Photo by Aaron Paul on Unsplash
This is a brain dump post to clear my head after a couple of conversations today stimulated my thought on using the business model canvas for assessing corporate performance
I was preparing to onboard a new client this morning. Its a business turnaround case. They’ve been running for a decade but slowly it’s all fallen apart for a number of reasons.
Right now I’m not sure how bad it is and I need a clear picture.
What I have done is to take the 9 aspects of the business model canvas and ask the client to give herself a score out of 10 for each of them.
The next step is to colour code the canvas using a similar schema to the Net Promoter Score. <7 = red, 7-8, yellow and 9-10 is green. Using those numbers seems about right as anything less than 7 is really unsatisfactory to a customer. How can we deliver great value if we aren’t performing?
How does this work in practice?
I’ve mocked up a couple of response I received in the last few minutes from a client that I started working with in October
As you can see back in October the business was not doing well. Remember a red score is anything less than 7. This is why I was brought on board.
As we move forward to March you get this
As you can see the performance has improved dramatically. Some areas are really good, and many of the problem areas have been stabilised and are satisfactory
It very clearly shows us where management needs to spend its efforts to bring the business up to speed. Those red areas are big weaknesses in the ability of the business model to deliver at the moment.
What is this based on?
It’s based on the CEO’s subjective assessment of performance in an area. That’s a valuable insight. Can we take it further and make it a more useful management tool
I think we can. I haven’t done this yet but I’ll approach it as follows
First, choose the 2 or 3 key metrics in each area. What they are, how they are measured is entirely up to the business.
Then define the range that is valuable. Your sales plan may say that you want $25 million in sales this month. That’s the target and so we’d define that as a 7 or 8. Sales of $30 million would be clearly green. Sales of $15 million would be clearly red. We can add in colour graduations to provide some nuance as required.
Extend this out for all the other segments as required.
In some ways, this is similar to the balanced scorecard. That’s a bunch of KPIs on a grid with colours
This is a Picture of the Living Business
Where this is different is that the business model canvas captures how the business model works. So you are looking at the health of the business and I suspect, given the correct choice of KPIs, see how all the moving parts interrelate and impact each other.
So a falling of conversion rates in a customer segment will be an indicator of a weakening value proposition which will then impact sales and the efficiency of marketing performance
As I said. This is a work in progress and I’d love to get your thoughts on this and how it can be developed. Send me an email if you’d like to try it out with your business
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