Business frameworks are structured models or approaches that can be used to guide decision-making and problem-solving within an organisation. There are many different types of business frameworks, each of which provides a different perspective on how to analyse and address business challenges.
Since the dawn of doing business, leaders have been refining their analysis of where and how to compete, grow, and manage their organisations. Business frameworks have been integral in both the development of strategy and the execution of it because they help inform key decisions and offer scenarios and insight on what options to adopt.
In simple terms, a business framework is a system of rules that are used to govern a process or decisions. They help ensure that the output of decisions or processes is consistent, of a high standard, and aligned with an organisation’s principles, values, and goals. But as with all tools, the results depend on the skills of the people using the tools, rather than the tools themselves.
There is an abundance of business frameworks available and top professionals in their field become highly proficient in using those that are relevant to their particular line of work.
Why are Business Frameworks Important?
Business frameworks are important because they provide a structured and systematic way of thinking about business challenges and opportunities. They help organisations to clarify their objectives, identify key issues, and develop strategies for achieving success. By providing a common language and set of tools that can be used by all members of an organisation, business frameworks can also facilitate communication and collaboration within the organisation.
In addition, business frameworks can help organisations to be more agile and adaptable, as they provide a framework for ongoing analysis and decision-making. By regularly reviewing and updating their strategies and plans in light of changing market conditions and new opportunities, organisations can stay ahead of the curve and respond more quickly to new developments.
Business frameworks can be an important source of competitive advantage for organisations. By using frameworks to analyse and understand their markets and customers, organisations can develop unique and differentiated strategies that allow them to stand out from their competitors.
Why Do We Need Frameworks in Business?
To an extent, this question was answered above but we’ve asked it specifically because it is one of the most frequently asked questions about business frameworks.
Business frameworks are essential tools for various reasons. Here are some of the key reasons why we need frameworks in business:
Better Decision Making
Business frameworks help businesses make better decisions by providing a structured and systematic approach to analysing problems, evaluating alternatives, and selecting the best course of action.
Frameworks provide a common language for business professionals to discuss and communicate complex ideas and concepts. This common language helps to reduce confusion and misunderstandings, leading to more effective collaboration and teamwork.
Frameworks help businesses streamline their operations by providing standardised procedures and methodologies that can be easily applied to different situations. This reduces the need for businesses to reinvent the wheel each time they face a similar problem.
Business frameworks provide a consistent approach to problem-solving that helps to ensure that all stakeholders are working towards a common goal. This leads to more predictable and reliable outcomes.
Frameworks can also provide a framework for innovation by providing a structured approach to exploring new ideas, testing hypotheses, and identifying new opportunities.
Business frameworks are essential tools that provide businesses with a systematic approach to solving problems, making decisions, and achieving their goals. By using frameworks, businesses can improve their efficiency, consistency, and effectiveness, leading to better results and improved performance.
Who Uses Business Frameworks?
Business frameworks are used by a wide range of individuals and organisations across different industries and sectors. There are different levels of expertise found in every profession, and people who are skilled at using specific business frameworks tend to be among the higher calibre professionals. Here are some examples of who uses business frameworks:
Business frameworks are commonly used by executives and senior managers to help them make strategic decisions, assess risks, and identify opportunities.
Management consultants use business frameworks to help their clients solve complex business problems and develop strategic plans.
Business frameworks can help entrepreneurs assess the viability of their business ideas and develop business plans.
Investors use business frameworks to evaluate potential investments and make informed decisions about which companies to invest in.
Business students and aspiring professionals use business frameworks to learn about different aspects of business management, including strategy, marketing, finance, and operations.
Non-profit organisations use business frameworks to develop strategic plans and manage their operations effectively.
Overall, business frameworks can be used by anyone who wants to better understand and improve the operations and performance of a business or organisation.
While many people have their favourites, there is no one best business framework and often you may find that you need to use several during the course of your work. Frameworks save you time by providing a starting point for information gathering and analysis. That said, no framework can replace the need for experience and common sense. Business frameworks are time-savers, but ultimately it is your business insight and your ability to work well with others that will deliver value to an organisation.
