The 6 stages for creating and managing Advantage in the life cycle

“Doing the right things, at the right time, in the right way”

A roadmap for entrepreneurs & business leaders

Why focus on Advantage?

Whether you are starting, scaling or resetting a business your Advantage is what makes you different and delivers value to your stakeholders (Customers, Employees, Shareholders, Suppliers, and Partners etc.). In my 33 year career in business as a manager, leader, employee and advisor I observed that those that focus on their advantage and manage it continuously are the most successful performers and those who either do not focus, or lose sight of advantage perform below average or ultimately fail, because they are notDoing the right things, at the right time, in the right way”. This led me to research and develop “The Business Advantage Model™ (BAM™)” a comprehensive and detailed Framework for entrepreneurs and business leaders to minimise risk and maximise returns.

What is Advantage?

Advantage is being in a position which is favourable or superior. In business we often discuss “our competitive advantage” which describes where we have a superior position to the alternative choices (often our competition). But to consider competitive advantage alone as it is generally understood, is misleading as it often leads to a myopic focus on one external market advantage , rather than understanding the total competitive advantage that makes your business the choice, and all the things that enable that deeply embedded advantage you want to leverage and develop.

The 6 Stages (Phases) of business evolution relating to advantage

We use a simple model basis of “Advantage” in particular competitive advantage but not exclusively, because if we focus on creating advantage in every part of our business as part of the culture and process, aligned with the target market advantage then we maximise the value we create within the business and for our stakeholders. In addition understanding the sources of advantage and managing those sources ensures a sustainable approach to the delivery of market advantage. There can be many sources of advantage (access to cheap finance, skills, competencies, location, raw materials, process etc.)

As business leaders we usually have limited resources and constraints, and also our experience cannot prepare us for every situation and/or role, so it is important we do “the right things, the right way at the right time “.

The 6 stages of advantage are as follows:-

  1. The potential Advantage
  2. Creating Advantage
  3. Proving Advantage
  4. Protecting Advantage
  5. Leveraging Advantage
  6. Changing Advantage

To skip any stage runs the risk of dilution and/or loss of advantage, so whether we are a start-up, scaling or turnaround entity each stage needs to be considered in sequence, otherwise we may miss something important and do something that reduces the potential to create value. In each stage there are two central aspects: 1. The Progress Deliverable & 2. The Planning Deliverable.

 

Potential Advantage – Business Validation (Stage 1)

Often we are starting with an idea, and an idea is not a business, so we need to validate that idea with quantitative and qualitative data/facts from the market. First we must establish that real advantage potential exists in the market, and confirm we have the capability (competence & capacity) to create that advantage. We confirm markets exist for the solution (product/service), that there is a problem/opportunity the target customer acknowledges and our solution advantage is attractive. We also confirm that there is a value proposition which can deliver an ROI that is acceptable to the stakeholders. Some of the things we will do at this stage include: Defining the problem, customer, market, solution and advantage, understanding the compelling drivers and sources of advantage and considering all options and alternatives available to us and to the market. We quantify the value proposition for our customer and for our business, and ensure there is sufficient scale and opportunity in the future to deliver an attractive ROI. We ensure we have or can acquire the capability and resources to deliver the ROI. We look at organisation/company formation, funding, governance and compliance. On completion we will have confirmed that we have a solid business case to move from idea to solution/concept, and we set a vision and plan that is informed and achievable. Stage 1 is perhaps the most detailed stage in the model as it is the most important as regards setting the foundations for a business and avoiding potential wasting of resources on ideas that are never likely to deliver on initial expectations.

Progress Deliverable: – Confirmation we can create advantage and a business case to create value

Planning Deliverable: – Foundations & Plan that enables the creation of advantage and market entry

Creating Advantage – Business Verification (Stage 2)

We now need to prove the concept to ourselves and representatives of the market. We want to ensure we can create & validate the advantage and that it is visible to stakeholders. This stage is about proving the concept, not just prototyping the solution, but prototyping and testing the complete business model as we understand it at this stage. If Stage 1 is research then Stage 2 is development. We emphasis the need for an Agile approach not just to development but to the business as a whole, central to this is active engagement with Alpha customers and the market in short sprints. In parallel we start more detailed planning for market entry, this stage will include understanding our positioning, and who we will target as Beta clients? We develop Alpha and Beta client programs and contracts. We put in place board & management structures to support market entry and, contracts to meet good practice and minimum compliance requirements. We also will identify sources of funding and how to approach initial funding of the business. The final key deliverable of this stage will be the preparation of a business plan which should be a pragmatic description of how? And when? We will create advantage and value, and outline the roadmap for stakeholders towards an ROI. We will include some detail on our Beach-head market entry plan.

Progress Deliverable: – Confirmation we have created advantage for Alpha customers

Planning Deliverable: – Market Entry Plan & Resources (Beach-Head)

 

Proving Advantage – Confirmation of Business (Stage 3)

