Creating Your Unique Business Design for Results

Last month we discussed why firm valuation is the best “win” metric for your business. This holds if your firm is a private for-profit or a publically traded firm. We said though that measure and its components are lagging in nature. What causes increases in firm valuation in the first place? For this we need to discuss leading indicators and that is the subject of this article.

The firms in last month’s article over the course of a ten year span grew their market value an average of seven times over each of their rivals: these included Microsoft, Coca Cola, Cisco, General Electric, Nike, Yahoo, Mattel and The Gap. While some of these firms have slowed down a bit, what caused this huge performance difference?

The answer is they had “business designs” that were upgraded and refreshed almost continuously. Some like Apple have overtaken Microsoft but we know superior sustained performance over a given time period is due to continuously refreshed business designs.

A short detour. The business world now has many new phrases that have cropped up in the last ten years that are close in meaning. Business models, and lean start-up principles are two new phrases. They emerged to aid business leaders in our fast moving world. Lean start-up principles, which I wrote about here last year, allow starting a new venture (a brand new start-up or a new business within an already established firm), quickly. The business leader uses fast small experiments with as little capital as needed when it is needed. A business model is just that – it allows you to model different business approaches for a current or new business on a sheet of paper. We push the business model forward using lean start-up principles. And crowd-sourced funding is a newer way to raise relatively small amounts of capital when needed.

Your business design then is a new phrase that tries to strike a balance between flexibility and permanence. A business design is simply more detail around your best business model. But here is a vital point: your business design must be committed to with funding and other resources and capabilities. The fluidity and speed of business models and lean start-up principles has to end sometime – you and your management team need to commit with ample funding at some point to be able to scale up.

So firms who enjoy sustained periods of time of superior performance have the best business designs for their competitive spaces. How do you then construct a superior business design? Once again I adapt the brilliant work of Adrian Slywotsky and here are the steps:

1. Ask yourself what are your top five to seven key business issues now. A CEO of a technology-based firm in slow growth but rapidly changing environment listed these top seven business issues:

  • “I do not know where our future growth will come from”

  • “My talent is demoralized”

  • “My customer churn rate is way too high”

  • “My selling prices are falling faster than my costs”

  • “We have too many assets on our balance sheet”

  • “We have lousy customer service”

  • “I do not understand the new competitors we face”

2. What are the smartest business design choices to respond to these issues? Your key business design choices are:

  • Customer Selection: Who are the best customers I choose to serve? Who will we not serve?

  • Unique Value Proposition for Customers: Why will customers buy from me and not my competitors?

  • Unique Value Proposition for Talent: Why do the best people want to work here?

  • Profit Model: How do we make money?

  • Size and Scope of Operations: Where should we play to win and how big must we become to realize the full potential of our business? What geographies and bundles of different products and services should we offer? Should we acquire certain competitors or even some of our suppliers?

  • Strategic Control and Differentiation: How do we protect our profits and customer relationships?

  • Organizational System – What organizational structure and culture do we need to create?

  • Knowledge Management – How do we manage and distribute the intelligence in the system?

Here is a key point for today’s business world: as your key business issues change, some or all of your business design needs to change to align as well. For some business environments, this change happens every five years or so. In others it can be as little as eighteen months. I cannot name an industry where the business issues and business design stay in place for more than ten years.

But the firms above who enjoyed sustained superior performance over fifteen years continuously articulated their changing business issues and aligned their changing business design to them.

This is a daunting task that can be done. Great leadership throughout your firm is key. But digitizing your business to the maximum extent possible is also vital in today’s world. And this is the topic of next month’s article.

This article is part of a series on what causes a firm’s value to increase

Bill Bigler is Director of MBA Programs and associate professor of strategy at LSU Shreveport. He spent twenty-five years in the strategy consulting industry before returning to academia full time at LSUS. He is involved with several global professional strategy organizations and can be reached at and