While some organisations find themselves using ambiguous or unclear frameworks, the best managers and leaders understand the importance of well-documented frameworks that everyone can read about and understand. It’s now common, particularly among larger organisations, to see these well-documented frameworks widely adopted and taught across the enterprise. As business frameworks have become more integral to the way organisations operate, they are also frequently mentioned in job ads and in the CVs and resumes that respond to them.
There is an extensive range of business frameworks available, and here we consider six of them.
A strategy framework is a tool that can help structure business thinking and guide businesses as they grow and accomplish their missions. They demonstrate how a business or department plans to use projects and other initiatives to uphold the overall vision of executive stakeholders. They can also be used to analyse business issues and develop strategies that are appropriate for a particular organisation. An example of a strategy framework is Porter’s Five Forces.
Porter’s Five Forces Framework
Porter’s Five Forces is a framework that helps organisation understand the intensity of competition in an industry, and its attractiveness and profitability level. It is based on the concept that there are five forces that determine the competitive intensity and attractiveness of a market. These five forces help to identify where power lies in a business situation. This helps understand the strength of an organisation’s competitive position, and the strength of a position that the organisation may consider moving into.
Porter’s Five Forces framework consists of these five components:
- Competitive rivalry
- Threat of substitute products
- Bargaining power of buyers
- Threat of new entrants
- Bargaining power of suppliers
- Business Model Frameworks
Business Model Frameworks
These business frameworks are structured approaches for thinking about how a business creates, delivers, and captures value. A business model describes the way an organization generates revenue and profits by offering products or services to customers. There are many different business model frameworks that have been developed over the years, each with its own unique perspective on how to analyse and design business models.
Business model frameworks can be useful for entrepreneurs and business leaders who want to understand how their business operates and how it can create value for customers and stakeholders. An example of a business model framework is the Business Model Canvas.
Business Model Canvas
The Business Model Canvas is a visual representation of a company’s value proposition, infrastructure, customers, and finances. It is a flexible tool that can be used to understand, design, and communicate a business model in all industries. It can be particularly useful for startups and small businesses, as it provides a simple and intuitive way to understand and communicate their business model to potential investors and partners.
The Business Model Canvas consists of nine building blocks, which are:
- Value Proposition
- Customer Segments
- Customer Relationships
- Revenue Streams
- Key Resources
- Key Partners
- Key Activities
- Cost Structure
Innovation frameworks are a strategic structure designed to give organisations the ability to tap into ideas, evaluate the strengths and weakness of each, make informed decisions and build strategies to turn ideas into value-generating opportunities for the business.
Whether it’s sustaining innovation, disruptive innovation, incremental innovation, or radical innovation, without a clear innovation framework, businesses could be simply collecting ideas without realising they were sitting on a goldmine. An example of an innovation framework is Doblin’s Ten Types of Innovation.
Doblin’s Ten Types of Innovation
The Ten Types of Innovation Framework developed by Doblin helps to design new innovations and assess the current rate of changes in your products and services. Step one is to find opportunities for innovation, and step two is to make them happen.
These ten types of frameworks can be used in different combinations and are classified into the three categories shown below:
- Profit Model
- Product performance
- Product system
- Customer Engagement
Business Transformation Frameworks
A business transformation framework enables transformation managers and leaders to take a holistic and process driven approach to creating new business outcomes. Whether an organisation’s definition of business transformation involves big bold moves, minor performance improvements, managing this is a complex undertaking. An example of a business transformation framework is the Business Transformation Management Methodology (BTM2).
The Business Transformation Management Methodology
The Business Transformation Management Methodology (BTM²)was the world’s first holistic business transformation management methodology that provides a framework with clear phases, deliverables, and corresponding methods. It is a generic framework, which can be applied to different business transformation use cases, and is not specific to one business function, technology, or industry.
BTM2 helps you manage the following nine transformation management disciplines across the four business transformation phases of Envision, Engage, Transform and Optimise:
- Meta Management
- Strategy Management
- Value Management
- Risk Management
- Project and Programme Management
- Business Process Management
- IT Transformation Management
- Organisational Change Management
- Competence and Training Management
Digital Transformation Frameworks
A digital transformation framework helps managers and leaders future-proof their business by shifting legacy customer, business, and operating models into a new normal. It’s when innovative people leverage technology and data to enable completely new ways to create value for the business, customers, employees, and partners.
