Business models – How to manage the time dimension
Considering the ever-changing business world we are living in, understanding business models and defining new ones are the new business-as-usual activities. We are seeing a series of rapidly growing startups with business models evolving around new technologies and use cases. To adapt to this fast moving business environment, creating solid reference points for measuring progress is increasingly important.
Considering the ever-changing business world we are living in, understanding business models and defining new ones are the new business-as-usual activities. We are seeing a series of rapidly growing startups with business models evolving around new technologies and use cases. To adapt to this fast moving business environment, creating solid reference points for measuring progress is increasingly important.
When it comes to business models, there are many different ways to depict the model and its constituent components. One well-known method is the business canvas structure, in which we are able to define the key pillars of a business model including cost structure, revenue streams, customer segments, key activities, key resources, partners, channels and value propositions. These pillars enable us to define different key parts of the business and also enable us to see how they interact and if there is anything out of place in the model. When you put them on a page, it gives you a bird’s-eye view of what the business is doing or what it aims to do.
In many business model studies, there is one critical element that is often overlooked, which is the time dimension. Whether you are creating a new business model structure from scratch or updating an existing one, the time dimension is often considered an implicit variable in the model, which will be addressed in subsequent periods depending on market developments. However, in today’s fast changing environment, it is important to focus on the time dimension and address it as a separate variable affecting how the business model evolves.
Let’s expand our point of view by analyzing some of the individual components of the business model structure.
• Value propositions: These elements define what you offer to your customers with the resources and capabilities your organization possesses (or plans to possess). In other words, these are the products and services your company provides and are what makes your company stand out among other competitors. Although it is vital to create a starting point for your value proposition set, it is important to note that the initial value propositions will partially or fully change as the market changes with time and with changes in market conditions, players, rules and infrastructure. In defining this component of the business model, it is critical to incorporate the potential value propositions in the mid and long term. This can be achieved by factoring business strategy and expected market trends and conditions into the business model equation.
• Key partners: Another critical area in which the time dimension plays a key role. In today’s world, business partners and strategic collaborations are becoming an integral part of business as markets and technology infrastructures become more complex. Depending on how the market evolves and how the company aims to position itself in the mid and long term, it is important to define what type of partnerships it will develop in addition to the short-term goals it has planned. Considering the market dynamics (startups, new technologies) it may not always be possible to identify collaboration partners with pinpoint accuracy. However, it is always a useful practice to evaluate where the ball is heading and to decide in which areas we will need the expertise and partnership of other players.
• Key resources and activities: One final area that is important to consider is key resources and activities. To implement any business model, you have to execute a certain set of activities that utilize your resources in order to attain your organizational objectives. In the initial phase, in the case of let’s say a startup, the resources are the initial team, technology solution and potential customers. The initial activity set will be the creation of the minimum viable product, defining the go-to-market and gaining the first customers to establish a foothold in the target market. This is an area where the time dimension should be considered in detail and, if necessary, according to different scenarios. In the business model, the expiration date of existing resources and activities and their next step versions should be assessed in detail by taking into account market conditions, technology trends and competition. Next versions of key resources and activities might decide what is achievable and what is not achievable.
Initially, it might sound obvious that the time dimension is a critical element in designing business models. However, in today’s VUCA (volatility, uncertainty, complexity, and ambiguity) world, this is something that can be overlooked in business model design.
The views expressed in this article are the views of the author only. This article provides general information and point of view, and should not be considered as professional advice.
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