Does Your Business Model Need an
Extreme Makeover?

by Lisa Nirell

Want to determine whether your business model deserves an “extreme makeover” or not? Here are the top ten clues.

  1. You are frustrated by customers demanding lower pricing, and they no longer seem willing to pay extra for your “value-added service.”

    What makes your product or service unique? Do customers regularly tell you that they are willing to pay extra for this? If price or the ever-vague “good customer service” are the only differentiators, it is likely your product has become a commodity.

  2. Customers are choosing an alternative solution to satisfy the same need.

    If you are losing some of your best customers, quickly determine why the shift is happening. Hiring an independent researcher to interview or survey lost customers is one way to do this. Is the alternative solution easier to use, less time-consuming, or cheaper? Does it appeal to their sense of greed, safety, or ethics?

  3. Your margins keep shrinking due to rising costs of doing business.

    If the key cost drivers in your business model have risen out of proportion to your price increases, it’s probably time to revisit your core offerings.

  4. New, innovative companies are entering your market.

    Case in point: The automobile manufacturers once boasted industry dominance in the United States. Over the last decade, the “big 3” have become “the handicapped 3.” Toyota and Honda now lead the charge in innovative hybrid fuel cars. The Big 3 could have adapted, but were wiped out by their lack of innovation and nimbleness.

  5. You are resisting a new industry shift or technology, even when customers are asking for it.

    How much do you find yourself digging in your heels with your customers — even when your market is asking you to change? In 2005, I experienced the perfect illustration of a company’s unwillingness to accept an industry shift while visiting a Mercedes dealer. At the time, I was in the market for a new vehicle. I asked the manager, "What is Mercedes-Benz's strategy for building alternative fuel vehicles?" It was as if I spoke the unspeakable. The manager firmly replied that they were focusing on fossil fuel technology for many years to come.

    Is your company wearing the same blinders? If you can spot the shift early enough, you should be able to adapt early enough.

  6. Your key people are married to “the way we have always been doing it.”

    You cannot seem to coach them to think otherwise. Persistent, limiting beliefs are an indicator that a sale or merger is a better option than transitioning to a new model. If you have multiple locations, and you are unable to detect this behavior firsthand, these are signs that your current team is not in a position to strategically transform the business:

    • Customers are demanding that two competitors work together and merge talents, and these companies are unwilling to.

    • The leaders are tolerating major dysfunctional and destructive behavior.

    • The founder or owner needs to create, but has not yet begun, a succession strategy, due to such things as a serious health/personal issue or retirement.

    • The company is unable to meet its goals after several consecutive years.

  7. You believe that strategic thinking and growth is reserved for large, well-established companies.

    How many times do you tell yourself “planning and visioning are important, but I am just too busy to do it?” If this happens daily, that’s a clue that your growth plan is in jeopardy. You have limiting beliefs — and you’re unconsciously passing those on to your team.

  8. You are struggling to shift from “practitioner” mode to “leader/visionary” mode.

    The habits and skills that help leaders attain their first few millions inhibit their ability to generate the next ten million. Many skilled experts excel at their trade, and later decide to start their own business in that field. After their first few millions, they are still working in the business. This severely limits their ability to look ahead and refine their growth strategy.

  9. You are constantly saying “yes” to interesting distractions (a.k.a. new ideas and projects).

    When the leaders keep announcing new projects and strategies, teams lack direction. They struggle to answer “What is our core business? Where do we invest? How does our job tie to our company’s success?”

    Here is a classic example of distraction addiction. One of my former clients announced a 39-point company turnaround strategy to a roomful of managers in Toronto. That software company was sold within 18 months at a bargain-basement price.

  10. You continue to sell old, unprofitable products — and invest valuable resources to support them.

    Many founders are emotionally attached to their past success and history. That’s human nature. We love our babies and don’t want them to leave for college. These blinders prevent us from gathering regular feedback on our current market opportunities, re-assigning our top performers to hot new projects, releasing poorly selling/low-margin products, or staking a claim in new, highly lucrative markets.

If you face any of these Top Ten Traits, it’s time for a makeover. What beautification steps will you take immediately to take charge of your market?


Lisa Nirell is Chief Energy Officer of EnergizeGrowth, a strategy consulting and publishing firm based in Sunriver, OR. She helps successful entrepreneurial leaders who have not yet reached the level of achievement they know is possible. Visit www.energizegrowth.com for additional resources. To request your free 35 Page Strategy Field Guide (a $37 value), email research@energizegrowth.com.

This article was originally featured in Cincom's ExpertAccess

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Copyright 2006 - 2007 by Lisa Nirell. All rights reserved.

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