“We create shapes,” the written message on the outdoor ad for World Class Fitness Center works strategically, tactically and creatively. Aligning these three elements creates business model victories. Business model strategy. Too often leaders leave the answer to “What business are we in?” to company history, industry practices, management desires or serendipity. What a tragic mistake. Successful business model innovation often starts with rethinking what the business is all about, creating answers that differentiate your business while opening doors to new growth platforms. Health club users show up and sweat for the benefits of a healthier, more attractive body. World Class’s business definition – we create shapes – reflects this. It’s also broad enough to create new growth platforms. In addition to the traditional health club, with its equipment, trainers and classes, this definition could also include nutritional advice, exercise routines and equipment…
Honesty Advances Business Model Innovation
Milwaukee Brewers owner Mark Attanasio demonstrates one of the most important qualities of a strategic leader – an honest assessment of the status quo. “We know we’ve got a problem, which is starting pitching. We as an organization need to face that reality and address it, as opposed to shrink from it or excuse it. Our offense is so good, if we were just average in pitching, we’d be a contender. We’ve had two seasons now of having a top offense and extremely poor pitching.” Attanasio then admits there is no one coming up through the ranks to solve the problem, suggesting a trade may be necessary. Imagine if someone somewhere in the J&J leadership team spoke up, “Our drive for earnings is leading plant managers to compromise quality to meet earnings expectations. If we don’t address our quality issues, I’m calling the…
Business Model Synergies Bring Shareholders Value
Which business development move will destroy shareholder value? • Intel acquiring a wireless computing chip company (Infineon) and a security-software maker (McAfee)? • Proctor and Gamble creating two new businesses – Tide™ Dry Cleaners and Mr. Clean™ Car Washes, adopting a franchise business model? • Starting in 2011, BestBuy offering a Best Buy branded mobile broadband service as a reseller of Clearwire’s 4G network? All three examples deal with synergies. Strong business models are jam packed with synergies and smart leaders focus growth strategies on synergistic moves. If you don’t understand the concept of synergies, here’s a simple explanation. Synergies arise when the whole of a business is worth more than the sum of the value of its parts standing independently. McDonalds grew profitably into a global giant because its different locations are highly synergistic. Expenses are leveraged across locations (marketing, construction, food-prep,…
What business are you in?
Baby carrot farmers are attempting to transform their vegetable into a daring, naughty snack food. The tiny orange roots are now branded Baby Carrots Rock. New packaging, bold ads and social media are part of a $25M marketing campaign. Two young entrepreneurs start College Hunks Hauling Junk, differentiating the experience they offer from what you’d except when the typical crew of a local mover shows up on your doorstep. Second Harvest Food Bank of Southern Wisconsin, which supplies food pantries with food donated by grocers and others, faces an insufficient number of food pantries to serve a growing number of needy families. Driven by its mission to eliminate hunger, it transforms itself into a mobile food pantry business after purchasing and outfitting large trucks. Harley Davidson changes the concept of its business from motorcycles to motorcycle experiences and the rest is history. Sweden’s…