While for some organisations digital transformation is limited to digitising existing processes, others are fundamentally transforming their business models and establishing themselves as digital economy leaders. An example of a digital transformation framework is the Digital Capability Framework.
Digital Capability Framework
The Digital Capability Framework is designed to help companies innovate and orchestrate digitally enabled business transformation. It helps companies analyse their current situation and identify new business cases, which are enabled by technology trends.
The Digital Capability Framework enables managers and leaders to take a structured business orientated approach to digital transformation, which gives rise to closer collaboration between IT and the Business.
The framework consists of four building blocks which are:
- Digital Capabilities
- Digital Capability Maturity Models
- Digital Use Cases
- A Digital Transformation Roadmap
Digital Maturity Frameworks
A digital maturity framework is a structured approach for evaluating the extent to which an organisation has adopted digital technologies and practices, and for identifying areas where further progress can be made. Digital maturity frameworks typically involve assessing an organisation’s capabilities across a range of dimensions, such as digital leadership, customer experience, operations and processes, and data and analytics.
There are many different digital maturity frameworks that have been developed over the years, each with its own unique perspective on what constitutes digital maturity. An example of a digital maturity framework is Digitopia’s Digital Maturity Index
Digital Maturity Index
The Digital Maturity Index (DMI) from Digitopia can be used in each phase of transformation to help identify where there are gaps, establish key areas to focus on, and where to start. It does not replace an overarching transformation framework but is meant to serve as a guide and tool to be referred to throughout the process.
DMI analysis provides a view on organisation’s transformation status vs market and industry best-in-class. DMI recommendations provides detailed and actionable initiatives that are prioritised to accelerate the transformation journey. A DMI roadmap is a plan of action that is aligns and balances budget and vision
The DMI has six dimensions, which are:
Customer Centricity Frameworks
A customer centricity framework enables a company to continuously understand and anticipate the needs of the customer. Then, as a matter of process, they deliver on those needs. It’s common for companies to announce how they are focused on the customer and that they put the customer first. But the number of companies that do this is fairly limited.
Customer expectations and behaviours have changed dramatically over the past decade. Organisations are expected to meet customers’ needs and expectations at every interaction, in return for customer loyalty. The ability to deliver this depends on the extent to which ‘customer-centricity’ is embedded within every single person in your business. An example of a customer centricity framework is the Three-Wheel Framework of Customer-Centricity.
Three-Wheel Framework of Customer-Centricity
The Three-Wheel Framework of Customer-Centricity consists of three inter-connected wheels that each represents one important phase in customer-centricity. All three wheels need to move together in a synchronous manner in order to create a customer-centric focus in the organisation.
The framework consists of these three key components:
- Know Your Customer
- Build Key Insights
- Take Key Actions
Project Management Frameworks
A project management framework is a set of standard project management processes, templates and tools that can be used to initiate, plan, execute, control, and close a project. Using a project management framework facilitates decision making, communication, and coordination, and ultimately produce the required outputs on time and budget. An example of a project management framework is the Project Management Body of Knowledge (PMBOK).
Project Management Body of Knowledge
PMBOK is the abbreviation for Project Management Body of Knowledge. It is a collection of guidelines, best practices, processes, and terminologies that are widely adopted across the project management industry. PMBOK helps organisations standardise practices across various departments, tailor processes to suit specific needs, and improve the odds of project success.
PMBOK suggests using 47 project management processes, which are categorised into these five Process Groups:
- Initiating Process Group
- Planning Process Group
- Executing Process Group
- Monitoring and Controlling Process Group
- Closing Process Group
There are thousands of articles, videos and podcasts suggesting innovative and useful business frameworks. Some frameworks are very high level, while others are underpinned by their own rich body of knowledge.
The choice of a business framework depends on the business, its goals, and often the personal preferences of key decision makers. Regardless of the business goals you are aiming to achieve, the use of frameworks can be very helpful, and often expected of the highest paid professionals in their field.