Think big, start small
Businesses large and small around the globe are currently facing unprecedented challenges due to the economic crisis caused by the Covid19 pandemic.
However, innovation management expert and author of the bestselling book, ‘The Business Model Navigator’, Professor Oliver Gassmann, says there are short-term and long-term solutions for SMEs’ survival and post-crisis growth.
Below he recommends key tips and critical actions to help your business adapt and thrive.
“In the short term, it’s a question of survival. In an economic downturn you just need to get cash first, to get the business going, and to do this you may need to adapt your business model.”
For short term survival, Prof Gassmann advises SMEs should “find out what the customer really wants” and try to adapt the business model to meet their needs. He cites innovative examples such as a rent a dog business which emerged during the lockdown in Spain, when people could only venture outside if walking a dog.
For businesses to survive long term however, Prof Gassmann says it’s important to:
1. Identify the trends that are challenging your business model (for example, the shift from retail stores to online shopping)
2. Examine and explore how to adapt your business model to survive in a post-Covid-19 world.
He points out that innovation research has shown that economic crises tend to accelerate existing trends, rather than create new trends. “Ongoing trends like the digitization in communication and shift to online shopping are being accelerated right now and are here to stay, so there are some short term winners of the situation, such as the online communication platforms and online retailers.”
The current global crisis also presents a big opportunity for SMEs who are generally better positioned to be agile and adapt than larger multinational companies. In fact, Prof Gassmann recommends that multinationals should behave more like SMEs.
Professor Gassmann, who has published over 400 articles and several books on innovation management, defines a Business Model as “the story of your company: how to create value & how to capture value.”
He says a business model also answers four integrated questions:
Who is your target customer or target market?
What is the value proposition you offer to the customer? Or what do you do to answer the needs of the customer, relieving their pain and increasing their gain?
How do you create value or implement the value proposition or the supply chain architecture?
Why is it profitable?
“If two out of these four questions are addressed at the same time, then we are talking about business model innovation.”
He adds that according to his empirical research, “the big synergies” often lie in businesses’ ability to think simultaneously in several dimensions at once.
Professor Gassmann’s original book examines how just 55 business models are responsible for 90% of the world's most successful businesses. His forthcoming book, the New Business Model Navigator, looks at new and emerging business model patterns, specifically how to create commercial business out of IOT (Internet of Things).
He believes “the biggest bottleneck in business model innovation is not in the idea, but in how to decrease the number of opportunities to as few parts as fast as possible, to go forwards as cheaply as possible.”
The mantra from his new book is to: Think Big, Start Small, Fail Cheap & Learn Fast.
“In the New Business Model Navigator we ask you to look at what the underlying assumptions of your business model are and how you can test them. You have to ask yourself, is your business model consistent with external drivers such as Covid19? It’s important to identify how Covid19 is affecting your business and how you can adapt your business to survive in a post Covid19 world.”
To recap and conclude, he advises SME managers to take the following steps to aid their business survival:
For short-term survival: adapt today’s business model to be as agile and value proposition driven as possible.
For long term survival and growth: Identify ongoing trends and ask what they mean for your business and your business model?
Go through your business model, identify and analyse the change drivers which pressure your business and look at how you can learn from others to adapt, survive and grow.
