Your Business Model and Constraints

Every business has a model, an internal structure that helps to understand the way it interacts with its market. Business Model Generation defines these elements –

  • Customer Segments
  • Value Proposition
  • Channels
  • Customer Relationships
  • Revenue Streams
  • Key Resources
  • Key Activities
  • Key Partnerships
  • Cost Structure

I suggest another element surfacing as the world comes back on line in this pandemic – constraint.

Every system (business) has a constraint. That constraint is connected to a-capacity-of-something. Initially, constraints show up as whack-a-moles and we arm ourselves with mallets to snuff them out. Eventually we understand that every system will always have a constraint, our job is to put the constraint where we want it (strategic constraint). Some constraints are internal to our business model, sometimes they are outside (external systems, like the market, regulation, finance, labor, technology).

Examine your business model and its constraints. Capacity may have shifted due to the pandemic, your constraint may have moved, your business model may be wobbly because something subtle (or not-so-subtle) has changed.

2 thoughts on “Your Business Model and Constraints

  1. Jeff Stern

    The constraint that I see often overlooked in planning is time. Folks usually measure widget making with little problem (still ambitious!). managing time of oversight, management, coaching, marketing, sales, etc is just as important. If a sales team (cold caller plus salesman) needs to make 100 calls to obtain 20 appointments to make 5 sales, what’s time factor? Does the working CEO carve out time to think about leadership communication as well coaching?

    Time does = money, revenue and expense!

    1. Henry Camp

      I agree. I’d change one thing. Time CAN = money. Since it is often wasted, we waste our opportunity. Tom is right on. Once one is aware of their preferred (strategic) constraint, efforts can be made to not waste its capacity to make the system more money. This is disproportionately important to good outcomes and a specific focusing point, as opposed to general cost cutting anywhere. Time is the ultimate constraint, after all net profits are just money over time.


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