Blog: Bridgeland and Zahavi on Business Modeling
In the book, we describe how business models are useful for persuasion, for changing someone’s mind about something. Of course business models have many other uses as well: analysis, training, etc. Seven other uses are described in the book.
Among business models, business simulations are particularly persuasive. In the book we say:
… simulation can be a powerful tool for persuasion, and this use of simulation is not widely appreciated. In fact, simulations are used so rarely for persuasion that sims are something of a secret sales weapon, an advantage to the people and companies who make use of them.
BJ Fogg, the director of the Stanford Persuasive Technology Lab, says, “Cause-and-effect simulations can be powerful persuaders. The power comes from the ability to explore cause-and-effect relationships without having to wait a long time to see the results and the ability to convey the effect in vivid and credible ways.” [Fogg 2003] Today when people want to persuade, they typically uses verbal techniques, numbers and graphs, or images and video. All these media have limited effectiveness. People dismiss words, ignore numbers, and are sophisticated critics of images and video. But simulations give them the ability to try things out, to experiment and build up their own understanding inside the simulated world. Simulations encourage people to reach their own conclusions through their own trial and error, but faster and more safely than they can in the real world.
[From the book Business Modeling: A Practical Guide to Realizing Business Value, by David M. Bridgeland and Ron Zahavi, published by Morgan Kaufmann Publishers, Copyright 2009 Elsevier Inc. All rights reserved.]
Let’s look at an example. Suppose you are attempting to sell Indian offshore call center services. Like most offshore call centers, yours provides telephone-based customer service cheaper than can be done by onshore call centers in North America. The main value proposition is price. Of course price can be easily understood without a need for simulation.
But the situation is a bit more complex. You differentiate yourself from other offshore call center services (who also offer low prices) by your relentless focus on accent. Most offshore call centers speak Indian English, but your call center employees speak American English with a South Carolina accent, thanks to hundreds of hours of training, monitoring, and coaching. You even focus your hiring on dialect. Your call center is based in Mumbai, home of Bollywood, the Indian movie industry. You hire aspiring and out-of-work actors and actresses to fill your cubicles, hiring employees who delight in playing characters from Charlestown and Greenville.
But so what? Why should your clients care about accent? There are several business advantages that accrue to your clients. First, some residential callers from North America have difficulty understanding Indian English. Communication with someone speaking American English is easier and more natural. Second, some residential callers from North America become uncomfortable when they realize they are speaking with someone from the other side of the world. Many people have not realized that telecommunication is free, and have little day-to-day experience with international calls. These callers never realize they are speaking to Amita and not Amy. To someone from Ohio or Oregon, South Carolina feels familiar to them; Mumbai does not. Finally some residential callers are politically opposed to speaking with Indian call centers. They see call centers in India as the “export of American jobs”, and they become angry when they talk to someone speaking Indian English. When they talk to your staff, they are usually fooled into thinking the call center is really based in South Carolina.
You have a compelling value proposition for your call center, but how do you show that value prop to your prospective clients? Of course you provide demonstrations. You play recordings of calls between North Americans and your call center, to show how natural the conversation is.
In addition, you provide a simulation, a web-based strategy sim that allows your prospective clients to try different alternative strategies. Working in the sim, your clients can experiment with different call pickup times, how quickly the calls are answered. They can experiment with different targets for time spent on the level 1 calls. They can experiment with different strategies for when to escalate to level 2 and to level 3. And of course they can experiment with different degrees of accent and dialect.
Their experiments have results. Your clients can see the results on time spent, on costs, on success rate for solving their customer’s problems, and most importantly on customer satisfaction. They can see for themselves the big and lasting effect accent and dialect has on customer satisfaction. And they can experience for themselves the difficulties of making an offshore call center work when customers are uncomfortable or angry. (Customer satisfaction is a “soft variable”. Soft variables will be explained in a future posting.)
You have built a model visioning sim. Model visioning is the use of business simulation for sales pursuits.
Model visioning is most useful for big sales, sales of a $100 million system integration project, or a $200 million outsourcing contract, or a $300 million construction plan. These big projects have big business consequences, positive and negative. Anticipating and understanding all the consequences is hard. Buyers need help in thinking through the big project. They need a custom-built business simulation to experiment with.
Traditionally what do people do to sell big projects? Big projects are sold with meetings and presentations, long written proposals, and demonstrations. A model visioning sim does not replace any of these techniques. Instead it complements these techniques. At the meeting, the sim is presented. Since it is a websim, the URL is provided to the prospective client. He can try it on his own, experimenting with different approaches to the project.
Model visioning is new: few people have employed sims in the sales process. It is virgin territory. When I create a sim for a big pursuit, and show it a client, I feel like the Dutch explorer Aerjan Block seeing Long Island for the first time. Who knows how big this is, or how important?