Kay Plantes is an MIT-trained economist, business strategy consultant, columnist and author. Business model innovation, strategic leadership and smart economic policies are her professional passions. She resides in Madison, Wisconsin and Oslo, Norway.
I spent the weekend in Scotland, where one cannot escape RBS’s logo, RBS standing for The Royal Bank of Scotland. Its brand imagery stands out exiting the airplane, passing city billboards, and reading or listening to local media.
Today, the people of Scotland own close to 70 % of RBS because the former (duly fired) CEO and his board believed that bigger is better. With a small domestic market of 5.2 million residents (about the size of Minnesota) and strong English competitors, RBS acquired what turned out to be a poorly run Dutch bank in order to grow. Thankfully, a strong domestic position will keep the bank in business; but it will be a long time before Scottish taxpayers are repaid for keeping RBS afloat.
Small is beautiful.
Consider PNC, the regional bank headquartered in my hometown of Pittsburgh compared to Bank of America and Citibank. Leaders of the latter two organizations grew by rapidly consolidating the banking industry, becoming two of the “too big to fail” financial institutions federal policy makers are so worried about today. My bet is that these two behemoths will succeed only by shrinking.
Just as a big ego is in fact too little ego, growth for the sake of growth destroys value when it adds more complexity than it enhances competitiveness. Why do I reach this conclusion?
Remember the “telephone line” game we played as kids, whispering a sentence to one person only to laugh when a completely different meaning emerged from the 15th person in the line? Large company management is like this telephone line. When growth does not complicate, the telephone line remains short and the organization retains its focus.
When growth adds complexity – different businesses, different markets, different technologies, and different competitors – more management time and new management layers are devoted to managing numbers and communications versus managing the business. Focus gets lost. Growth at a higher scale demands still more acquisitions financed by squeezing existing businesses. Realized organic growth versus the inherent potential of the businesses to grow falls woefully short.
When is bigger better?
Here are four situations in which acquisitions to gain scale are advised:
Your industry has excess capacity and consolidation is vital to fiscal health. This is why Phillips-Van Heusen Corporation is close to closing a deal to acquire Tommy Hilfiger for $3 billion and Stanley Works is acquiring Black and Decker Group for $3.5 billion.
There are economies of scale (doing more lowers costs) along a vital element of your value chain. I’m not surprised that Coca-Cola Company and PepsiCo are acquiring their large independent bottlers.
Your business model strategy depends upon a broader offering. Biotech leader Invitrogen (now Life Technologies) grew to billions through acquisitions while Promega remains well below $1B in revenue due to different business models. Life Technologies dominates many markets owing to its stronger business model.
You are too small to attract great talent or afford required internal processes. Lack of scale causes many start-ups to sell out to larger companies in their industry. Rapid synergistic acquisitions might have built an independent powerhouse.
When public image trumps the bottom line
All too often, leaders fool themselves into thinking their situation fits one of these four occasions when it does not. A common example is “If we’re bigger we’ll leverage our overhead costs.” What’s really going on when leaders claim false synergies is they’re stumped about how to grow profits so they acquire companies to cut shared costs and show profit gain. Or, they desire more prestige, which most business leaders equate with size.
We have the INC. 500 and Fortune 500 after all, not the Business Week 30,000-30,500.
This decade will be especially cruel to leaders who make the wrong call on size and acquire merely for the sake of growth (versus grow as an outcome from doing the right things well). Markets are fragmenting left and right, talent’s seeking meaningful workplaces, and nimbleness has become a new requirement for success. Woe to the leaders whose acquisitions do little to strengthen their organization’s value promise or hard-to-copy advantages.
As for RBS? CEO Stephen Hester communicates that small can be sublime by reminding his leaders that risk-adjusted rates of return matter, not the level of absolute profits. Smart.
Can you suggest other instances when bigger is better?
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For insight on business model strategy, read my recently released book, Beyond Price.
Last week’s post talked about the vital alignment between your brand platform and your value promise. A great example of getting the two concepts of brand and value promise wrong comes in a series of ads that Madison’s Capital Bank presents in the daily Wisconsin State Journal. Each ad contains a picture of one of the bank’s commercial lenders with the words Capital Bank to the left followed by three adjectives.
