By Leo Hopf
In every business there comes a time when continuous improvement no longer leads to success. This is the inescapable reality of the business lifecycle — all businesses mature and eventually decline. When you are approaching the inevitable decline, it is time to renew your business model.
But how do you make changes to your business model when everyone is busy running the business? And, how do you even begin when there is no one person tasked with renewal, no defined renewal process, and when most organizations are hesitant to take risks?
The Renewal Process — Rethink, Reinvent, Reposition
The renewal process provides a roadmap to structure the renewal conversation, and provides the milestones and timeline to keep the conversations on track. The renewal process has three phases — rethink, reinvent, and reposition.
The objective of the rethink phase is to identify which pieces of your portfolio need renewal and which do not. Rethink consists of these three parts:
Scan: Evaluate your portfolio and develop an initial list of renewal candidates.
Size: Estimate the potential value uplift for each renewal candidate. You don’t have time to renew parts of your business that do not provide the opportunity for dramatic value gains.
Select: Develop your final list of renewal candidates and prioritize them against other ongoing and proposed initiatives competing for management attention and funding.
The objective of the reinvent phase is to create a powerful renewal strategy. Reinvent consists of three parts: structure, stretch, and screen.
Structure: Define who will make the decision and who will do the work. In addition, explicitly state the assumptions you will make to simplify and focus your work.
Stretch: Push your team beyond the boundaries of their previous discussions. Almost by definition, everything they have already considered has not been sufficient to renew the business.
Screen: Evaluate your renewal alternatives against your organization’s key value measures to identify your preferred renewal path.
The objective of the reposition phase is to make the transition from the old business model to the new one. Reposition consists of the following three parts:
Schedule: Define the discrete projects that will move the organization from the old business model to the new one.
Secure: Ensure that sufficient resources are allocated to successfully complete these projects by the deadlines you have set.
Switch: Manage the transition in both the marketplace and within your organization. This switch must be managed effectively because you will be redefining who you are and what you do in the eyes of your customers and your employees.
Mr. Hopf works with senior executive teams and boards to bring clarity and alignment to their most pressing strategic issues. He is the author of Rethink, Reinvent, Reposition: 12 Strategies to Renew Your Business and Boost Your Bottom Line, which was named the book of the month for July, 2010 by the Institute for Management Studies.