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Golf and frisbee: a misconception about the applicability of business modeling

Blog: Bridgeland and Zahavi on Business Modeling

Most business people do not create business models. They design software or they manage sales accounts or they are responsible for regulatory compliance, but they do not create business models. Fewerthan 1% of business people create business models of the sorts we describe in the book. Even if you expand the definition of business model to include financial models and accounting models, even then fewer than 5% of all business professionals are modelers. As a business modeler, I work with a few other modelers and many nonmodelers. Most of my business interactions are with nonmodelers.

Nonmodelers share a common misconception about business modeling. They think some situations are amenable to modeling and other situations are not. They think business models apply to a small and limited domain and that most of the problems they encounter are outside of that domain. They say “Of course you cannot model that human behavior of people undercutting their colleagues as they compete for scarce internal investment.”  Or they ask whether colleague competition for internal investment is modelable. Or worst of all, they simply assume that it is not modelable, that models apply elsewhere perhaps but not to what they are doing.  They see business modeling as like golf, only to be played in special designated courses, and not playable elsewhere.

They are wrong. Business modeling is like Frisbee, playable everywhere, on greens, on a sidewalk, on a street, or in the snow. You can model any business situation. There are no domains of modelable and not modelable. Everything is modelable. The answer is always yes.

Why does this common misconception exist? Why do nonmodelers assume that business modeling is like golf and not like Frisbee? One reason for the golf assumption is perhaps lack of knowledge. Nonmodelers do not understand business modeling (of course) and so do not know the extent that can be modeled.

Perhaps the golf assumption is also due to the human tendency to exaggerate the importance of one’s own knowledge. “Those domains over there may be amenable to modeling, but my own specialization is far too complex.” When working with subject matter experts, I often see this peculiar combination of arrogance and fear. They are both arrogant in their assumptions about the complexity of their own field, and fearful that what they know can in fact be reduced to some digital models.

Of course some situations are not amenable to business process modeling. They don’t involve business processes, or at least they do not involve business processes in any important way. Last year, Ron and I worked with a third modeler, Varun Panchapakesan to analyze an existing IT desktop support operation. Our job was to take costs out, to determine how the same quality of service could be provided to customers at a lower cost. Our initial plan was to model the business process of desktop support, and then redesign it, implementing a cheaper process that accomplishes the same result. But as we dug into the problem, we discovered that the business process was very simple. Someone calls the service desk with an issue with their desktop computer, an “incident”. The incident is either solved on the first call or it is escalated to tier 2. They either solve the incident on the phone, dispatch someone to solve it in person, or it is escalated to a tier 3 specialist. And tier 3 solves the vast majority of the incidents that reach them.

We could model the business processes of this desktop support operation, but modeling the processes would not help us remove costs. Instead we modeled the mix of incidents, what kinds of problems the users actually see, and how the mix of incidents would change with different interventions. We built a motivation model, creating causal loop diagrams and a simple system dynamics simulation.

The issue is never whether a business situation can be modeled. It can always be modeled. The answer is always yes.

You can always play Frisbee, even in the snow.

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