Capital Bank
Knowledgeable
Resourceful
Responsive
The three adjectives or attributes may be what differentiates Capital Bank lenders from competitors’ lenders. But these three adjectives are neither a value promise nor are they reflective of a thoughtful brand platform. Before I explain why, let’s look at a winning example.
A winning value promise and brand promise example
Walmart’s “everyday lowest price” is the company’s value promise, its “True North” that drives all internal decisions. “Save more. Live better” is the brand promise that stems from Walmart’s value promise. This brand tagline expresses a benefit and it is emotional. Contrast that with “Knowledgeable. Resourceful. Responsive.” Where’s the benefit? The emotion?
Walmart’s value promise of “everyday lowest price” is terrific because it is:
Highly relevant – addresses benefits or costs that matter to its target customer
Unique – Walmart has built advantages that make it hard for competitors to copy its lowest price promise
Translates into a compelling brand promise with high emotional appeal, living bettter
What’s the problem then with Capital Bank using attributes in its brand communications and as its value promise?
First, they may not be unique. If I am a business and my banker is already knowledgeable, resourceful and responsive I react with “I have that. Thank you anyways.” Capital Bank’s commercial lenders may have to knock on a lot of doors to find a disgruntled customer of a competitor.
The second problem is that attributes make for weak internal directives. The commercial bankers are not being called to deliver any specific result to clients. Lenders can easily say to themselves, “I am being knowledgeable, resourceful and responsive” and think that that is enough. But what if most other community commercial bankers in the market are also knowledgeable, resourceful and responsive? The adjectives create no momentum for change.
Third, the attributes are internally focused. They have no “What’s in it for me?” factor from the potential customer’s perspective. Relevancy and emotional appeal stem from the “What can you promise me?” factor, not the description of the bankers.
Capital Bank could do a lot better
What value promise would work for Capital Bank? I’d want to do customer and market research first, and understand the core competencies of Capital Bank, to answer this question correctly. But for purposes of this blog, here are three benefit promises that require knowledgeable, responsive and resourceful lenders plus a lot of systems, incentives, measures and partners. These promises would likely create internal change and lead a potential customer to say “Wow, I’d like that, even though I’ve been highly satisfied with my commercial lender.”
Fastest answers – this is great for a target that must make fast decisions dependent on lending
The best loan to protect your cash flow – this is terrific given all the uncertainty about future economic trends
“Protect and enhance your creditworthiness. Call us first with any financial question or issue.” – this is a unique way to position Capital Bank ahead of accounting firms, whom businesses see as more trustworthy than bankers in general
Each of these value promises could then bridge to a great brand promise with emotional appeal. Can anyone recommend some great ad copy?
Note that I am not saying that attributes are unimportant, as they are. They are the “reason to believe” the value and brand promises. Capital Bank may be onto some interesting areas of differentiation for its commercial lending around knowledge, etc. But the bank’s leadership and ad agency have not done the work to create a winning value promise and brand platform.
If your internal and external communications are all about attributes i.e., adjectives that describe you, you’re not answering the compelling question that all companies must answer. What can I promise and consistently deliver that will draw my target customer to me and keep him or her loyal? Then, how do I align everything I do (including aspects of my organization’s culture) to deliver on that value promise? And, how do I communicate the value promise in a way that is emotional, compelling and stands out?
What examples of bad ads have you seen?
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For insight on business model strategy, read my recently released book, Beyond Price.
A new client asked me a good question today. “You talk Kay about helping us find our value promise, but my communications agency is totally focused on our brand platform. What’s what and why does it matter?”
The answer rests in understanding communication challenges.
The internal communication challenge
Employees need a shared and actionable aim that advances the company’s success. It must be actionable so that employees and teams know how to go about their work. The aim must also be shared or else actions by one part of the organization hurt another part’s success, creating distrust and silo-mentality. (These two requirements are why “Grow profits and revenue” as the only aim fails.)
