The Chartered Institute of Management Accountants is an <IR> Breakthrough Partner
The term ‘business model’ is well-established and frequently used in the world of commerce. However, it is also a concept many people don’t give a second thought about. This can be dangerous as not understanding your business model and adapting it to market changes, new technologies, risks and threats can damage your organisation.
Business models are a representation of how an organisation defines, creates, delivers and captures value for stakeholders. They work as a narrative, promote integrated thinking and are the basis for supporting decision making throughout the organisation. They also form a fundamental part of Integrated Reporting as business models are one of the key focus points for investors.
The Association of International Certified Professional Accountants is inviting you now to participate in a consultation on the CGMA Business Model Framework. Understanding the business model and its dynamics is crucial for long-term value creation. We believe that the CGMA Business Model Framework will aid this understanding, and the aim of this consultation is to help us further refine and enhance it, and ensure its applicability and ongoing relevance. Furthermore, we will use the responses for the development of practical tools to support long-term value creation.
The Framework builds upon research that we have carried out over a number of years and includes the contributions we have made to the development of the International <IR> Framework. At the heart of it is creating value over time.
Understanding the business model is relevant to every sector and to organisations of all sizes. Because of this the Chartered Institute of Management Accountants (CIMA) published Rethinking the Business Model last year, a white paper with the purpose to clarify the concept of business models. The report also introduced the Framework which aims to be a tool to aid integrated thinking by connecting the various elements of the business model to improve decision-making. It is also meant to help board members, senior executives and finance people understand, develop, deploy and report their business model.
Business models are created and developed within the organisational ecosystem which is made up of markets and society. Both are impacted by technology which not only affects a company’s productivity and efficiency but, through the impact of risks and opportunities, very often is also the reason for competitive advantage or disruption. Therefore, organisations need to understand the interactions within the ecosystems in which they operate and how changes within these networks and relationships might affect the business model in the future.
We would like to get your comments and professional expertise on the various elements of the Framework which we have presented in the following five sections:
– Definition of business model
– The organisational ecosystem
– Elements of the business model
– Implication for organisations
– The role of finance professionals
The consultation period runs until 6 September 2017. More information on how to participate as well as the consultation paper can be found on www.cgma.org/BusinessModelConsultation.