The classic models for thinking and doing business focused on investing and acquiring assets, due to their high risk component, do not withstand contact with the increasingly volatile, complex and uncertain reality.
The traditional view of business and company creation responds to logic: I plan + I get a budget or investment ($) + I acquire assets + I hire employees + I execute + I triumph (or I am surprised with a catastrophic result!)
That logic is there. It is so incorporated into our training that we disregard and often assertively deny the existence of other possibilities.
In essence, we must remember that a business consists of a repetitive process of generating value for other actors and capturing value.
Businesses of the future are collaborative, human and stakeholder-centric: actors take a central role in terms of the information they generate to support decisions. They work with dynamic and flexible business models and not with rigid long-term plans. They prioritize experimentation, measurement and learning over budget execution. They rely on allies and third parties and have a strong sustainable financing component, through the same actors, clients and suppliers.
In this context, I suggest 3 principles that in my opinion every company that wants to adapt to the future must follow:
1. Kill the idea
It is essential to abandon certainties and the notion of having the truth about the industry and replace the “we know” by listening to the client. “It is not about having or executing great ideas, but about validating, in close proximity with business actors, how to generate, deliver and capture more value repetitively. We must understand that the most powerful innovations are not always products or services nor do they necessarily require technology.
2. Replace business plans with business models
As Steve Blank, father of modern entrepreneurship, mentions: “The business plan does not survive the first contact with the client.” So: Why? How can you confidently execute a document full of hypotheses (or guesses) that represents only a snapshot from a moment in time?
The new methodologies build from business models, which focus on business actors, describing how value is generated, distributed and captured. They allow hypotheses to be formulated and given visibility, which will then be validated with simple experiments and listening. Indeed, much of the powerful wave of innovation we are experiencing is happening. based on disruption of business models.
3. Redefine the role of risk and investment in the current context
The pandemic exposed the limitations of rigid business models. He also awarded to the companies that managed to adapt and to those who knew how to innovate in time. The thing is that the organizational model that we still replicate was created to maximize efficiency in a world that maintained the illusion of stability. Today, the companies of the future prioritize flexibility and adaptability over efficiency, new businesses and opportunities over the barriers imposed by staying in the same industry or based on a single product.
With the exponential advancement of technologies, the logic of investing in assets as an entry barrier is gradually breaking down. Outsourcing begins to play a very important role and high fixed cost structures can put a company at risk of the next shock or black swan.
I greatly appreciate your joining me in this newsletter. I close like every edition with a small video or podcast fragment reinforcing some of the ideas of the article.