The best internal directive is a value promise. It’s the promise the company makes to its target customers and the basis on which it wants to win business. Internally, it tells everyone the ultimate goal of his or her work. I recently interviewed ten employees of Tasty Catering, a business caterer in Elk Grove Village, Illinois. They each knew their job was to exceed their customers’ most demanding expectations. The entire company’s business practices, including its values, are aligned to deliver just that.
The external communication challenge is to grow awareness, consideration, trial and purchases. Clearly the value promise is a key part of this, but effective communications must also be emotional and tell a story. The brand platform captures what’s needed for winning marketing communications.
The brand promise – which is the value promise discussed above
The foundation story of the company – how it became what it became – revealing the deeper values of the company
The brand personality – which captures for example whether a company’s qualities are more like Lexus or a Ford Truck
The brand essence – a clear list of what the brand is and is not
The message strategy – target markets, key message and key word in the message, and reasons to believe
The brand platform drives marketing and sales, the two external facing parts of any organization.
Alignment issues are at the core of every business problem
When the brand platform is not backed up by a strong value promise that internal operations are designed to fulfill, ads, brochures, sales reps and web sites make false promises. Marketing communications become spin and customers defect. In addition, the company creates new products and services that fail to support the brand promise, diffusing brand equity.
These problems arise because all too often inside-facing employees have no idea about the basis on which the company is trying to win business. All too often, companies have not defined their value promise, much less their business model. (See Harvard Business Review’s “Can You Say What Your Strategy Is?”.)
Another mistake companies make is creating a brand promise that lacks any functional differentiators around which employees can relate how they go about their work. Brands without tangible, functional legs of differentiation easily fall down. Companies that keep changing the brand promise also create havoc when internal operations are forced to follow flavor-of-the-day priorities. While business models must change to remain relevant and differentiated, value promises should evolve, not totally disconnect from the past.
A different set of issues arise when the company has a great business model and a compelling value promise, but fails to communicate it effectively to outside audiences. Awareness rates, consideration rates and attitude towards the brand remain weak, hurting sales and margin growth.
Summary
The value of the value promise is that it aligns internal and external communications. At the same time, it aligns internal operations with front-facing marketing and sales. The net result is growth and higher margins.
It sounds so simple. Why do so many companies muck it up?
(Thanks to Scott Cooper of Marketing Engine Group, my colleague in helping companies build their brand equity and discover profitable growth opportunities.)
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For insight on business model strategy, read my recently released book, Beyond Price.
Susan Boyle, a 47 year-old unemployed woman appeared as anything but a leading candidate for British Idol success. (Blockbuster American Idol and its British spin off are talent shows for amateur singing talents.) Prior to her appearance, Boyle had spent her adult life caring for aging parents in a small Scottish town. No wonder the judges and audience laughed as the overweight, seemingly backward woman walked onto the stage in a frumpy dress, with a 1950ish haircut and challenging accent, claiming she wanted a career as a singer.
Boyle’s moving rendition of “I Dreamed a Dream” from the Broadway Tony-award winning musical Les Miserables drew gasps then cheers and then a spontaneous standing ovation from the audience. With a voice which made Julie Andrews, star of Sound of Music and Mary Poppins, sound amateurish, Boyle’s try-out became You-Tube’s most watched video in 2009. (Video link is below.)
Talent Boyle had in spades. But it takes more than talent to be a star. Since the April show, Boyle has transformed her persona to meet all the requirements for a successful performance career. Publicists at her side, a caring agent, a broader singing repertoire and a stylist transformed this raw talent into a stellar performer.
Along the way Boyle was forced into challenging personal learning, necessitated by the crisis that occurred when the reclusive woman could not emotionally handle her sudden fame. Today Boyle stands confidently, totally enjoying the thrilling life she has created.
Every organization has a latent talent, waiting to be developed and deployed to serve others. Like Boyle, other changes may be necessary to build a winning business model and secure success. Crises all too often induce these changes.
How might your organization – a collection of individual talents and organizational capability – shine? What customer group can you most delight and turn into raving-about-your-organization fans? What could you do to earn their standing ovation? With this in mind, what changes should your organization make to turn your talent(s) into an organizational advantage that lets you compete as one–of–one in an attractive market?
