Every successful business needs to have a clear strategy that guides its activities and growth. But developing a great strategy isn’t enough. You also need to have a supportive business model that allows you to execute on that strategy effectively. Misalignments between your business model and strategy can limit your success and prevent you from reaching your full potential. 

In this comprehensive guide, we’ll explore how you can align your business model with your overall business strategy. We’ll look at how to evaluate your current business model and strategy, identify any gaps between the two, make adjustments to your business model, implement changes smoothly, and measure success. With the right business model-strategy alignment, you’ll be set up for greater growth and profitability. Let’s get started!

Understanding Your Current Business Model

First, take time to understand your existing business model. Your business model describes how your company creates, delivers and captures value. Some key elements of your business model include:

• Your customer segments who are the customers you aim to serve?
• Your value propositions what core value do you deliver to customers?
• Your channels how do you reach your customer segments?
• Customer relationships how do you build relationships with customers?
• Revenue streams how does your business earn revenue from each customer segment?  
• Key resources what assets and resources does your business need?
• Key activities what are the most important things your business does?
• Key partnerships what partnerships does your business rely on?
• Cost structure what are your major cost drivers?

To understand your current business model, gather information on each of these elements and map out how they fit together. Analyse any documents which describe your business model like business plans or marketing plans. Interview team members across roles to get their perspectives. And scrutinise your actual business operations to see how activities are happening on the ground. 

This analysis will provide you with a clear picture of your existing business model, which you can then compare to your overall strategy.

Evaluating Your Current Strategy  

Next, take time to thoroughly evaluate your current business strategy. Your business strategy outlines how you intend to achieve your major business goals and objectives. Some key elements of your strategy may include:

• Your target customer groups and markets
• Your competitive positioning and differentiators  
• Your growth objectives e.g. growth in revenue, customers, market share
• Your marketing and sales strategies
• Strategic partnerships and alliances
• Geographic expansion plans
• New products/services you aim to launch
• Cost leadership or optimization approaches
• Mergers, acquisitions or divestments  

To evaluate your current strategy, dig into your existing strategic plans and planning documents. Look for your vision, mission, values, longer-term objectives and goals. Analyse past strategy presentations, memos and meeting minutes to understand your strategic priorities. Talk to your leadership team about the critical elements of your strategy going forward. 

This will provide you with a solid understanding of your overall strategic direction, which can then be compared to your current business model.

Identifying Gaps Between Business Model and Strategy

With a clear picture of both your current business model and strategy, now you can identify any gaps or misalignments between the two. 

Look for areas where your current business model may not fully support key elements of your strategy. Some examples of gaps you may find include:

• Your customer segments in your business model differ significantly from target groups in your strategy.

• Your current value propositions and offerings don’t fully align with new strategic priorities.

• Your revenue model and cost structure may not be viable to support aggressive growth plans.

• Your marketing and sales model may not suit plans to enter new geographic regions. 

• Your business model is highly centralised, while your strategy calls for more decentralisation.

• You lack key strategic partnerships called for in your new strategic plans.

Take your time in carefully analysing areas of misalignment. Talk to staff in different business functions to get their perspectives on gaps. Some gaps may be minor, while others may be major roadblocks that require significant business model changes. Prioritise the biggest gaps to tackle first.

Adjusting Your Business Model to Support the Strategy 

Now that you’ve identified the most important gaps between your business model and strategy, you can start adjusting your model. Significant changes to your business model may be needed to fully align with and support your new strategic direction.

There are many ways you may need to evolve your business model:

• Modify your customer segments or target markets Expand into new customer groups or geographies aligned with your strategy. Narrow your focus on your most profitable or strategic segments.  

• Refine your value proposition Add new offerings that serve your strategic goals. Remove poor-fit products or services dragging you down. Reposition around the needs of key target customers.

• Adapt your channels Ramp up digital channels and diversify go-to-market approaches aligned with your strategy. Double down on the highest-converting model.

• Evolve your revenue streams Move to new recurring vs transactional revenue models to support growth. Introduce strategic pricing changes. Unlock new revenue streams from emerging business areas or partnerships.

• Double down on key resources and activities Invest in core resources vital to your strategic capabilities, like data analytics skills. Outsource peripheral activities to focus internal capacity on what matters most.

Be open to reimagining every aspect of your business model to best serve your strategy and vision. Aim to build an integrated model aligned from the top down.

Implementing Changes to Align Business Model and Strategy   

With your future realigned business model defined, now you need to implement the changes to bridge the gaps with your strategy. This takes careful planning and execution across departments. 

Here are tips for smoothly transitioning to your new business model:

• Get leadership alignment Ensure your executive team and stakeholders are fully brought into the business model changes needed to support your strategy. Address any concerns head on.

• Plan the rollout Create a detailed implementation plan outlining what will change, related milestones and responsibilities. Set a clear timeline for the transition.

• Align internal resources Assess resourcing needs under your new model and realign teams and budgets accordingly. Bring on new capabilities as needed.

• Update processes Adapt internal systems and processes like CRM, reporting and budgeting to fit your new model seamlessly. Automate processes where possible. 

• Communicate proactively Keep both internal staff and external partners informed and aligned throughout the transition period. Celebrate wins.

• Provide training Offer training and support to get staff up to speed on changes to business operations and their roles.

• Track progress Monitor implementation metrics closely. Continuously assess what’s working and what needs refinement. 

With careful preparation and support, you can implement significant business model changes smoothly while minimising business disruptions. This will allow you to bridge gaps with your strategy and start executing unitedly.

Measuring Success of the New Aligned Business Model 

Once you’ve realigned your business model with your current strategy, you need to measure whether the changes are working and driving strategic success. 

Here are some metrics to track:

• Financial performance Are profitability, revenue, margins improving in line with strategic goals since you aligned your business model?

• New customer acquisition Are you acquiring customers from your strategic target segments at a healthy rate?

• Customer retention/loyalty Are customers more engaged on key branded touchpoints aligned to your new model?

• Brand awareness/perception Does your brand increasingly stand for your strategic repositioning in customers’ minds?

• Team productivity Are internal teams executing more efficiently against your core strategic activities?

• Process efficiency Have you realised process cost savings from optimising operations for your new business model?

• Time-to-market Does your new business model allow you to move faster to bring strategic new products/services to market?

Analyse these KPIs early and often to ensure your evolved business model is delivering on its purpose driving your strategy forward. Be prepared to fine-tune your model continuously to improve alignment. With the right metrics framework, you can measure your success and continue optimising.

Conclusion

Aligning your business model with your broader company strategy is crucial for realising your major goals and growth potential. By taking the time to thoroughly evaluate your current model and strategy and methodically bridge any gaps between them you can build a strong integrated foundation for success. With regular measurement and iteration, you’ll be able to ensure your business model continues evolving to support your strategy into the future. The effort required to achieve this alignment will pay dividends in the form of a more focused, efficient and high-performing business.