How key business resources move through stages, with changing impact
An Extension to the Core principles and business models.
This short course is just one of several Extensions you can use on its own or add to other Dynamic Business models, and remember you can also buy the complete Extensions set here for a lower total price (opens in a new tab).
What will I learn?
This class shows how to model the development of resource-stocks through stages. (See the curriculum near the end of this page). Some resources can just be bought, fully-formed with no delay - buying new equipment, for example. But others must develop through stages, and that process is both time-consuming and costly. For example:
Customers must be made aware and informed of what we offer before they buy from us or become loyal.
Staff may join as trainees, before moving through junior to senior levels - and we may hire and lose people at each level too!
Products - and services, too - take time to develop, then produce prototypes and do market-testing until we eventually bring them to market.
Assets of many kinds deteriorate through stages. Equipment becomes less reliable, data gets out of date - and while their contribution to the system declines, the cost of maintaining them rises!
How does it work? Each stage in the pipeline works like any Stock - filling up and draining away as customers (or staff, products, assets etc.) are added and lost. But ... the in-flow to each stage in the pipeline is limited by the number in the previous stage. It is hard to get customers to buy a product, for example, if no potential customers are aware of it or understand why they might want it?!
So this class shows how to model these structures, starting by getting one stage complete and validated, and then replicating that structure an joining it to the first.
Pipelines multiply business results. Not only do pipelines cause costs and delays - they also hit the system's performance. This graphic shows how cutting the marketing budget for a new product by half led to much less than half of the expected growth in customers and sales.
Faster pipelines too! This class focuses on long-term pipelines, but the same principles apply to pipelines that work much faster. Signing up new customers (the "customer journey") also takes customers through stages, but plays out in days or even hours! Finding, selecting, interviewing and appointing staff is another pipeline, that plays out over a very short period.
Use the Attributes model-structure alone - or enrich your Core business model. Like all the dynamic-model extensions, this framework is very useful on its own - it is really useful, for example, to have a model playing out your staff-development plans or your 'customer journey'. But the pipeline frameworks should also be used for any model of the overall business when key resources develop through stages - as they nearly always do!
The "RoI" of this course.
Building powerful pipelines to "breed" more customers, and great staff or products can transform business performance.
This image shows the long-term decline of a Spanish drinks brand that had been popular with older consumers, simply because its loyal drinkers were dying off! A big re-branding effort seemed to make the product more appealing to younger drinks, but sales showed little sign of recovery, even after spending millions of Euros on advertising. The effort and spending were about to be scrapped.
But careful consumer research, informed by our customer "choice pipeline" adoption model, showed that younger consumers were beginning to perceive the brand differently, and that some were seeing it as 'cool'. The plan to scrap the project was scrapped (!) and the pipeline model steered the type, scale and timing of marketing efforts that successfully rebuilt the brand.
Note that this case also exploited the 'intermediaries' model (lesson 4.6 from the Core Course, class 4) and modelled the brand's intangibles (Extension-class 9)
Rejuvenating a 'tired' drinks brand ...
Cutting tech-staff turnover in an aerospace business:
This aerospace company had been competing to hire top computer-science graduates from top Universities, but after going through a training stage and first junior job-roles, these now-expert youngsters were being stolen by large banks paying much higher salaries.
But analysis with our staff pipeline model showed how many staff who were not stolen had been coming through through a different path over past periods, and were just as good as those who left. The company was able to cut the over-hiring it was doing in an effort to ensure enough staff reached higher levels, and build stronger levels of experience across the group, and all at lower cost.
Both these results were worth millions to the companies involved. The Spanish brand business bought-in the expertise from a top consulting firm, while the aerospace business only had to invest in up-skilling one of the analysts in its accounting team!
Who is this course for?
Business leaders Some heads of marketing, R&D, HR - even some CEOs, feel it is so important to get a grip on the quality of their business that they invest effort in modelling it themselves - even a top level appreciation of the model will aid your thinking.
Analysts and accountants. Every analyst supporting a business or functional leader should know how to model the quality of their organisation's resources, and understand how they are changing through time so they can advise leaders on what needs to be done.
Consultants. These models are so powerful that clients will be blown away by the value you bring to their business. It's faster and easier than using spreadsheets and less prone to error. The approach used provides a valuable addition to a consultants toolbox.
Business students (and teachers*) The mechanisms in this course are a critical element of how business works - so understanding them will give you an important additional method for approaching strategic questions - and employers will really value this skill.
*Teachers - we can provide materials from this course for you to use in your classes - contact us for information. Please do let us know where you teach and approximate student numbers in addition to any questions or comments you have.
How long does it take?
Like all of our courses, you do not have to start at the beginning and slave through every lesson to the end - we suggest key items to focus on first. Working carefully through just those key lessons may take about a half-day.
You can then come back to fill in important extra principles and skills. That could be another ½ to 1 day, depending on how deeply you want to get into each lesson and practice it on your own cases – all time that you can claim as self-directed CPD (continuous professional development).
Then, of course, you can spend any time you want on consolidating your skills and following our detailed guidance on how to apply the modelling to your own case and issues.
Why use these models - and when?
Whether launching a new business, tackling a problem or opportunity, or planning for the longer term, surely you would simulate what could happen, just like with other complicated things we do. This lets us:
Design what we might do before we risk serious cash and effort
Test those plans against all kinds of uncertainties (Would you rather experiment with the real world, using real money and people!?)
Manage the business or issue continually against a living model of what will likely happen next.
... and if you want to be really bold and "re-invent your business model" or undergo "digital transformation" it might be best to explore where you are going before you set out!
What is the alternative?
Spreadsheets could theoretically calculate-out everything in a business, but no human could reliably capture a living business system with only rows and columns of numbers to work with.
Balanced scorecards transformed business control by looking beyond the financials! But they do not calculate-out what causes what across the business "machine", and they leave out key issues - like competition! There is no better BSC than a good DBM!
KPI systems often try to be more comprehensive than BSCs, but they often go too far, including every indicator and ratio anyone thinks important. There is no better KPI system than a good DBM!
Business-model canvas and tools like Strategyzer or Leanstack share the same limitations as balanced scorecards and spreadsheets.
Note: If you purchase a single extensions class and then decide to upgrade to the full extensions course we provide a coupon at the end of of the individual classes which can be used to recover the cost of your single class.
Kim is an experienced strategy professional, teacher and publisher of online courses and teaching resources on business modeling
– fast becoming a main-stream capability for executives, consultants and business students. He also offers resources to help model non-business challenges, notably in health-care and international aid.
After senior corporate strategy roles, Kim joined London Business School, to teach on MBA and Executive programs. To overcome serious limitations with standard strategy methods, he developed the powerful strategy dynamics modelling method for designing and managing strategy for any organisation or challenge. Once a specialist skill, building these simulations is now easier, faster and more reliable than spreadsheet modeling. Such models mimic real-world behaviour and performance of businesses and other organisations with uncanny realism.
Kim is author of the prize-winning Competitive Strategy Dynamics (Wiley, 2002), a major strategy textbook Strategic Management Dynamics (Wiley, 2008), and summary e-book now widely used in MBA and executive teaching – Strategy Dynamics Essentials (Kindle, 2011). He is also co-founder of Strategy Dynamics Ltd, which publishes "serious games" and online courses exploiting the user-friendly modelling application, Silico.