Build a business model around this talent. Define your target market. Decide on the scope of your business – what you are and what you are not. Capture and communicate the value promise that will lead customers to consider you. And identify, besides your talent, other aspects of your organization that will make your value promise challenging for competitors to copy. Finally, define the structures and strategies you’ll deploy to ensure profitability. With these decisions in hand, go execute.
Watch and listen to the Boyle video. The emotions you feel tap the universal desire of humans to express our innate talents and shine in the eyes of others.
Milk is bad for children’s bones. Superman became a serial murderer.
Shocking, yes? But no less shocking than Toyota, the world-class manufacturing quality expert, recalling millions of cars across its product lines. Three generations after its founder created Toyota on a philosophy that built quality into every step, it turns out that Toyota’s quality has been steadily eroding.
Today, Toyota’s quality issues are deep and systemic.
After all, the company’s problems:
Involve multiple components, vehicles and years of manufacture.
Create dangerous safety issues – failing brakes and uncontrollable self-accelerating gas pedals.
Were surfaced years ago yet are leading to recalls only under regulatory pressure.
May not have had the attention of top management until after all hell broke loose. (Toyota’s CEO just recently committed to creating a senior level “quality committee” to look into the problem.)
May not yet be truly resolved. While the accelerator fix has been identified, it’s unclear whether there’s an electrical system glitch causing some uncontrolled accelerations.
Are not being presented truthfully. Toyota’s leaders make false statements that put Toyota in a better light, only to rescind these comments when a government agency points out the truth.
The winning value promise
Toyota’s compelling and unique value promise propelled Toyota to surpass GM as the world’s largest automobile manufacturer: With Toyota, you can have comfort without frustration, a welcomed relief in an industry formerly fraught with reliability issues from all but Honda.
Leveraging its quality advantage, Toyota built a line of cars from economy to luxury that reduced the frustration of car ownership (Lexus versus Mercedes/BMW and Camry versus GM/Chrysler/Ford brands). Its brands also increased comfort compared to Honda’s reliable line. The Prius extended Toyota’s brand promise into its hybrid engine cars.
The root cause of the Toyota’s quality problems
No one would expect 100% perfection on Toyota’s part. Suppliers and designs change, materials have defects, etc. in manufacturing companies. But quality issues in multiple parts and vehicles and a growing number of recalls over the years point to the deeper cause of Toyota’s quality issues.
New automobile component technologies (more electronic and less mechanical) should have led to new quality systems and far more careful attention to drivers’ experiences than Toyota provided. Whether it was over-confidence in its historical quality systems or pressure to keep production and profits rolling as demand grew, internal forces precluded a relentless drive to fine-tune internal systems to Toyota’s value promise as technology changed.
This drive – to align everything to the value promise while generating profitability – should be front and center in any strategic leader’s agenda. Instead, Toyota maintained its brand promise in external communications, but failed to align internal decisions with its value promise.
Another piece of evidence that Toyota lost an internal focus on its value promise comes in Toyota’s reactions to its quality issues. Toyota fixed new cars being produced without recalling cars in the field, delayed communicating quality issues to customers and regulators and made many misstatements to the public. Toyota’s historic value promise for sure didn’t drive these decisions. Rather, Toyota’s reactions have raised frustration and reduced perceived reliability of the Toyota brand, the opposite of its value promise.
The lesson
Growth often destroys brands. As companies get larger, C-Suite leaders lose the pulse of the business at the same time that communication channels to the C-Suite become convoluted or blocked. Growth and profits become aims, while delivering on the value promise becomes secondary or even forgotten. A disconnection arises – between what is promised and what is then delivered – that erodes brand equity.
Hopefully Toyota will learn the lesson that a business’ value promise must drive all internal actions and decisions. It will take an incredible communicator to instill a singular focus on the value promise all over again, a focus Toyota’s founder created and his son and grandson lost. Meanwhile, Ford and Hyundai are driving their cars and messaging right through the hole Toyota left in the market.
