The Business Advantage Model Overview

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Overview of the Business Advantage Model (BAM)

“The entrepreneurs Roadmap”

Purpose of the BAM (Starting or  accelerating  business performance)

Successful businesses and organisations have a compelling advantage or set of advantages over their competition or where they compete for resources.  Understanding and managing these advantages at every stage of a business from idea through to scaled success is a trait of highly successful businesses. Having a framework and road map as an entrepreneur or business leader which connects the process of advantage creation and realisation with every core critical dynamic in the business is a unique way to focus the team on what is important  for a business or organisation based on its current stage of evolution and performance. The BAM is not an academic model but a set of skills, tools and competencies for entrepreneurs and leaders to improve new and evolving businesses succeed. It is both a risk management tool and a framework for performance based on understanding and managing competitive advantage linked to every function in the business/organisation at every stage of its development.

Basis of the Model (Based on experience do the right things at the right time in the right way)

A recent study by Harvard Business school indicates that New Venture failure rates are between 30% and 90% depending on how you define the criteria for failure:

  • 30% to 40% where investors liquidate and lose most or all of their investment.
  • 70% to 80% where the business stakeholders fail to see expected ROI
  • 90%-95% where the business declares a projection and fails to meet that projection

The author and developer of the BAM decided to use his 33 years of business experience with both successful  and sub-optimal performing (failures) start ups and mature organisations combined with proven academic and business research and tools to provide a guide to entrapreneurs and intrapreneurs to reduce the risk of failure and increase the success rates, while increasing entrepreneurial activity . Just a few small percentage point improvement in success rates can have a significant knock on benefits for an economy and those involved in investing  risk capital. Just a small improvement of say 5% in success rates would see exports in Ireland as an example increase by €100m & employment increase by 10,000 in what would be considered a small entrepreneurial economy. The author has developed this model while he continues to be actively involved with a number of entrepreneurial start ups and reviews, coaches and mentors many more on a day to day basis. There are hundreds of tools, processes and guides to help leaders create successful companies and growth, many underpinned by both academic research and practical application. These tools cover every aspect of the business, these can be learned through reading the relevant business books and journals and are taught mainly in  3rd level education for specific subjects/qualifications. The BAM is not intended to create another tools but more a methodology to select and apply the various techniques in a practical and pragmatic way on a Just in time flexible basis to create and realize competitive advantage and performance improvement.

In part it is about helping entrepreneurs, leaders  and investors stop activity and consuming resources as early as possible in the cycle of entrepreneurialism, to allow these stakeholders quickly move to the next opportunity with high levels of motivation, but more importantly helping these stakeholders identify, quantify, qualify and plan the potential of the opportunity and then execute a strategy that will realise that potential, or signal any change in the dynamics of the business environment that allows the stakeholders promptly adapt to those changes.

Summary of the Model

The model is designed to assist users understand how the stages of evolution (development/maturity) of a business relate to the critical functions and their focus at any stage in the development cycle. It is designed to provide guidance to the team as to what is important to have in place and to be doing at any point in the cycle. It is underpinned by the premise/thesis that success comes from creating advantage, managing advantage and then realising that advantage in the market place and this leads to success in meeting performance goals.

Advantage Column (Far Left)

From top to bottom outlines the stages of advantage as a business moves from idea, to achievement of vision , plan and ROI:

  1. Potential Advantage Confirmation: This stage is about confirming the potential advantage for a business exists.
  2. Creation of the Advantage: This stage is about “designing in” that advantage to the business
  3. Proving the Advantage: This stage is about ensuring stakeholders can see the advantage
  4. Protecting the Advantage: This stage is about ensuring the advantage is sustainable
  5. Leveraging the advantage: This stage is about expanding the value of the advantage
  6. Changing the advantage: This stage is about adapting current advantage and creating new advantage to increase the value of the business.

Business Column (Far Right)

Maps the stages of evolution of a business initiative and model from idea to achievement of vision, plan, and ROI as it relates to competitive advantage stage in “advantage life-cycle”.

  • Validation of Business Proposition: confirmation we are building the right business
  • Verification of Business Proposition: Confirmation we can build it right
  • Confirmation of Business Proposition: Confirming stakeholders agree it’s the right proposition and its built right.
  • Securing the Business Proposition: achieving sustainable growth and performance
  • Scaling the Business: Maximising available value for the business
  • Innovation of the business: expanding the ambitions and potential of the business

 Key Dimensions of the Business (Top Row)

In creating advantage and business performance success the key areas identified must be in near alignment to minimise risk, and tp optimise performance for each of the stages of a business. What is important at each stage for each dimension differs and failure to address or, a tendancy to skip a stage for a dimension will degrade performance and increase risk. As an example let us consider the Potential Advantage stage; the business opportunity dimension, may arise from an idea the entrepreneur has to solve a common problem that is novel and will create the value in the new business. The first and very important step is to clearly define the problem, quantify it and confirm with the person or entity that may have the problem that they actually do have the problem,that  it is a cost to them, or a lost opportunity, to size that cost/opportunity and establish what they would pay to have an acceptable solution. A common mistake entrepreneurs make is to use their experience or a limited contact to make the decision, and to start building the solution skipping the first step, only to find out 1. It does not solve the problem or solve it fully, 2. The solution is not saleable/purchasable 3. The cost to provide the solution outweighs the benefits and therefore will not sell. Bottom line is resources, energy and time is expended requiring a complete re start or worst case exit of this new business.

  1. Opportunity/Problem:- the central driver to create value must be understood and clearly articulated at every stage of evolution, including the expansion and diversification of the business.
  2. Solution/Competitive:- the solution (Product/Service) must address the problem or grasp the opportunity in a manner that the customer and market perceive as better than any alternative.
  3. Customer/Value:- the customer must be understood and agree (By Purchasing)  that there is high value in the solution as they are the source of value in our business.
  4. Market/Brand:- the size of and dynamics of customer groups must be well understood in order that the, investment matches the opportunity for ROI, and the  value proposition and advantage may be communicated to them and they are enabled to buy into our advantage and value.
  5. Team/Competence:- all business/organisations are built around people and human systems, they build the value, the product, the process, the relationships. They create or acquire resources and they consume resources. We need to have the right people, with the right skills and competence , doing the right things at the right time to accelerate through the stages.
  6. Governance/Compliance:- Leadership and management of the business , while engaging all the stakeholders is a critical success factor. Stakeholders who are making a decision to invest (Any resource) in the business will consider how well the business is managed.
  7. Finance/Profit: A fundamental success factor at every stage of the business evolution, how funding is secured and how it is deployed to create advantage and profit and ultimately stakeholder value.

The Advantage Intersections (The right thing, in the right way, at the right time)

The two axis of variable create a maturity type matrix that can be measured to provide the team with both a dash board of how they are evolving, and indicate where they have risk in the business so that the risk can be mitigated. Each box in the matrix provides a description for that dynamic at a specific level of the important features for that point to ensure sustainable advantage and business is achieved.

The label/name of the box is just an indicator of what is the main function that is appropriate for that dynamic at that level of advantage. The model describes for every box what are the right things to have or be doing, what is the right way to do it, and at this stage/time of business evolution.

There is an underlying assumption that the earlier stage dimensions have been addressed, nothing missed or skipped.

 

 

 

 

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