business and IT Services© Jan 2013
  2. 2. Potential Advantage – Business Validation (Stage 1)Often we are starting with an idea, and an idea is not a business, so we need to validate that idea withquantitative and qualitative data/facts from the market. First we must establish that real advantage potentialexists in the market, and confirm we have the capability (competence & capacity) to create that advantage. Weconfirm markets exist for the solution (product/service), that there is a problem/opportunity the targetcustomer acknowledges and our solution advantage is attractive. We also confirm that there is a valueproposition which can deliver an ROI that is acceptable to the stakeholders. Some of the things we will do atthis stage include: Defining the problem, customer, market, solution and advantage, understanding thecompelling drivers and sources of advantage and considering all options and alternatives available to us and tothe market. We quantify the value proposition for our customer and for our business, and ensure there issufficient scale and opportunity in the future to deliver an attractive ROI. We ensure we have or can acquire thecapability and resources to deliver the ROI. We look at organisation/company formation, funding, governanceand compliance. On completion we will have confirmed that we have a solid business case to move from idea tosolution/concept, and we set a vision and plan that is informed and achievable. Stage 1 is perhaps the mostdetailed stage in the model as it is the most important as regards setting the foundations for a business andavoiding potential wasting of resources on ideas that are never likely to deliver on initial expectations.Progress Deliverable: - Confirmation we can create advantage and a business case to create valuePlanning Deliverable: - Foundations & Plan that enables the creation of advantage and market entryCreating Advantage – Business Verification (Stage 2)We now need to prove the concept to ourselves and representatives of the market. We want to ensure we cancreate & validate the advantage and that it is visible to stakeholders. This stage is about proving the concept,not just prototyping the solution, but prototyping and testing the complete business model as we understand itat this stage. If Stage 1 is research then Stage 2 is development. We emphasis the need for an Agile approachnot just to development but to the business as a whole, central to this is active engagement with Alphacustomers and the market in short sprints. In parallel we start more detailed planning for market entry, thisstage will include understanding our positioning, and who we will target as Beta clients? We develop Alpha andBeta client programs and contracts. We put in place board & management structures to support market entryand, contracts to meet good practice and minimum compliance requirements. We also will identify sources offunding and how to approach initial funding of the business. The final key deliverable of this stage will be thepreparation of a business plan which should be a pragmatic description of how? And when? We will createadvantage and value, and outline the roadmap for stakeholders towards an ROI. We will include some detail onour Beach-head market entry plan.Progress Deliverable: - Confirmation we have created advantage for Alpha customersPlanning Deliverable: - Market Entry Plan & Resources (Beach-Head)Proving Advantage – Confirmation of Business (Stage 3)In Stage 2 we have confirmed there is advantage, value and a business we can create for stakeholders. Wehave engaged with customers, markets and potential customers, and we have a plan that ensures we knowwhat is required to enter the market. We now enter the market, in a well-defined approach to the beach-headsegment that we have identified. It is during Stage 3 we refine and prove each aspect of our business so we canscale to long term sustainable advantage and value creation. At this stage we are launching to Beta customersand looking at the total customer experience not just the experience with the core solution advantage, we alsoStrategic Business and IT Services© Jan 2013
  3. 3. are getting more direct feedback from the market to understand those variances that exist relating to differentcustomer groupings and segments. We also concentrate on how we release solutions internally and externallyand, develop all our touch points with customers and the markets to ensure our advantage is visible andexperienced. At Stage 3 not only are we entering the market but we are preparing for future scaling of thebusiness. We have started to commercialise our advantage but we can be sure that we will learn much throughmarket engagement, and we will be refining our business model (How we convert advantage to value). We willreview pricing and the total customer experience through a safe relationship with early Beta clients whichenable us to minimise risk when we release to other non-Beta beach-head customers. We also at this stagedefine and practice our selling strategy and process, ensuring Marketing can create leads and, sales canconvert these to customer revenues. Our sales strategy becomes very important from qualification, through tonegotiation and contracts. In Stage 3, we begin to focus on the important Key Performance Indicators (KPI’s )and metrics we have identified as enabling us improve our core advantage and performance, We review KPI’son a frequent basis for all key dimensions of the business. Roles, Teams and Structure will need to be moredefined Stage 3, as we are starting to grow the entity and must be ready to scale. In addition getting clarity onhow we lead, manage and govern the business going forward and the relationship between each of these rolesis important. The importance of management information and analysis is increasing so we get more formalisedon budgets, business cases and performance reports.Progress Deliverable: - Confirmation of initial commercial viability and deliveryPlanning Deliverable: - Foundations & Plan that enables the start of the scaling processProtecting Advantage – Securing the Business (Stage 4)Protecting Advantage is more about deepening the relationship with customers and markets and