Strategyzer 7 Questions
Strategyzer’s 7 Questions helps organisations create better business models by posing questions which can help identify areas for improvement and differentiation
The 7 Questions focus on understanding the organisations customers, the value delivered to those customers, and the overall strength of the business model. Each question encourages critical thinking about different aspects of the organisation, such as whether the value proposition is compelling and how well revenue streams are structured. Answering the questions supports identifying areas that need improvement.
The tool is especially useful for organisations looking to innovate or strengthen aspects of the business model.
The results
- A more robust business model
- Identification of business model strengths and weaknesses
- Identification of risks and opportunities
When to use it
Business Planning: When defining a business plan for a new venture or refining the direction of an existing one
Product or Service Innovation: When seeking to uncover new opportunities for innovation and growth
Collaborative Decision-Making: When seeking to facilitate strategic discussions, align stakeholders, and make informed decisions
Strengths
Easy to understand
Facilitates alignment
Uncovers hidden opportunities and risks
Industry agnostic
Weaknesses
Oversimplification risk
High level
Some questions may be less relevant
How to use it?
What do I need to start?
A documented business model. This can be done using the Business Model Canvas
Other potential inputs include:
- Market research and competitive analysis
- Target customer insights, such as their needs, preferences, and behaviours
- Internal performance metrics
How to use it?
Who to involve?
Strategyzer’s 7 Questions is best when done in a group setting. Consider including:
- Decision makers who can take responsibility for parts of the business model
- Representatives who can provide insight into the seven question areas
- Representatives who will challenge insights and assumptions
- Advisors who can offer advice based on what works well in the industry
Step by step
1
Outline the business model
Ensure all participants understand the business model.
2
Work through each question
For each question:
- Pose each question to participants
- Document key insights
- Discuss and document any potential action items
- Consider if further research is required
Question 1: Switching costs
How difficult or costly is it for customers to switch to another offering?
Example: Switching from an iPhone to an Android phone requires a lot of effort because it is difficult to transfer photos, contacts and applications
Question 2: Recurring revenues
Does each sale require more effort, or are there automatic follow up sales and revenues?
Example: Nespresso locked in recurring revenues by requiring customers to buy expensive pods – or face voiding the warranty. Subscription models also have strong recurring revenues
Question 3: Earning vs Spending
Does the business earn before spending? What sales revenues are received before producing or delivering value to customers?
Example: Dell computers changed their model to minimise spend by reducing inventory holdings of computers – only building product after customers designed and paid for their PC’s
Question 4: Game changing cost structure
Is the cost structure significantly better than competitors?
Example: Spotify was the first to implement the ‘freemium’ model – enabling listeners to stream licensed music for free, supported by advertisements. This was a game changing cost structure that vastly reduced the cost of customer acquisition.
Question 5: Get others to do the work
Does the business model allow for getting customers or others to generate free value?
Example: IKEA furniture stores introduced self-assembly which meant outsourcing assembly to the customer.
Question 6: Scalability
How easily can the business grow without bumping into ceilings?
Example: Airbnb provides a digital platform where property owners can let their property to guests. This allows the business to grow rapidly without the need to purchase or manage physical real estate assets.
Question 7: Protection from competitors
How easy is it to be overthrown by the competition?
Example: Commonly used social platforms like Instagram are difficult to compete with, as they have a large, established user base and the products value to customers is the connection with other users they are interested in. A customer is unlikely to switch to a competitor unless a significant portion of their network also makes the move.
3
Summarise and prioritise action items
- Consider insights and proposed actions collected across all questions.
- Prioritise actions.
- Assign responsibilities.