Media provides a great case study of creative destruction, to coin Joseph Schumpeter’s term for capitalism’s ability to destroy while creating anew. Yet even massive creative destruction will not reverse the basic economic principal that customers buy based on highest perceived value, where value is perceived benefits less the perceived costs to acquire those benefits. Newspapers, for example, were highly profitable when they held the unique advantage of cost-effectively and frequently reaching customers with an advertiser’s message. Editors focused first and foremost on readers, with the publisher paying most attention to advertisers. The symbiotic relationship worked … … until Cable TV and the Internet fragmented markets and provided alternative and less costly routes for commercial advertisers and classified ad purchasers to reach their target markets and paying readers to find news. The monopoly position of the newspaper as a frequent advertising vehicle was…
Business Model Innovation Earns 2009 Inc 500 Spot
I spoke a number of months ago to an audience composed largely of machining companies. (Machining companies transform metal and other hard materials into parts used in transportation equipment, packaging machinery and other manufactured goods.) Like many CEOs in mature manufacturing markets, the leaders felt their companies’ offerings had become commoditized. Quality and service, once differentiators, were now requirements to even be considered. Once considered, a customer’s (usually a purchasing agent) final selection of a part supplier was driven largely by prices quoted on bids. Many leaders were angry and frustrated at the Herculean power price (and purchasing agents) acquired during the recession. All signs point to price remaining important into the distant future as well. If companies are doing their best work ever, why were they being treated like a commodity versus a truly valued partner and supplier? A comparison of websites…