1. Living Business Models for Business Plans and Challenges
Kim Warren and Rod Brown
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2. A Living Business Model …
A working, quantified simulation that mimics the actual behaviour of all significant aspects of the enterprise, function or issue of concern
A LBM matches real world performance, and for the same reasons, helping us:
... design the system so it can perform well
… test alternative strategies and scenarios
... manage the system so it does perform well
... fix the system if it goes wrong

3. New-business business plan from year 2 New-business profit growth
Our concern is to improve performance over time
13.0
9.0
year 1
-1.5
New-business business plan from year 2
Profit: $m/year 10 5 2
4.0 3 4
This is not adequate: things change much faster, and we can act much faster
months
New-business profit growth
current plans
progress to date
opportunity
$m/month
2.0
1.0 12 24 36 48
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4. … also for initiatives, or functional plans and issues, over varying time-scales
E.g. cutting key staff turnover in aerospace
quarters 1 3 5
15%/year 2 4 6
feared
result
weeks
E.g. fixing service quality in telecoms
feared decline
recent problems
recovery
1.0
0.8
0.9
0.7 5 10 15 20
Where?
time
Performance
now
Why?
How?
The generic questions:
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5. Success-case: Opun.co.uk … launched Jun 2015
Start to finish support for home-improvement projects
Attracts home-owner enquiries with mostly web- marketing and word-of-mouth
Recruits and validates contractors
Skilled staff help with design, drawings, planning, fitting, building work, warranty

6. Success-case: Opun.co.uk … launched Jun 2015
Pre-launch model of how the business could work
Added early data and shared the model with investors to raise £10m … and now used for weekly operating decisions
See Rod explain the business and its model : sdl.re/OpunTalk
STOP PRESS! June 2018: Premium retailer John Lewis Partnership acquires Opun

7. Dynamic Strategy Map used by Opun Board

8. Demo model of the Opun home-project business startup
Get this model at sdl.re/OpunDemo

9. Things have changed …
Simulating business systems and performance was difficult
… but better method and tools now make it practical
… easier, faster, more reliable than common spreadsheet-based alternatives

10. Why do these models work?
They capture: … critical factors that accumulate over long periods … all the interdependencies in the system … the many feedback mechanisms that exist … any thresholds that cause tipping-points … intangible factors NOTE: These issues also apply in non-profit and public sector cases, and equivalent models are equally useful.
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11. Want to learn more? WORKSHOP this afternoon – see a LBM in action
Online courses for analysts/consultants and for leaders: sdl.re/courses
… including free sdl.re/modeling-getting-started/
StrategyDynamics.com … much free material
YouTube.com/StrategyDynamics … many topic-videos
Enquiries to sdl.re/contact
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