In Stage 2 we have confirmed there is advantage, value and a business we can create for stakeholders. We have engaged with customers, markets and potential customers, and we have a plan that ensures we know what is required to enter the market. We now enter the market, in a well-defined approach to the beach-head segment that we have identified. It is during Stage 3 we refine and prove each aspect of our business so we can scale to long term sustainable advantage and value creation. At this stage we are launching to Beta customers and looking at the total customer experience not just the experience with the core solution advantage, we also are getting more direct feedback from the market to understand those variances that exist relating to different customer groupings and segments. We also concentrate on how we release solutions internally and externally and, develop all our touch points with customers and the markets to ensure our advantage is visible and experienced. At Stage 3 not only are we entering the market but we are preparing for future scaling of the business. We have started to commercialise our advantage but we can be sure that we will learn much through market engagement, and we will be refining our business model (How we convert advantage to value). We will review pricing and the total customer experience through a safe relationship with early Beta clients which enable us to minimise risk when we release to other non-Beta beach-head customers.  We also at this stage define and practice our selling strategy and process, ensuring Marketing can create leads and, sales can convert these to customer revenues. Our sales strategy becomes very important from qualification, through to negotiation and contracts. In Stage 3, we begin to focus on the important Key Performance Indicators (KPI’s ) and metrics we have identified as enabling us improve our core advantage and performance, We review KPI’s  on a  frequent basis for all key dimensions of the business. Roles, Teams and Structure will need to be more defined Stage 3, as we are starting to grow the entity and must be ready to scale. In addition getting clarity on how we lead, manage and govern the business going forward and the relationship between each of these roles is important. The importance of management information and analysis is increasing so we get more formalised on budgets, business cases and performance reports.

Progress Deliverable: – Confirmation of initial commercial viability and delivery

Planning Deliverable: – Foundations & Plan that enables the start of the scaling process

Protecting Advantage – Securing the Business (Stage 4)

Protecting Advantage is more about deepening the relationship with customers and markets and accelerating growth and success rather than, things like patents and copyright, though they have importance real value is created by growth and performance. In a sense it’s about accelerating growth, market share and Brand identity. We are now at a stage where the rate of shareholder value creation can be accelerated. To date we have mitigated both the product/technical risk because we have proved the advantage, we also have started to significantly mitigate the commercial risk by entering the market, growing the customer base and revenues and processes. So stage 4 is about acceleration of growth and lock down of all areas of advantage. We start to look at our solution and geographic market options to enable growth and expansion, we will want to prioritise one or more areas where our advantage is compelling and access is achievable as we start to scale. We may look at alternative approaches to markets, organic and in-organic. Timing and solution life cycle management become more important, knowing when?  And how?  to enter new markets and/or introduce new solutions or advantage to current markets. We may want to enhance our focus on competitors and competitive behaviour because by now we should be making an impact on the market, or entering new markets with new competition. Legacy competitors may be responding to our advantage or new competitors bringing new advantage that dilutes our advantage. We will now need to put more formal CRM processes in place to broaden and deepen our knowledge and relationships with customers and, ensure a consistent total customer experience. Our capability is growing, and managing it requires more formality to ensure we get the best from people and teams. This is the stage the board and shareholders should be reviewing progress on value creation and options for any value realisation event that might occur in the future. We also look in more detail at how to raise series A finance required to scale the business.

Progress Deliverable: – Commercial success and structure/resources for growth in place

Planning Deliverable: – Solution and market development plans

 

 

Leveraging Advantage – Building Scale in the business (Stage 5)

By now the business KPI’s will be demonstrating growth and performance improvement not only top-line but the underlying drivers and enablers. You will have refined your core advantage and also created visible and measurable value, we now seek to leverage the achieved advantage with the additional assets created to create further growth. This is likely to involve entering new markets and adding new solution applications. Our focus here will be “similar and synergies”. We will be becoming more innovative in seeking new advantage and sources of advantage particularly externally where 3rd parties can provide complementary assets/resources we can leverage perhaps in cross selling or, in creating new solution applications leveraging our core advantage, with other secured new advantage. Our focus on collaboration and collaborative culture will be enhanced to release talent in the organisation and facilitate all types of innovation (people, process, technology, market). We look at our business model and structure in the context of leveraging the touch points with customers; we consider the structural dimensions of products, services and e-business models. Data an analytics become ever increasing in importance as we should have history and scale and therefore lots of information that help inform the future. Brand analysis and management is an essential enabler to future growth and scaling, as we have an established company and solution brand. In-organic growth such as M & A may be the pragmatic reality to accelerate scaling and we consider what is relevant and how to achieve successful inorganic growth along with ensuring we have a business case versus organic growth. We may have created financial strength and cash assets which must be managed to maximise value so we need to consider treasury, Foreign exchange and tax management.

Progress Deliverable: – Success in new and expanding markets creating assets and value

Planning Deliverable: – Asset leverage plan and environmental analysis and long future projections

Changing Advantage – Continuous business innovation (Stage 6)

We create a proactive culture that can project future changes and opportunities for our organisation. We are planning and executing to maximise value, advantage and growth while minimising risk. We are identifying and executing strategies for diversification that are based on new core advantage in existing or new markets. We may have or be considering IPO to fund significant growth and also convert some value into returns for shareholders. This stage is all about avoiding complacency, continuously innovating and growing and adapting our advantage. We may be in reactive mode as a result of a step change (or expected) in our core business/advantage which signals a plateau or future decline in our advantage and value. We look at change management in detail as it’s here we need to be proficient in changing the direction of the ship. We may have to shift our organisation and venture to new advantage, new solutions, new competitors, new markets, new models and new structures and capabilities, so change management is critical. We will be building our competence in Organisation design and development, managing human systems and keeping our people motivated and innovative so they engage in driving change, without losing sight of the day job our current core business. We also look at company value and valuation in order that stakeholders can make informed decisions on further scaling, value realisation and value risks.

Progress Deliverable: – Scaled value through business innovation and diversification

Planning Deliverable: – Business case for changes and delivery of related ROI

Summary

The model identifies the 6 distinct phases of a business/organisations development, it provides a road map to focus on doing the right things, the right way, at the right time to maximise advantage and value creation. The detail of each stage of the model is extensive so there is a logical roadmap for leaders and teams.

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