In a rapidly-changing world with intensified competition coming from every corner of the world and highly demanding customers, having a great idea, even a great product or service is simply not enough! In a world of constant change, only constant innovation is the answer! If you do not react on time, someone will take your place on the market, your customers will switch to your competitors. No hard feelings, we are all in the search for the best option, and you should be as well!
“Better late than never”, DOES NOT WORK anymore!
When I say innovation I don’t only refer to radical innovations and the creation of entirely new products and services, but also to ordinary improvements of your business processes. More specifically your business model!
“We are no longer competing through goods or services, we are competing through business models”
– Igor Gut, the author of DNA of a successful company
It’s very important to clearly define your business model. Many companies tend to leave out some crucial aspects of the business model which easily leads to failure to predict opportunities on the market. At the same time you risk overlooking weaknesses and threats on the market which if you act pro-actively can be converted into your strengths. Finally, well developed business model enables you to identify:
- areas of your business which are underperforming;
- areas where an external help would bring efficiency at a higher level;
- areas where savings can be achieved through centralization of services;
The Business Model Canvas of Dr. Alex Osterwalder gives a good overview of the parts consisting the business model and how they function together. One important part is describing your business’ infrastructure through which your business creates, delivers and captures value. It consists of your KEY RESOURCES which are the indispensable assets of your business, while the KEY ACTIVITIES identify the operations your business requires to perform well.
However, the most important parts of the infrastructure are the KEY PARTNERSHIPS which help you leverage your business. Companies competing on the global market often have global operations and require global infrastructure. You can now source and organize your business on a global level which has shown as the most optimal option. You have several alternatives:
Shared service centre (SSC)
Centralize operations at one shared service centre within the company, usually at a low cost location for cost efficiency. Another option is to entrust the SSC to an external partner with specialized knowledge in the area. This was the case of SKANSKA which set up a single SSC for its F&A processes in partnership with Infosys. In addition to the cost saving and increased efficiency SKNSKA was able to focus on its core business.
Outsourcing
Traditional outsourcing is convenient for non-core activities of your business, usually daily tedious tasks that take up a lot of time. These can be account payable, accounts receivable, payroll calculating among others. You can outsource on project or department basis. You can also use outsourcing as a resources augmentation tool when you are faced with high costs or skills shortages. This means you still keep your Accounting department in-house, but increase the stuff number by recruiting talent at a remote location. You can conduct the recruitment process yourself or outsource it to a company with market knowledge and connections. The main idea is to free up your best talent to focus on what is of utmost importance for your company.
Extended office model
If you are not a fun of outsourcing (I hope you are still reading). There is an alternative option which differs from traditional outsourcing in terms of quality, control and costs. Namely, you can have a dedicated team working solely for your company who will function as a natural extension of one of more of your departments. You communicate on daily basis, as if the people from the outsourcing company work at the office next to you. This helps employees to identify with the brand of the client and build team spirit environment across borders.
If you want to know more about how this model works watch the short VIDEO: https://www.youtube.com/watch?v=W6CMbzl2f10
Conclusively, businesses must stop justifying and defending their current business models. The game field has changed and the rules as well. The most important capability of today is understanding the business model options at a broader scene. Be innovative with your organization and planning of your business. Building your business model is not a one stop thing is an on-going evolving process.