acceleratinggrowth and success rather than, things like patents and copyright, though they have importance real value iscreated by growth and performance. In a sense it’s about accelerating growth, market share and Brandidentity. We are now at a stage where the rate of shareholder value creation can be accelerated. To date wehave mitigated both the product/technical risk because we have proved the advantage, we also have started tosignificantly mitigate the commercial risk by entering the market, growing the customer base and revenues andprocesses. So stage 4 is about acceleration of growth and lock down of all areas of advantage. We start to lookat our solution and geographic market options to enable growth and expansion, we will want to prioritise oneor more areas where our advantage is compelling and access is achievable as we start to scale. We may look atalternative approaches to markets, organic and in-organic. Timing and solution life cycle management becomemore important, knowing when? And how? to enter new markets and/or introduce new solutions oradvantage to current markets. We may want to enhance our focus on competitors and competitive behaviourbecause by now we should be making an impact on the market, or entering new markets with newcompetition. Legacy competitors may be responding to our advantage or new competitors bringing newadvantage that dilutes our advantage. We will now need to put more formal CRM processes in place tobroaden and deepen our knowledge and relationships with customers and, ensure a consistent total customerexperience. Our capability is growing, and managing it requires more formality to ensure we get the best frompeople and teams. This is the stage the board and shareholders should be reviewing progress on value creationand options for any value realisation event that might occur in the future. We also look in more detail at how toraise series A finance required to scale the business.Progress Deliverable: - Commercial success and structure/resources for growth in placePlanning Deliverable: - Solution and market development plansStrategic Business and IT Services© Jan 2013
  4. 4. Leveraging Advantage – Building Scale in the business (Stage 5)By now the business KPI’s will be demonstrating growth and performance improvement not only top-line butthe underlying drivers and enablers. You will have refined your core advantage and also created visible andmeasurable value, we now seek to leverage the achieved advantage with the additional assets created tocreate further growth. This is likely to involve entering new markets and adding new solution applications. Ourfocus here will be “similar and synergies”. We will be becoming more innovative in seeking new advantage and rdsources of advantage particularly externally where 3 parties can provide complementary assets/resources wecan leverage perhaps in cross selling or, in creating new solution applications leveraging our core advantage,with other secured new advantage. Our focus on collaboration and collaborative culture will be enhanced torelease talent in the organisation and facilitate all types of innovation (people, process, technology, market).We look at our business model and structure in the context of leveraging the touch points with customers; weconsider the structural dimensions of products, services and e-business models. Data an analytics become everincreasing in importance as we should have history and scale and therefore lots of information that help informthe future. Brand analysis and management is an essential enabler to future growth and scaling, as we have anestablished company and solution brand. In-organic growth such as M & A may be the pragmatic reality toaccelerate scaling and we consider what is relevant and how to achieve successful inorganic growth along withensuring we have a business case versus organic growth. We may have created financial strength and cashassets which must be managed to maximise value so we need to consider treasury, Foreign exchange and taxmanagement.Progress Deliverable: - Success in new and expanding markets creating assets and valuePlanning Deliverable: - Asset leverage plan and environmental analysis and long future projectionsChanging Advantage – Continuous business innovation (Stage 6)We create a proactive culture that can project future changes and opportunities for our organisation. We areplanning and executing to maximise value, advantage and growth while minimising risk. We are identifyingand executing strategies for diversification that are based on new core advantage in existing or new markets.We may have or be considering IPO to fund significant growth and also convert some value into returns forshareholders. This stage is all about avoiding complacency, continuously innovating and growing and adaptingour advantage. We may be in reactive mode as a result of a step change (or expected) in our corebusiness/advantage which signals a plateau or future decline in our advantage and value. We look at changemanagement in detail as it’s here we need to be proficient in changing the direction of the ship. We may haveto shift our organisation and venture to new advantage, new solutions, new competitors, new markets, newmodels and new structures and capabilities, so change management is critical. We will be building ourcompetence in Organisation design and development, managing human systems and keeping our peoplemotivated and innovative so they engage in driving change, without losing sight of the day job our current corebusiness. We also look at company value and valuation in order that stakeholders can make informed decisionson further scaling, value realisation and value risks.Progress Deliverable: - Scaled value through business innovation and diversificationPlanning Deliverable: - Business case for changes and delivery of related ROISummaryThe model identifies the 6 distinct phases of a business/organisations development, it provides a road map tofocus on doing the right things, the right way, at the right time to maximise advantage and value creation. Thedetail of each stage of the model is extensive so there is a logical roadmap for leaders and teams.Strategic Business and IT Services© Jan 2013