Business Model Frameworks For Consulting Businesses
The result of a tiring analysis of the most popular ones.
Let's recap what we explored this week so far:
- We established a clear definition of a business model, identifying value creation, value delivery, and value capture as the universal functions of a business.
- We saw that since there is not a single answer to how an organization works, the essential components of a consulting business will depend on the framework you choose to use. The framework you pick to analyze your consultancy matters just as much as the process you go through to rethink it.
Which leads us to our next question: What is the best business model framework for boutique consulting firms?
If the questions matter just as much as the answers, we better pick the most relevant ones for our industry and context. This requires a long and methodical work of:
- Identifying existing business model frameworks;
- Going through literature and case studies to understand their business use;
- Exploring strengths and limitations of each framework, and their relevance for boutique consulting firms.
Luckily for you, I volunteered for the job.
Existing Business Model Frameworks
There are hundreds of business model frameworks. I analyzed the following 10 (remember, I don't have unlimitted time for research!):
- The Business Model Canvas;
- The Four-Box Model;
- The Flourishing Business Canvas;
- The Component Business Model;
- The Fluidminds Framework;
- The VARIM Model;
- The Business Model Navigator;
- The Causal Loop Diagram;
- The Board of Innovation’s Business Model Mapping Tool;
- The Business Model Mixer.
Some of them, like the Business Model Canvas, offer a visual chart to paint a picture of an organization and help to illustrate trade-offs. Others, like IBM’s Component Business Model, are more “logical” and highly focused on operations. There’s not a single recipe here.
I might elaborate on detailed comparisons in a future publication (drop me a line if you'd be interested in reading it). Let's get straight to the point here.
Winners, And Choosing To Go Beyond Them
The Business Model Canvas and the Four-Box Model are the most elegant and easy-to-use frameworks but feel generic for consultancies since they were designed for a wide variety of organizations. The only industry-specific tool we found, Sioo’s Business Model Mixer, is a more descriptive tool that illustrates innovation trends but gives little space for discussions on how its business components can work together.
This is not new to me. Part of my advisory work includes helping consulting partners review their business models and, by the end of the process, I always feel slightly frustrated with those popular frameworks. They work. But I wish there was a more specialized framework for boutique consultancies.
And that made me question whether I should create a new framework myself.
I'd like to register here that this was not an easy decision. First, I have way too much on my plate right now and this required dedicated time. Second, I don't like to reinvent the wheel. Popular frameworks such as the Business Model Canvas will give you 80% of the benefits.
But those 20% were too frustrating to ignore. My mission is about showing people that there’s a different path to building and growing a consultancy, one on their own terms. Micro boutique founders and partners are already underserved and deserve better tools and ideas.
That's why I invested time into creating an alternative framework. One that is industry and size specific, for micro and lifestyle boutique consulting firms with 1-20 people in their team. I'll share an overview of it tomorrow.