Do you regularly ask or hear in meetings, “What should we do in light of our value promise?” If not, make sure everyone in your organization knows your company’s value promise and get busy with alignment. Your Toyota moment may not be as public. But the lost reputation, revenue and profits will nevertheless be substantial.
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The 2008-2009 economic recession changed customer and business behaviors, not unlike how a hurricane reshapes the built and natural environment. If you are not incorporating recession-induced changes into your business model strategy, your market position will weaken.
The Recession Has Changed Consumer Behavior – Forever
A recent in-depth study of consumer attitudes and behaviors by Context-Based Research Group, an ethnographic research and consulting firm, adds to the growing evidence that consumers have changed for good. (Listen up B2B company leaders, because your customers will change along with these consumer changes.) Consumers, after living through needed financial downsizing or, for the wealthy, downplaying of wealth, have discovered there’s magic in less.
According to the authors: “Our studies portray a society moving into an era where we measure the quality of our lives in social terms before economic ones. Forty-three percent of Americans believe the recession has positively affected their lives. With this kind of positive reinforcement, we now see the potential to maintain a healthy balance between our consumer and non-consumer sense of selves.”
More specifically, across a sample representative of the US population in terms of gender, income, race, age and region:
78% agreed the American Dream has died — people now see how the dream had become defined in terms of material possessions rather than freedom and ideals
88% took steps to spend less
83% made permanent changes in spending and saving behavior
51% planned to give time and/or volunteer as a gift this past holiday season
83% planned to spend more time with family and friends over the holidays than they had previously
61% de-cluttered their home and/or consigned items
The magnitude of these changes, documents over the course of two research studies, is startling.
The report profiles four new segments of consumers, each likely to have distinct needs from products and services.
Rational: Understanding true value and how things fit into your life (26%)
Relational: Putting social relationships over transactions (23%)
Balanced: Spending with thought and care, but with some fun too. (26%)
Joyful: Experiencing true joy often from non-consumer spaces (25%)
Add in the fact that Generation X and Y workers are seeking more meaning from work, and you can be sure that your business is facing a steady headwind of change.
The Recession Has Changed Business Behavior – Forever
Another shape-shifter is the extent to which businesses have learned to produce a lot more with less as a result of the considerable belt-tightening the recession forced. Undoubtedly many businesses tightened their belt too much, which opens the door to new B2B business models. How can you help your customers “right-size” while still retaining the lower-break even point their downsizing created? One of my clients, a remarkable start-up named Pinstripe led by HR-industry dynamo Sue Marks, enables its clients to outsource recruitment and screening of workers, speeding up hiring and improving the quality of the hires.
The Business Model Lesson
Remember, when external changes occur in your markets, you and all your competitors go back to START, where a new competition unfolds. Change obsoletes leaders’ advantages and creates openings for new entrants and former also-rans. The new winners are those leaders who accept rather than fight the change, and align their company’s business model to the changing environment.
What recession-induced changes do you plan to capitalize upon? What might your competitors be planning?
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The President’s current political, foreign policy and domestic issues remind me of running a business in challenging times.
Never forget about customer experience and how markets change.
Our economy totally tanked. Yet the Obama administration and Congress marched forward into health care as if nothing was really different. A more moderate approach to health care reform, coupled with a stronger emphasis on innovation initiatives to improve our long term economy would have been a smarter move on the administration’s and Democratic party’s part.
To what extent is your business model based on old paradigms about your target market?
Recognize competitive threats, but don’t get so focused on the threat, you lose sight of opportunities.
The terrorist threat is daunting and must be managed, much like many competitive threats businesses face. But if all US policy’s focus is on this threat, as NYT columnist Thomas Friedman wisely writes, we’ll slowly fall into ruin. Managing terrorists does nothing to advance our economic vitality. Indeed, homeland security diverted a significant percent of the basic scientific research we rely on government to fund to keep our economy vital.
What competitive threats are forcing you into a defensive position with little positive to look forward to?
Make sure any new business model is aligned well with external trends.
The majority of Americans have concluded that Democrat’s proposed health care policy was too much change and cost in light of our current economic issues. Had the bill dealt with medical-legal costs, offered much smaller entitlements, and created more individual incentives to be healthy, business and consumer public opinion would be quite different.
