The Perils of an Inflexible Business Model

Posted by Chuck Kocher
On December 2, 2019

Business Plans Are Important but They’re Not Sacred

I’m guessing that you’re already convinced of the need for good planning in order to drive your business forward. You’ve seen all the memes and encouraging slogans such as: “Failing to Plan is Planning to Fail,” and “An Idea Without a Plan is Just a Dream.” As a business coach, I work with business leaders and their teams to help them create solid, specific business models and strategies that will help them achieve their goals. But I want to share a bit about the perils of an inflexible business model. Plans are important, but they’re not sacred.

Disruption is the New Norm

Why is it dangerous to have a rigid business plan? It’s because, in the world of business, disruption is the new norm. Amazon completely changed the face of retail. Now they’re even in the grocery business! Elon Musk has disrupted the automobile industry with his electric cars. And while Tesla may not own the majority of the market, it have certainly impacted it. It’s hard to find a major auto manufacturer who isn’t offering an electric car today. According to landline-only homes in the U.S. dropped from 34.4 percent to 12.9 percent, while in many emerging economies, populations skipped over landlines completely and went straight to cell phones.

 What’s Your Iceberg?

We’re all familiar with the history of the Titanic. The ship was considered “unsinkable” by its builders and owners—and by its captain. It was, in fact, a remarkable vessel. But people overlooked the very real perils of icebergs. It would seem that they ignored the fact that much of the danger that an iceberg presents is not visible on the surface.

What’s your iceberg? What are the business shifts and market changes that could sink your scaling ship? Beyond that, what assumptions are you making that could lead you into a head-on collision with events that could destroy your business?

What Does It Take to Change Course?

It’s one thing to acknowledge that there are potential dangers in the marketplace. It’s something quite different to actually change the direction of your business. What does it take to change course?

It begins with being willing to challenge your assumptions.  Are the assumptions upon which you built your business model still valid? To answer that question requires you to be a deliberate and disciplined learner. You need to keep your eyes and ears open to shifts in the market and valid trends among your potential clients. I’m not talking about having a knee-jerk reaction to every new idea that comes along. Instead, observe the trends and ask yourself (and your team, and your trusted advisors) what’s driving those trends. One way to do that is to commit yourself to learning: Read regularly or listen to podcasts about emerging trends.

It’s also important to challenge your leadership team. When you meet regularly, challenge them with regard to your corporate assumptions. Do they still hold water? Encourage your team members to look beyond your industry to observe what’s happening in other corners of the business world. Get input from outside sources who aren’t influenced by or beholden to your assumptions. Bring in outside experts to challenge your assumptions.

Don’t Abandon Ship

I’m not suggesting that you abandon ship or that you should throw your business model overboard. Your business model is a tool that can help you achieve your goals. It may be right on target. But don’t assume it’s foolproof. Successful scaling businesses today need to be vigilant. They need to constantly transform themselves (and that includes their business models) if they want to stay relevant and successful in today’s ever-changing business environment.


Image by sweetreilly0 from Pixabay