The road just got rockier and the atmosphere foggier. Stock market turmoil, coupled with continued uncertainty about federal fiscal policy and the Euro, creates additional challenges for every business owner and leadership team. The risk of a double dip recession just increased. At the same time, significant liquidity resting in investor and company balance sheets stands ready to fuel attractive economic and asset value growth when the right signals appear. While I usually hate “Top 10” lists, we’re all in need of some jump-start ideas to turn feeling blocked into forward movement. Here’s some ideas to find pockets of light as you plot your course through a suddenly thicker forest. You’re not the only company, leadership team and family feeling upset right now. What would you learn (as a B2B company) if you interviewed a range of people in your top customers or…
Five Indicators of Broken Industry Business Models
How do you know when an industry is broken and radical change is undoubtedly on its way? The question is an important one for established and start-up companies. Industry transformations offer rich opportunities and devastating risks. Take the case of college education. I’ve seen enormous progress in my daughter’s writing and critical thinking skills since her arrival at Bates College in Maine where she is a Junior. Yes, the tuition payment (without any scholarship or financial aid) is very high, but I see significant value in the exchange, based on the college papers Lauren has shared and conversations about issues at the dining room table. Apparently Lauren is the exception to the rule among college students, according to a recently released book, Academically Adrift: Limited Learning on College Campuses by Richard Arum and Jospia Roksa. “According to their analysis of more than 2,300…
Lifestyle company business model strategy
The table lacked butter and olive oil, purposefully. So began my meal Saturday night in Orlando Florida at Seasons 52, a fresh dining concept from Darden Restaurants, parent company to Olive Garden and other restaurant chains. Nothing on the Seasons 52 menu has over 475 calories, a requirement that leads to guiltless mini-desserts. The upscale menu changes every three months (I ate from the Fall menu), and includes weekly specials that capture a food in its best season. Brussels sprouts – a rare restaurant find except in gourmet restaurants – caught my eye. Attractive presentation, brick ovens and a terrific wine list (including wines “soon to be famous”) added to the dining experience. An inviting stone and wood décor complete with a fireplace and a welcoming piano bar will draw repeat visitors for sure. I’m writing about Seasons 52 as it contains the…
Why Blockbuster failed and World Class will win
“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…
Saving Newspapers Before Google Rescues The Day
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…
Why Capital Bank’s Attributes Fail as a Value Promise
Last week’s post talked about the vital alignment between your brand platform and your value promise. A great example of getting the two concepts of brand and value promise wrong comes in a series of ads that Madison’s Capital Bank presents in the daily Wisconsin State Journal. Each ad contains a picture of one of the bank’s commercial lenders with the words Capital Bank to the left followed by three adjectives. Capital Bank Knowledgeable Resourceful Responsive The three adjectives or attributes may be what differentiates Capital Bank lenders from competitors’ lenders. But these three adjectives are neither a value promise nor are they reflective of a thoughtful brand platform. Before I explain why, let’s look at a winning example. A winning value promise and brand promise example Walmart’s “everyday lowest price” is the company’s value promise, its “True North” that drives all internal…
Are your business model and brand strategies aligned?
A new client asked me a good question today. “You talk Kay about helping us find our value promise, but my communications agency is totally focused on our brand platform. What’s what and why does it matter?” The answer rests in understanding communication challenges. The internal communication challenge Employees need a shared and actionable aim that advances the company’s success. It must be actionable so that employees and teams know how to go about their work. The aim must also be shared or else actions by one part of the organization hurt another part’s success, creating distrust and silo-mentality. (These two requirements are why “Grow profits and revenue” as the only aim fails.) The best internal directive is a value promise. It’s the promise the company makes to its target customers and the basis on which it wants to win business. Internally, it…
Business Model Evolution
The technology sector is rapidly moving from companies competing as technology specialists to vertically integrated companies competing on solutions. HP acquires EDS and (pending) 3Com Corp. Dell quickly follows with acquisition of Perot Systems. Oracle buys Sun Microsystems (beating out IBM by 10 cents a share). Even Apple, the original vertically integrated company, is deepening its integration by acquiring chip-maker P.A. Semi. I could go on and on. What’s creating these seismic changes in business models and business model strategy? Economists call it the natural evolution of industry structure. After new technologies are proven, horizontal strategies (i.e., going after multiple market segments) often win the game, as they secure economies of scale and afford the significant innovation costs required to stay on the leading edge of technology. But over time, thanks to the dynamic forces of competition, maturing technologies become commodities. The “unmet”…
Non-profit for profit merger
What sector do GOOGLE or TWITTER belong to after all? The late Peter Druker once commented that most of the interesting work would be in the social sector, as that is where the unresolved problems rest. I wonder if he fully anticipated how non-profits are not the only enterprises focused on social issues. Many for-profit companies are headed there as well. Google is enabling educational advances in very poor areas and we all witnessed how Twitter gave voice to Iranian protesters. Donna Fenn, best selling author of Alpha Dogs and Upstarts and contributing writer for Inc. comments that business start-ups among young leaders is at all time high with Generation Y. And most of these, she shared at the recent Wisconsin Early Stage Symposium, are involved in social entrepreneurship in some way. HP and P&G are among the many Fortune 500 companies that…
How Does Gourmet Magazine Reach Its Demise as Julia Child’s Cookbook Reaches #1 on the NYT Best Seller List?
Conde Naste is rebalancing its portfolio, with consulting firm McKinsey & Company at its side. The global strategy-guru firms (McKinsey, Bain & Company, etc.) are like the Big 8 (now 4 and counting) accounting firms that bring “credibility” to management’s decisions. If the esteemed McKinsey & Company said to get rid of Gourmet Magazine, it must make sense. But does it> A Business Model Framework Out of Step with the Times Some context: The Conde Naste business model is failing on the profit front for two reasons. First, Web 2.0 and now Web 3.0 is revolutionizing media. More important, the recession is shrinking advertising pages. Conde Naste’s strategy is to reduce brands in each content category, with the larger circulation brands surviving as they offer, at least in today’s dollars, more advertising revenue. So we will have fewer bridal magazines and one less…