Starting Point for Simplicity: Draw Your Business Model

by Rita McGrath for Harvard Business ReviewCompanies that grow face a predictable problem: over time, the business becomes way too complex for its own good. I see this a lot in companies that have moved heavily into what I call the “exploitation” phase of a competitive advantage, or the phase that comes after the initial launch and successful ramp-up.With the warm glow of steady and more-or-less predictable profits to depend on, more and more policies are introduced, more new ways of extracting profits are developed, the company loses touch with its customers, fewer activities are directly related to what Geoffrey Moore famously called the “core” and instead have to do with context, and the company seems to lose its agility. The internal world comes to matter more than what is going on outside the boundaries of the company and it just sort of loses its edge. The difficulty here is that this doesn’t happen overnight. Convinced that they have a sustainable competitive advantage (always a risky way to think about your business), executives allow bureaucracy to take over and decision-making to become sclerotic.To give an example of just how hard it can be to prevent this from happening, let’s consider the case of Nokia.Read More →