Is your business model aligned with where your markets are headed?
Reduce investing in legacy businesses that are likely to go by the wayside and, instead, deploy disproportionate resources into efforts that build a better business model.
The public anger over the stimulus arose because we put the nation further into debt with little to show for it. As an economist I understand some of the stimulus spending (e.g., expanded unemployment benefits and keeping police and fire officials on the job). But we lost a huge opportunity to create investments that would make our businesses far more productive. Instead, too much political pork got funded. If you must go into debt, invest in things with high future return.
Are you spending scare investment funds on things that offer little incremental return vis a vis your future? The group that created Lunchables at Oscar Mayer-Kraft fought like marines to steal resources from the bologna business. Fortunately their tenaciousness paid off and Lunchables became one of the best new products in grocery store history.
Find the investments that reduce competitive threats while creating growth opportunities at the same time.
One of the most urgent needs in our country is to stop importing oil and become energy independent. We’d reduce political threats against us, enhance our economic success and generate jobs at the same time. While cap and trade may not be the right approach in a slow economy, it’s time we recognize how we have subsidized oil and coal with our federal policies and start to level the energy playing field. The public benefit of energy independence is so great that individual companies will never invest enough. If ever there was a case for government subsidies, alternative energy is it.
The same could be said about agricultural policies and health care. Until we stop subsidizing corn and sugar and encourage farmers to invest in production of healthier foods, we will have an obesity problem and escalating health care costs.
What are the home run investments in your business? How can you obsolete competitive threats while at the same time seize attractive opportunities?
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My CEO client sent the following e-mail to his leadership team last week to prepare for this week’s retreat that I’ll lead. His e-mail is an example of terrific business model innovation leadership.
We will make mistakes as we go through this planning –this week and beyond. I’m more concerned about not making mistakes.
If we don’t make mistakes, it means we are taking no risks, we are content with the status quo and are defaulting to making a few minor changes here and there. We can’t do that.
The way I see it, that’s far riskier than making decisions and finding out that our best plans need to be adapted. Not making mistakes means choosing film over digital, slide rules over calculators, Northern Lights [bet you never heard of that] over Google.
As we think about what we plan this week and going forward, let’s be ready to make mistakes. I don’t want to make decisions that would compromise our values or undermine what makes us special nor do I want to make decisions that put the essence of the business at jeopardy. But we have to take risks.
So, let’s approach our plans with the idea we will do new things, test our ideas, find some successful, others that need to be adapted or dumped and keep trying.
Fearing “reasonable mistakes” is a huge mistake in this process.
Leadership is effective only if you have followers. Followers are looking for credibility (i.e., trustworthiness), inspiration and competency. After reading piles of leadership books, I distilled all I learned into 5 behaviors that leaders must demonstrate through their words and actions for potential followers see “leadership” and follow.
Foster change and renewal
Articulate and model the core values of the organization
Enable others to achieve their full potential
Instill a meaningful purpose and shared vision for the organization
Maintain momentum
What do your actions, words and decisions say in terms of these five practices of business model innovation leadership? Are you a leader or a barrier to change?
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“You’ll find the style you want at the optometrist store on State Street,” my most stylish girlfriend advised. Sure enough, I walked into rack after rack of brands and styles upon entering the shop. While the amount of choice was reassuring at first glance – surely there is a look here for me – I soon felt frustrated. Already daunted by the prospects of wearing glasses full time, selecting “my best” style felt as confusing and full of potential regrets as selecting a college felt when I was 17.
“Can you advise me on a good style for my facial shape?” I asked the elderly clerk ten minutes into my trying styles on. “No. You’re on your own. But I can access the most expensive brands in the locked cases if you want.” Half an hour later, I left. The store’s “best choice” value promise failed to deliver because the owner limited differentiation to physical product alone.
The owner of this store, like many others in this challenging economy, lost a cash-paying customer. And, judging by the speed with which I lost my vision in the last year, I was the kind of customer an owner would want – a frequent buyer willing to pay full price. Had the owner invested in knowledgeable clerks or software programs to help me quickly find a winning look and feel confident in my choice, I’d be a lifetime customer, not a prospect that walked out never to consider the store again.
