First, let me admit my bias. I wear a gorgeous 14k gold Swiss watch everywhere but in the water. The thought of replacing it with an Apple Watch would, for me, feel like replacing a great dinner with brightly colored and beautifully shaped nutritional tablets. Was that why Apple’s share price failed to rise following Apple Watch’s debut today? Still, the Apple Watch may find a great market if we shake off the history of “the watch,” a noun denoting a time-telling device, and avoid viewing it as a wrist smart phone. Instead, let’s think about the new entrant as a “situational mobile solution for watching” (the verb). What are some of the situations in which an Apple Watch could provide significant customer value? Exercise. I carry my iPhone when I run to track my miles, speed, elevations, etc. I would welcome a…
Would Checker Cab becoming UBER have been a good thing?
Let’s work backwards. Take Checker Cab, Michigan’s largest cab company and the only one to cover all 147 square miles of Detroit. After a strategic planning retreat, the owners, now calling the company Checkmate, decide to: Replace dispatch units and meters with an internet-based platform that manages fee calculation and customer billing and provides a faster and more consumer-friendly matching of drivers with riders. Change the pricing model to enable the company to earn excessive premiums in peak traffic. Eliminate its extensive driver training focused on defensive driving and driver and passenger safety. Lower its renowned standard for driver background checks. Sell rather than rent its fleet of cabs to drivers, so it no longer needs to pay insurance. Create a process to make sure drivers are insured. Whether individual owners’ insurance covers cars used for commercial purposes is unclear, but hey, that’s…
Medtronic avoids BlackBerry’s business model mistakes
Once a mobile phone leader, BlackBerry will pass from irrelevancy to bankruptcy absent an outside purchaser. Medtronic will wisely avoid this fate if it transforms its culture and business models following its recent acquisition of disease management and patient monitoring company CardioCom. Whereas BlackBerry missed the technology shift that required phones to provide mobile photography, music, and computing —not just calls and emails — Medtronic appears to understand it’s engine needs rebuilding. By further exploiting all the data collected by its chronic care devices (such as pacemakers and insulin pumps) and serving the chronically ill before they need devices, Medtronic can do more to improve health and lower its costs. Indeed, the medical device leader’s recent creation of a business model innovation center in Singapore demonstrates that the company knows that devices alone can no longer fuel its growth. Much as Caterpillar earth…
What Obama missed in his economic assessment
Great strategy requires a solid grip on the situation. Here are five situational facts Obama missed in today’s economic address at Knox College. Urgency is needed to prevent a second recession. China is slowing. Europe is imploding. Rising interest rates are slowing the housing recovery, with continued government cutbacks strengthening the headwinds against US private sector recovery. We risk a double dip recession like the US Great Depression or the triple dips being observed in Europe. Therefore infrastructure investments, retraining of workers, and revitalization of manufacturing and aging cities are a necessity, not an option. Overseas job creation is the new reality. With the middle class growing across the globe, US companies should be investing in jobs abroad. Therefore our economic strategy should be to maintain US headquarters and create new companies – not prevent overseas job expansion. Corporate tax reform and incentives…
Our growing class divide
The well-dressed traveler ran like a bull charging a red cape, entering an open area in front of the waiting lines at Amsterdam’s United International check-in. “Excuse me – there’s a queue,” I commented from the front of the line. “But I’m Global Services,” he proclaimed haughtily, shocked at my objection. Thankfully, a United Airlines agent asked the “gentleman” to step to the end of the preferred travelers line. It occurred to me then that international airline travel is a good analogy for what’s happening in the US economy as we shed middle class jobs. You’ve either been born to the right parents, secured a good career and are living the life of the preferred traveler or you are stuck in the very back rows – unable to afford any preferential treatment. The gap between the two life styles is growing with our…
The business model opportunity that gun manufacturers best not shoot down
Business leaders, whatever their industry, become so mired in day-to-day demands of managing their business that they often fail to see opportunities not just outside their industry boundaries but inside as well. Revenue and profits suffer as a result. The gun industry is a case in point. The percent of US households owning a gun is has been declining for decades with ownership among younger demographics falling the most. Purchases by existing gun owners, which accelerated post Obama’s election, drive gun manufacturers’ revenue growth. This demand pattern is not sustainable as a revenue engine. Ownership will likely continue to decline owing to demographics as fewer young people hunt today than in the past. And at some point, the marginal benefit from an additional gun purchase drops below the cost of purchasing yet another gun. On the surface, therefore, it makes sense that the…
A better business model for banks
What to do about US banks that are too big to fail, to regulate, to understand, to manage or, given their importance in national income growth, to compromise their ability to grow? Two solutions are on the table: one high in regulation and the other high in disruption. Both aim to remedy the US taxpayer subsidized risk-taking that led (in part but not in isolation) to the 2008 financial crisis. The Dodd-Frank bill (also known as The Volker Bill) tries to separate banking and investment banking activities of the large bank holding companies, as they were pre-Clinton. The regulation is so weighed down in complexity — running about 850 pages and driving 9,000-some pages of regulations — it will require over 24 million hours by federal regulators to enforce it. Even IF the bill works, Dodd-Frank keeps in place a business model that…
Why Microsoft should have bought HP to save Windows
It came as no surprise to many analysts that Microsoft has had a disappointing few months, with very slow holiday sales of its Surface tablet and continuing tepid-at-best reviews of Windows 8. PCs and Windows software are in trouble – so much so that Microsoft is investing billions to prop up one of its channels to the market – Dell, and some predict a Kodak-like demise of Microsoft. It also comes as no surprise to anyone who, like me, turns on a Lenovo Think Pad (or any other PC) and resumes Microsoft Windows. Depending on how I exited my computer, I may have to wait as long as 5 minutes before it is usable. A similar delay occurs throughout the day when my computer falls asleep. Consider that my employer (IBM) has 400,000+ workers across the globe experiencing these delays every day, every…
The myth about markets
If this election is to be a national vote on the role of government versus markets to advance our nation’s wellbeing – as pundits suggest it is – it’s best that we step back to discuss what markets can and cannot do. In the process we will hopefully remember that we all benefit from a vibrant private sector and that government plays a vital role in its creation. Economists rightly applaud the role of markets and price in particular as the invisible hand that aligns demand and supply. Compare the economies of West Berlin and East Berlin before the fall of the USSR and you can see the power of price and free markets versus a planned economy in creating an economy that responds to people’s needs. Yes there is beauty in the invisible hand, and it generates significant national wealth. But the…
How Einstein would solve the physician shortage problem
Einstein argued that a problem will never be solved with the same mindset that created it. His thinking is sorely needed to address an emerging physician shortfall. The predicted shortage arises from a number of forces: According to a recent NYT article, “The number of training positions for medical school graduates is lagging. Younger doctors are on average working fewer hours than their predecessors. And about a third of the country’s doctors are 55 or older, and nearing retirement.” An aging baby boom generation will need more care. Our increasingly unhealthy population, with half of US adults having some kind of chronic condition, needs more care. The supply chain for producing US-trained physicians is expensive and restricted. Federal health care reform will make prevention and early treatment available to more people, adding up to 300,000 more patients into the primary care funnel. The…