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Special Letter

business model diversification:

Risk-Proofing Your Strategy ... a means to winning The Great Race

Publisher's Note: SNS members have long known of our deep conviction that business models provide the best lens by which to view companies and countries. United with the patterns of the actions (and almost never of the words) of their leaders, this also allows uncanny prediction accuracy on what they will do next, and why.

Members may recall the project SNS and Deloitte did in cooperation a few years ago, applying the learnings of Bill Ribaudo's team regarding how Wall Street rewarded four corporate business model types, with our work on the effect on country GDP of whether they were thieves or inventors, or something in between. 

In this issue, Bill's team shares a chapter of their upcoming book, offering companies a clear path on how to move from a low-multiple (of revenues) category into something safer, and of greater value. 

Not only is this view of the core values of each of our business models brilliant and useful - it's also many times more important to the many companies pivoting for their lives during the Covid pandemic. I expect that will include many, if not most, of our member companies today. Happy reading. - mra


Special Letter

business model diversification:

Risk-Proofing Your Strategy ... a means to winning The Great Race

By William J. Ribaudo, with Seema Bajaj, Parikshit Sinha, and Aditya P. Singh

The last few decades have featured unprecedented technological advancements and innovations. At the same time, the global economy has been repeatedly shaken by market disruption events, such as the subprime lending crisis and the COVID-19 pandemic. In times such as these, evaluating a company's strategy and approach to risk management, particularly in its business model mix, becomes even more important. Deloitte's Revenue Multiplier (RMx) business model framework[1] proposes a provocative new take on business models, the value and risks they create, and innovative ways to risk-proof your strategy in times of crisis and beyond.

Our research supporting the RMx business model framework shows that companies that monetize intangible assets, such as technology, communities, intellectual property (IP), and networks, among others, are valued more highly than those with primarily physical or tangible assets. These findings can be especially helpful in times of great uncertainty, serving as a strategic filter for scenario planning and paving the way for dynamic crisis management. The Revenue Multiplier research presents a compelling framework for leaders committed to responding to, or getting ahead of, digital business model disruption and unlocking value creation.


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