Business definition

Indentify the core reason or justification for existence.

The overarching goal of the organization is a logical next step to the vision and mission. This involves identifying the core reason and justification for existence. So called business definition.

The business definition (business scope) can be seen as the playing field at which an organization focuses within a given business domain (the total market). The business definition provides a strategic three-dimensional coordinate model for determining an organization's scope, focusing on customer groups, their needs, and the technologies required to meet those needs. Derek Abell's three-dimensional model simplifies this complex process by categorizing opportunities and challenges within a structured coordinate system, which serves as a tool for strategic decision-making. Here's a closer look at the key components:

1. Customer Groups
   • This axis defines who the organization serves. It categorizes the various segments of the market, such as demographics, industries, or geographical regions. By analyzing customer groups, organizations can identify underserved or emerging segments, forming the basis for targeted growth strategies.
2. Customer Needs
   • This axis focuses on what the organization provides to meet its customers' demands. Understanding customer needs ensures that the organization aligns its offerings with the market's expectations and pain points. Needs might range from basic functionality to complex, niche requirements, and addressing these effectively builds customer satisfaction and loyalty.
3. Technologies (or Competencies)
   • The third axis identifies how the organization delivers value. This includes the technologies, processes, or expertise used to satisfy customer needs. Identifying the most efficient and innovative methods for meeting customer expectations ensures a competitive edge.

Within the Rovaha strategy model we do not use the 3-axes model as intent by Derek Abell, but rather as a guideline for creating our helicopter view guiding towards our business definition. See propeller figure.

 Abell's model consists of three different dimensions / components:

With the three-dimensional coordinate system in mind, we are able to discover quick wins. How? Just take a look at the 8 different scenarios and pick the ones which you might have overlooked:

1. Existing customer groups / existing functions / existing technologies
2. Existing customer groups / existing functions / new technologies
3. Existing customer groups / new functions / existing technologies
4. Existing customer groups / new functions / new technologies
5. New customer groups / existing functions / existing technologies
6. New customer groups / existing functions / new technologies
7. New customer groups / new functions / existing technologies
8. New customer groups / new functions / new technologies

The model is very valuable instrument. Nevertheless, as mentioned above, we will not dive into the nitty-gritty details of the 3-axes model. We take the more pragmatic approach and use it as a guideline for creating our helicopter view on our business definition.

Application in Strategic Growth
The model helps organizations visualize areas of current focus (the cube) and identify opportunities for expansion. For example:

• Expanding by introducing new technologies (e.g., T3 and T4) to an existing customer group (C3).
• Entering new customer groups with existing technologies.
• Innovating to meet emerging or unaddressed customer needs.

Using this as a "helicopter view" approach, organizations can align their business definition with long-term growth opportunities, ensuring their strategy is both comprehensive and adaptable. Despite its simplicity, the model's strength lies in guiding focus and prioritizing areas for investment.

Example business definition:

Let’s focus on the propeller shaped model and define the dimensions for our dummy organisation NewCo Audio.

Customer groups

The first question we need to answer is who is being satisfied. I always like to start the process by exploring and defining three segments:

1. segmentation by value discipline, read customer requirement.
   • Commodity management: Our customer knows what his audio requirements are.
   • Solutions management: Our customer doesn’t know what his audio requirement are.
   • Supply Chain Management: Our customer has dynamic audio requirements.
2. Geographical segmentation
   • Dutch B2B customers
   • Cross border services, meaning we will follow our Dutch B2B customers across Europe
3. Classes of markets / industry segmentation
   • High profile events
   • Public area’s
   • Concert halls
   • Recording studio’s

Customer needs

The second question covers what is being satisfied. This is a bit of a tricky question as we must exclude our believes. In other words, don’t let your tunnel vision or core competences distract you. It is here where the AQSCI model contributes and help us to define answers from 5 different perspectives. AQSCI stands for Assurance of supply, Quality, Service, Cost, Innovation.

With the AQSCI model in mind we might define Newco customers’ needs as follow:

1. Need for logistics solutions & assurance of supply (SCM) (AQSCI)
2. Need for quality assurance and control (AQ/QC) (AQSCI)
3. The need for audio management and complementary high-quality products & services. (AQSCI)
4. Need for low operational total cost of ownership (TCO) (AQSCI)
5. Need for operational innovation and innovative audio products (AQSCI)
6. Need for consistent reliability = trustful partnerships; (AQSCI)
   • Enterprise partnership
   • Consultative partnerships
   • Collaborative activities

Distinctive competencies

Finally, how are Newco Audio customer needs being satisfied? By fulfilling the need for audio, logistic & partnership solutions. From a competences point of view, we just defined three competence silos, each having its own competence set:

1. Audio solutions
   • One stop shopping for high quality audio and complementary products & services
   • Suitable product portfolio (read: not extensive)
   • Internal and external repair shop & services
   • Professional 24/7 customer care centre
2. Logistics solutions
   • Regional and cross border JIT supply
3. Partnership solutions
   • Enterprise partnership for direct and indirect contracts
   • Consultative partnerships
   • Organizing collaborative activities
   • Purchase solutions
   • Offering online Point Of Sale (POS) and e-commerce solutions

Business definition
Taken the above into consideration we can draft a corporate overriding purpose for NewCo Audio:

We say what we do and do what we say – The NewCo Audio integrity! We manage a group of customers focussed, professional audio specialists. Continuously supportive, occupied, supplying high quality audio materials, related products, and services without pink noise. Our business concept has proven to be successful for more than 10 years in audio business.

We ensure our customers' competitiveness for high profile events, public areas, concert halls and recording studio’s by meeting the need for high-quality, hassle-free audio solutions, logistic & partnership solutions.

For that we have developed distinctive competencies and we act as a total audio management partner providing the most suitable audio technology, partnerships, logistics solutions, and customer service against the lowest cost of ownership (TCO).

Next logical step is to determine the value disciplines. Which factors add values for customers in their respective markets and what is needed to excel accordingly?