Read any business magazine and you’ll discover a multitude of examples of companies that secured profitable, growing market positions because their visionary leaders challenged the conventional rules of how an industry works. The leaders’ fresh perspectives resulted in winning business model innovations in industry after industry. Netflix ousts Blockbuster. Starbucks creates a rapidly growing revenue engine that every local coffee shop missed and is poised to steal share from bland-tasting Maxwell House and Nescafé on grocery store shelves. Amazon disrupts not just booksellers Barnes & Noble and Borders, but also Target and Walmart, with its no-bricks-and-mortar business model strategy. All too often leaders of established businesses act like horses pulling carriages in New York City’s Central Park, wearing blinders to avoid distractions. Which brings me, a political independent, to the narrow thinking of Wisconsin’s Republican Gubernatorial candidates on high-speed rail transit connecting Milwaukee,…
Intuition Advances Business Model Strategy
A National Public Radio story this week concerned Ludo Lefebvre, a successful Los Angeles chef who got cold feet after leaving established restaurants to create his own. With two Mobil 5-star ratings on his resume, $2 million in investor support and a weariness from working for bosses, why did Lefebvre change his plans? His gut told him to do something very different, something that has turned out to be a huge winner in the highly competitive LA restaurant scene. Instinct is an important ingredient in business model strategy decisions. A winning business model strategy addresses a multitude of questions with answers that fit together seamlessly to carve out a unique space, a task that is very challenging in increasingly cluttered and mature markets. According to New York Times bestselling author Jonah Lehrer in How We Decide, instinct emerges from the part of our…
Business Model Strategy Built on Collaboration Succeeds
Two vastly different news stories, one about Alzheimer’s and the other about dollar stores, together convey an important strategic leadership lesson about the importance of alignment with partners in achieving an organization’s goals. Dollar stores (Dollar General, Family Dollar Stores and Dollar Trees) are growing rapidly at the expense of Walmart. Recently the dollar stores have added a lot more branded products e.g., Kraft, Heinz and others. Better packaged food selections, plus dollar stores’ closer (than Walmart) proximity to low-income neighborhoods has attracted new customers and larger shopping trips as rising gas prices increase the cost of driving to Walmart. Lipton Cold Brew Iced Tea and Jello No-Bake Cheesecake in a dollar store? I suspect that after decades of Walmart’s ruthless purchasing practices, consumer goods companies seek any opportunity to diversify their channels to gain supplier power to fight Walmart’s Herculean purchasing power….
Technology Strategy as Part of Larger Business Model Strategy
A potential client in a technology industry called me with an all-too-familiar story about his privately held company: • Established decades ago as a niche technology company • Successfully executed many technology evolutions and disruptions • Earned price premiums for decades due to outstanding service and quality • Survived the 2008 decline – hardest years in the leader’s professional life • Previously distant competitors (by geography and technology) are moving into his markets intensifying price competition • His largest direct competitor is now offering “one-stop full-line” solutions which are far more comprehensive than his company’s niche offerings Furthermore, his company’s sales force used to work directly with buyers, with relationships keeping win rates high. Now an online bidding system decides which company gets each order. After becoming “qualified” to compete by proving his company meets quality and service standards, his company must bid…
Trends That Should Shape Business Model Strategy
In the 1980s I had the privilege of working closely with consultants from McKinsey & Company, strategy partners to many Fortune 1000 firms and global non-profits. McKinsey’s value promise in a nutshell is, “We’ll help you reshape your industry to your advantage.” McKinsey recently released a report on mega-trends that will shape markets. It’s essential reading for leaders of businesses of any size as they evaluate their organization’s business model strategy. In today’s economy, “status quo” is any company’s weakest strategic direction as the world is changing more rapidly and unpredictably. While forecasting the future is impossible, understanding dynamic trends and their implications for your organization’s risks and opportunities is paramount for making solid business model strategy decisions. In McKinsey’s words: “Managers must also gain an understanding of deep external forces and the narrower trends they can unleash. In our experience, if senior…