Beware the business boogey monster: False assumptions
Assert control over your company's destiny
A friend asked me if I knew a guy the other day, and I said something like, “Yeah, but what a cold, indifferent cat he is!” My friend responded, “Are you kidding? He’s a great guy!”
Shame on me. He is a great guy once you get to know him. The fact that he’s introverted and struggles in social situations caused me to have some false assumptions about his motives.
Nowhere are assumptions more powerful and potentially dangerous than in the two foundations of your business: your business model and your strategy. Leave those assumptions unchecked, and you’re as likely to make a fatal mistake as I was about the great guy I thought to be a jerk.
Business models and strategies overlap. Sometimes your business model can be your strategy, and sometimes your strategy works beneath your business model. It all depends, of course, on how you define the two.
The late Peter Drucker, perhaps the greatest business thought leader of our time, would’ve said that a business model must answer three questions: (1) Who’s our customer? (2) What does he or she value? (3) How do we make money satisfying that value? Brilliant queries!
Sometimes changing a business model results in a big win. IBM has reinvented its business model numerous times and is doing so again with Watson. Unfortunately, leaders usually think about their business model in two situations: (1) when the business is launched and (2) when they’re up to their armpits in alligators.
If we stick to the question format, we can best frame strategy with one inquiry: Why would our core customer buy from us versus other options?
Your competitors may have the same business model you do. So to succeed, you must have a different strategy or execute like hell! Do not, however, delude yourself into thinking you don’t need a strategy because it’s all about the execution. It’s not. If you execute brilliantly on bad ideas, you’ll just fail faster.
Underlying both a business model and a strategy are assumptions. Some are so deep-seated that we don’t even recognize them. It’s important to clearly articulate an answer to the following question: For our business model and strategy to succeed, what assumptions must be true?
This is most effectively done not by sitting down over a few pints of craft beer and shooting the breeze but by using a rigorous thinking process and multiple points of view to identify what you think the future will look like — and then drinking the beer.
Guess wrong, and you’re in trouble. Guess right, and you have a fighting chance to develop a winning business model and strategy. Refuse to do the work, and suffer the consequences of whatever comes around the corner — and sooner or later, it’ll be a large boogey monster!
If it were me, I’d rather exert as much control over my destiny as possible.