Impressionist artists were excluded from top official exhibitions because their “fuzzy paintings” did not fit the mold (i.e., set of assumptions) of what constituted great art of its time. So Monet, Van Gogh and others formed their own association, held their own exhibits, and attracted an art dealer who needed to differentiate himself from established art sellers. And that’s how modern art was born. Do these century-old reinvention patterns feel familiar? Treating an assumption as a fact can be very dangerous, as dealers of classical art discovered. Great leaders are willing to unearth hidden assumptions and challenge their validity. Consider the watch industry, at the edge of creative destruction with the explosion of digital communication devices telling time. If you’re like me, a millennial generation parent, you may know that look of disbelief when you ask your child if she’d like a watch…
Create stronger external support for your business model success
Too often business leaders put a key fact on their mental backburner – their business is surrounded by a “containing system” that shapes their company’s opportunities, risks and outcomes. Not only should leaders align their business models with external market trends, they should try to influence or shape their containing system to best support their businesses. Here are two cases in point. As supply chain gurus, Boeing and GM have already assessed the impact of Japan’s recent natural disasters and are scrambling for parts. Less astute companies will discover over the next six months that their supply chains are more dependent on Japan than manufacturing managers ever understood. Journalist Barry Lynn predicted these disruptions in his 2005 book End of the Line: The Rise and Coming Fall of the Global Corporation. According to Lynn, America’s manufacturing sector has undergone a twin revolution. The…
Are synergies enhancing your business model or fooling your leaders?
The brand premium Johnson & Johnson (J&J) historically earned for Tylenol and its other leading brands will undoubtedly shrink following events of the last two years. Why pay for peace of mind when the quality that created the peace of mind is now in doubt? J&J has long held a reputation as a champion of product safety that put the consumer first, even if it meant compromised profits. The company’s handling of tampering with its McNeil Tylenol brand in 1982 is a case study in crisis public relations. Yet, J&J’s recent history includes enough US Food and Drug Administration repeat visits and citations to cost J&J CEO Bill Weldon much of his 2010 bonus (if not his job this year). With product quality processes in doubt, McNeil and its parent J&J face an even graver set of concerns than those facing Toyota following…
Business model evolution is job #1 in today’s copycat economy
Madison-based TomoTherapy, a health care technology innovator, has sold out to another niche radiology technology company, California-based Accuray. The combined company will be better able to afford the direct sales and service forces and R&D investments critical to success when selling against radiology leaders like General Electric (GE), Varian Medical Systems and Siemens. Accuray’s superior financial performance made it the acquirer. Many in the region had hoped when TomoTherapy went public at a high valuation that it would join Epic and Promega as mid-sized companies headquartered in our region anchoring Madison’s biotech community. Had TomoTherapy evolved its business model strategy, it just might have succeeded. Instead, a plummeting then flat stock price led to the sale and, with it, an anticipated loss of high paying management jobs from Madison. TomoTherapy invented a break-through niche radiology product that enabled higher doses of radiation to…
Trader Joe’s Business Model Wins in a World With Excessive Choices
All too often the rationally best alternative comes with subtle trade-offs that reduce the emotional benefits of your purchase. Take the Accura I purchased owing to the high service costs I had experienced with my Audi. Within hours of driving out of the Accura dealership, I grieved the Audi’s zippier feel and realized that I had just paid a huge price premium for a Honda with fancy wrapping. The emotional loss need not always be the case. Take Trader Joe’s, in a class by itself when it comes to grocery stores. Fortune magazine captures the Trader Joe’s experience perfectly in saying, “Trader Joe’s is not an ordinary grocery chain. It’s an offbeat, fun discovery zone that elevates its shelves with a winning combination of low-cost, yuppie-friendly staples (cage free eggs and organic blue agave sweetener) and exotic, affordable luxuries – Belgian butter waffle…