While bets are being placed on whether the Green Bay Packers will beat the Pittsburgh Steelers for the Super Bowl ring, I’m placing my bet on a dramatic transformation of retail chains’ business models over the next decade. The football outcome can’t be predicted – both teams are awesome, and we can’t predict players’ energy showing up for the four quarters and their emotions throughout, factors critical to the final outcome. Market changes are easier to forecast because underlying trends shaping market dynamics are observable. Strategic leaders, like good investors, are always on the lookout for changes in dynamics and how they will impact the strength of different business model strategies. “Phone-Wielding Shoppers Strike Fear Into Retailers,” a December, 2010 Wall Street Journal article might as well have been titled, “Retail Store Business Model No Longer Viable.” The article told the story of…
American Airlines Business Model Strategy Bet
In the high-testosterone game of Chicken, two drivers race towards each other at accelerating speeds. The first driver to veer his car off the path loses the game. Clearly win-win solutions fail to exist in this game. Either one player proves his cowardice, or both players crash. A physically safe, but economically lethal game of Chicken is at play in the airline industry right now with American Airlines in one of the drivers’ seats. American wants travel agencies to bypass booking on Global Distribution Systems and instead use American’s own direct-connect network to book tickets. Global Distribution Systems (GDS) consolidate and keep up to date hundreds of airlines’ fares and schedules, presenting them to travel agents and online travel agencies like Expedia. GDS companies earn revenue from the airlines for any tickets booked on their system, sharing some of the revenue with the…
Can Business Model Innovation Help Curb Obesity?
I watched Food, Inc. over the holiday weekend, a documentary about US food companies whose products fill grocery store shelves and bins and supply our numerous restaurant chains. I’m a pragmatic independent, so I’m able to see through the one-sided nature of the filmmaker’s criticisms of food companies. But there’s significant merit in the film as well. The filmmakers argue that the application of factory methods to our food system in the last two decades – with its relentless drive to reduce costs – has stripped food of its nutritional value and safety. The catalyst to the change was the emergence of super-sized buyers the likes of McDonalds and Walmart. Even if you are not a McDonalds or Walmart customer, your food choices are being driven by their demands on suppliers. One net result, the film claims, is that we are a far…