"Companies must continuously review their business model to ensure that they remain relevant and to make any necessary adjustments," says Samantha Louis, CIMA Africa regional director. "Corporate success is a moving target, because customer behaviour can shift quickly." The report underscores the fact that businesses need to be resilient and adaptive. It looks at the key drivers of global economic integration, new technologies and greater and faster connectivity; as well as other emerging drivers such as ageing populations, democratisation of innovation, regulation and deregulation, and environmental resource constraints.
"Management accountants can better serve their corporations and provide additional value by understanding more clearly the connection between the business model and commercial success. Next to the CEO, management accountants often have the most holistic perspective of a corporation's operations. This stream of information can often hold the first signs of business model stress or indications of superior performance," says Louis.
Many companies have found that adapting their business models can lead to improved performance and competitive advantage. Some companies are choosing to eliminate the non-value-adding aspects of their business and passing the value-creating decision back to the customer, creating new revenue streams in the process.
Change is often difficult. Identifying when it is time to re-evaluate or change a business model requires a keen awareness of the company's goals, strategy and competitive advantage. Management accountants need to ensure they are keeping a close eye on business trends and developments that could disrupt the business.
The report recommends that as a first step companies should reflect on a series of questions, such as how internal initiatives are focused on effectiveness and efficiency contributing to long term success; how organisations differentiate themselves in the marketplace; how organisations' business models generate revenue and would a change mean a gain in competitive advantage; how new technology would disrupt the model; and where the points of vulnerability are.
"If the answers suggest a new business model could bring benefits, management accountants can play a valuable role in testing the waters. Management accountants contribute skills and capabilities beyond straightforward financial expertise. They bring to the conversation a deeper understanding of corporate strategy, risk analysis, and economic forecasting, among other aspects of corporate performance. Combined, these qualities create managers who can not only identify fault lines in business models, but can also propose solutions and bring the credibility necessary for their voices to be heard," concludes Louis.
