How can you build a portfolio of business models for your future?

Pick up any of the latest publications and thinking on the future of Strategy, and you are sure to come across recommendations to build portfolios of new business models. The recommendation and research make sense: firms that are able to develop and test new business models command higher valuations.

How can you make it work?

One of the most practical and useful tools I recommend to get started with is the Introduction to Strategy Canvas. 

The Introduction to Strategy Canvas is a straightforward way to explain your ambitions, your core business, growth areas, and new riskier ideas you may just be starting to explore and investigate. 

By recognizing that the Key Performance Indicators, commonly referred to as KPIs, are different for each type of business model, you can minimize the risk of killing off a good idea just because it did not meet an inappropriate metric. For example, in your core businesses, you are most likely using "MBA Finance" metrics including ROIC, NPV, IRR, and FCF. Metrics such as Return on Invested Capital and Payback work very well for established businesses, and not so well for brand new ideas.

You can imagine how the board of Blockbuster Video must feel today having turned down the opportunity to take a majority position in Netflix, having decided that the then plucky upstart streaming business model "just did not deliver the profitability numbers."

Together with your board and management team, walking through and agreeing on what the Growth and Explore areas are, and how we can measure success in those areas is a good way to begin to build Strategic Alignment on your portfolio of business models. 

One way you can begin to explore new business models is through Corporate Venture Capital. Corporate Venture Capital, when used correctly, is an amazing tool in your kit for long term Value Creation. 

IIn Corporate Venture Capital, the challenge is to ensure the board and management agree on the purpose of the initiative, and how it will be used. 

You can help in getting clarity on your Corporate Venture Capital initiative through the use of our Partner Strategy Tools Corporate Venture Capital Canvas:

Changing the way we approach Strategy, evaluate business opportunities, and build business model portfolios requires a shift in Thinking.

While it is never easy to move the culture and decision making paradigms within an organization, iwhen you follow three guidelines the probability of success increases significantly:

1. The application of the right tools
2. Careful choices regarding how to make the move stick
3. Ensuring clarity on what exactly you want to accomplish

Do you want to learn more on how your organization can develop a winning approach towards building business model portfolios? Contact me today.

The author, Scott Newton, is Managing Partner at Thinking Dimensions