Time for a Business Model Rethink

Oct 7, 2020 | Strategy, Valuation

Practically nothing is untouched by the pandemic. Significant resets are occurring in every sphere of life: hospitality, work and leisure, travel and holidays, and business and entertainment. Decision-making that used to take weeks and months is now happening in days. McKinsey and Co. estimates that in the US alone, e-commerce penetration achieved ten years’ growth in just three months.

Other trends, in customer behaviour, habits, preferences, and buying, are also being impacted and changed. Some of these changes will be permanent and the others might shift back, but finance leaders should be asking some key questions: Can my organisation continue in the post-pandemic world as it was pre-pandemic without changing and adapting to the new normal? How does my business model change? And how will value be defined and delivered, created, and captured in this post-pandemic world? (The Association’s Agile Finance Reimagined webcast and whitepaper series shares practical guidance and addresses many of these questions.)

This crisis, like every other in the past, has exposed weaknesses in organisations, but it has also opened new doors and fresh prospects. Finance leaders have an unprecedented opportunity to rise to this challenge and truly engage in value partnering by enabling their organisations to explore these new avenues and extract value from them. Despite being busy with ensuring that the workforce is safe, supply chain links remain unbroken, the current business continues to survive, and cash and liquidity are adequate for continuing operations, CFOs and finance leaders must address the imperative to reimagine their business model.

The CGMA Business Model Framework is a powerful framework to deploy to overcome the current crisis and address the disruption — while making the right investment decisions to generate value and long-term success for your organisation. The framework shows how your organisation defines, creates, delivers, and captures value for, with, and to its key stakeholders in a consistent and coherent manner.

The framework also helps answer several key underlying questions around value creation. The main questions that need to be reconsidered and addressed that will help CFOs and their businesses rethink and reimagine are:

Defining Value: What are the needs of the stakeholders, especially now? It is an opportunity to consider the changes and the value proposition being delivered to the customer. Health and safety and contactless options are now being assigned value, while just a few months ago they might not have been.

Regarding Creating Value, the question every organisation needs to consider is: How are resources being procured currently? And how are these turned into products or services that customers desire now? One would have to consider how customer desires have changed and adjust accordingly.

The key question to be asked around Delivering Value is: How is value delivered, and how can technology help deliver value? Enterprises that have delivered value using technology and introduced new ways of serving the customer are reaping significant benefits.

And finally, the way Value Capture occurs needs to be revisited. Digital capability enables value to be captured in new ways that enable “pay as you use” and measuring usage with metrics and measures that previously were not possible.

Ash Noah, CPA, FCMA, CGMA, is managing director—Learning, Education, and Development at the Association of International Certified Professional Accountants.