One of the hardest challenges facing leaders is making decisions in the face of uncertainties. To deal with the discomfort of uncertainty, some leaders turn their assumptions and beliefs into “facts” in their mind. That’s unfortunate. Stick blindly to ill-informed thinking, as some prominent leaders have done, and you’ve doomed your company to decline. Let’s look at some examples. Ironically, it was a Kodak engineer (Steve Sasson) who invented one of the first digital cameras in 1975. Three decades later, Kodak’s leaders made decisions seemingly based on a belief that digital photography would have a slow uptake, even though by that time digital cameras dominated the marketplace. Why? Digital technology made saving and sharing photos effortless. Blockbuster believed stores offered the most convenient video rental and purchasing experience. Its CEO turned down an opportunity to purchase Netflix in 2000. “Netflix doesn’t do anything…
Remember to ask, “What business are we in?”
If, as a company leader, you did not lose a heartbeat over the bankruptcy filing of Kodak, Barnes and Noble, Blockbuster and AMR Corporation (American Airline’s parent) or Google’s pending purchase of Motorola phones, you should have. When previously solid businesses run out of cash, there are lessons to be learned. In particular, never forget the vital strategic question, “What business are we in?” Too narrow an answer, like Kodak’s “film” or Blockbuster’s “video store,” positions your business to be disrupted by a better solution. Look what stand-alone digital cameras and smart phones have done to film or what Netflix’s more convenient mail-order DVD model did to Blockbuster. A change in consumer preferences also leads to disruptions as Netflix found out with the surge in on-line media streaming. Too broad an answer to the question “What business are we in?” or an out-of-touch-with-the-market…
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…