Niche businesses are terrific until they are not. If you run a business with a narrow target market or far more-focused offering than your competitors, you are in a niche business. Just look around the Madison, Wisconsin area: Placon focuses on heat-treated plastic (thermoformed) packaging – not cardboard, glass, injection-molded plastic, or other types of packaging. All Placon investments advance excelling at thermoforming packaging; none are diverted. First Business Bank serves businesses and their owners, not businesses and consumers. “They know business” is a terrific brand promise. American Girl sells to pre-teen girls and their doting moms, not boys. You get the picture. Because they are more narrowly targeted than broader businesses, niche businesses can tailor their offerings, investments, and operating systems to deliver differentiated customer value—allowing them to build a very solid customer base. There is a reason Duluth Trading does not…
Are your business model decisions aligned?
I had occasion this week to look at a number of different frameworks containing questions that help you design and innovate business models, each one developed by an insightful strategist and each offering advantages. While they varied in details, there was a singular logic that leaders, charged with ensuring their company is competing with winning business models, could benefit from. To illustrate, a story might fit the bill. All Pleasant Rowland’s advisors argued against her desired channel strategy. A former schoolteacher turned grade-school textbook writer, Rowland wanted to create a doll that would help mothers keep their daughters’ attitudes and dress younger, longer. An aunt herself, Rowland had observed how contemporary culture encouraged girls to consider make-up and the like at earlier ages than had Rowland. Rowland wanted to sell the doll through direct marketing (just catalogues at the time) in lieu of…