295) BEI Annual Conference – Nicholas Niemann and McGrath North | Business Model

Nicholas Niemann and McGrath North | Business Model

Norman: “I’ve read your books and I know in one at least you focused on business owners and their business model. Can you tell us a little bit about that?”

Nick: “Sure. What I found Norman in working with business owners for the past few decades is there’s so many companies that have done great for a long time. And then they’re finding that they’re hitting a stall and they’re trying to really understand why is that. And what I found through so many of those is they failed to continue to adapt the business model. And we might say that as we look at companies around the country they’ve been Netflixed, so to speak, companies that were really good for so long that failed to really understand and adapt to grow their business model. And so, part of the focus of our practice is how do we help to advise companies to really teach business owners how to keep from being Netflixed?”

Norman: “What’s the first step of that do you think?”

Nick: “The first step is really this, if we want to be in command of our business model, how do we do that? We do that by answering three main questions. What business are we really in? Why does my business model still work if it does? In other words, are there assumptions that I’ve made that were true in the past that really helped to drive the profits and the sales of the company, but those assumptions are no longer valid. We can think of Blockbuster Video as a company that everyone understands. They got Netflixed by Netflix and Blockbuster Video is now out of business.  The third key question is how does my business model create, deliver and capture unique value?”

Norman:  “This is kind of a fun question. You and I are both raised in a farm area, not too far apart actually, I remember reading your book about your father and watching him in business. I remember the story about the pony farm and I think there’s probably a lesson there for business owners. Would you mind telling that story?”

Nick: “There is. There’s nine key building blocks to every company. No matter if you’re the little pony farm or if you’re Apple or Amazon, you can describe every business that exists, small, mid-size, large, no matter what business sector, no matter what professional sector, based on nine key building blocks.

It’s part of an international program that I’ve been involved with that has created what’s called the Business Model Canvas and that canvas allows you to lay out the nine parts of your business model and to really understand your company better and allows you then to look at your company, compare it to a competitor, compare it to others in other industries to say how might we change, adapt, innovate our business model so that we can stay in business? So the pony farm is one example that at one time used to be a great business. But like all business models they’re all perishing. So we have to be thinking about how do we look towards the future, how might we get into some other business that may make more sense that we can build on that history.”

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