The design of a company is the mechanism by which value is provided to the client and a profit is made.
Business design includes client selection, product offerings, deciding which tasks will be carried out internally and which will be hired, and how profits will be produced.
Business design is often also known as the business concept. A successful business model represents a better way of doing business than existing business alternatives.
Creating a new business design is like writing a novel. It is a novel that attracts investors, clients and partners.
Good business design requires determining what the company will and will not do and how it will create an attractive and value proposition for customers. The design of a business must answer three basic questions: who is the client; how customer requirements are met; how profits are produced and protected.
The result of this design process is the business model, which is the description of the business and how it will work in economic terms. A business model is a set of planned assumptions about how the company will create value for all stakeholders (customers, investors, and partners).
The business model must answer questions about the customer, profit and added value. The elements of a business model are:
| Customer selection | Who? Is our offer relevant to the client? |
| Value proposal | What are the benefits that distinguish our offer? |
| Differentiation and control | How is cash flow protected? Do we have a sustainable competitive advantage? |
| Product scope and business activities | What is the scope of our activities? What activities will be carried out by the company's own resources and which will be contracted to external resources? |
| Organizational design | What is the organizational structure of the company? |
| Profit capture | How does the company make a profit and how is that profit protected? |
| Value of resources | Why would someone want to work at the company? How is your talent used? |
Why would someone want to work at the company? How is your talent used?
In this article we will focus on the first item "Customer Selection" and look at the specific Dell Computers model. In subsequent articles we will present the other elements of the business model.
Customer selection
The first critical element of a business model is customer selection. Business design tries to define who are those customers who have unmet requirements, needs and problems for which they have no solution. This defines what the market is. Dell Computers uses four market segments to describe its customers and prepares separate product offerings specific to each market segment.
Dell Computers Business Model
| Customer selection | Corporate, government, education, consumption |
| Value proposal | A computer configured specifically for each customer at a good price with great service over the phone or the Internet |
| Differentiation and control | Products configured to customer specifications via a direct sales channel by phone or Internet with a strong service relationship with the customer. |
| Product scope and business activities | Desktops, laptops, servers. Solid supply chain management |
| Organizational design | Divisional organization for each market segment. |
| Profit capture | Avoid price as the main attraction and focus on service and product availability |
| Value of resources | Employee training, learning, professional growth opportunities. |
It is important to select the type of client that will allow you to make a profit, and to treat the difficult client with unreasonable demands with caution. Rather than trying to keep all potential customers happy, you should focus on the right customer and offer them a product that adds value at a reasonable price, with a reasonable profit for the company.
Once you define your market, your customer, focus on it and discard customers that don't fit your business model.