Whatever your value promise, take execution to the extreme. If you are winning on lowest cost, drive any cost that does not benefit customers out your door, however radical the required changes. If you choose to win on speed, leave no delay unturned. Ask your customers what would knock their socks off if it could be done.
In today’s economy, you must become best on at least one benefit or you must be the lowest cost while meeting minimum requirements to be considered. Staying stuck in the middle is no longer an option for profitability and growth much less attracting and retaining talent.
What are you waiting for? In 2010, become best for some group of people who will thank you when 1-1-11 appears on their calendars.
Happy New Year! May joy and learning be your companion throughout the year, whatever challenges you encounter and victories you create.
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Best wishes for a joyous holiday. Here are the top trends I expect will shape our business models in 2010 and beyond and what leaders must do to address them.
Downward pressure on prices in a copycat, increasingly global economy will magnify and become relentless. Before you spend more money pulling costs our of your existing business model, redefine your business model.
The digital revolution will disrupt more industries, removing barriers to entry and the advantages of scale. Identify how to turn information technology into an advantage before existing and new competitors use it against you. Are there new channel opportunities? Can you reinvent your value chain? Change how you work with customers?
Customers will trust less, being skeptical of all value promise claims. Offer transparent proof of your claims and make sure your value-promise is more than emotional.
Talent, especially young talent, will flock to businesses that are producing social benefit, not just profits. Identify how you can deploy company competencies or change your value-chain to make positive community and environmental differences.
The government business model remains broken. Business leaders need to stop hiring-out government relations and bring business’ considerable problem solving and re-engineering skills into government. Make it an encore career or send some of your best people on sabbatical to drive needed change. Pulling costs out of government, while continuing government’s essential roles will bring dollars back to your bottom line.
The power of aligned networks will grow. Businesses collaborating with other businesses (including non-profits) to create wealth and higher-value solutions will win. Identify the larger competitions that your business could be part of and join with others to win those competitions.
The future will look foggier as past success no longer guarantees future success. Expect more ambiguity and uncertainty. Volatility and uncertainty are increasing exponentially. The old rules will no longer cut it. So strengthen your learning muscles. Read broadly. Listen to people you disagree with. Stretch your thinking. Identify and eliminate hidden paradigms. Step back more often from your business to see the larger system of which your business is a part. Systems thinkers will be highly valuable in the years ahead.
The baby boom’s aging will once again reshape industries. This large demographic group will demand new packaging solutions, new approaches to health care, new living arrangements, new financial products, new work arrangements and new experiences. Identify ways your organization can take advantage of the baby boom’s aging. And make sure you know why Generation X and Y will want to fill the shoes the baby boom leaves empty in your organization.
More will be demanded from all. Be sure to say thank you daily to those who are helping you build and evolve a winning business model.
What will increasingly separate fast growing from slow growing companies is not industry or nation, but business model. Identify key external changes you can capture to redefine your business model and ride these forces into a terrific start of the new decade.
I spent the weekend in Scotland, where one cannot escape RBS’s logo, RBS standing for The Royal Bank of Scotland. Its brand imagery stands out exiting the airplane, passing city billboards, and reading or listening to local media.
The 2008-2009 economic recession changed customer and business behaviors, not unlike how a hurricane reshapes the built and natural environment. If you are not incorporating recession-induced changes into your business model strategy, your market position will weaken. 
My CEO client sent the following e-mail to his leadership team last week to prepare for this week’s retreat that I’ll lead. His e-mail is an example of terrific business model innovation leadership. 
“You’ll find the style you want at the optometrist store on State Street,” my most stylish girlfriend advised. Sure enough, I walked into rack after rack of brands and styles upon entering the shop. While the amount of choice was reassuring at first glance – surely there is a look here for me – I soon felt frustrated. Already daunted by the prospects of wearing glasses full time, selecting “my best” style felt as confusing and full of potential regrets as selecting a college felt when I was 17.
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