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…
Business Model Innovation Earns 2009 Inc 500 Spot
I spoke a number of months ago to an audience composed largely of machining companies. (Machining companies transform metal and other hard materials into parts used in transportation equipment, packaging machinery and other manufactured goods.) Like many CEOs in mature manufacturing markets, the leaders felt their companies’ offerings had become commoditized. Quality and service, once differentiators, were now requirements to even be considered. Once considered, a customer’s (usually a purchasing agent) final selection of a part supplier was driven largely by prices quoted on bids. Many leaders were angry and frustrated at the Herculean power price (and purchasing agents) acquired during the recession. All signs point to price remaining important into the distant future as well. If companies are doing their best work ever, why were they being treated like a commodity versus a truly valued partner and supplier? A comparison of websites…
Who Is Goldman Sachs’ Customer?
A new Schwab advertising campaign states, “Ask not what you should do for your broker.” What a great way to successfully communicate Schwab ‘s value promise given what’s happened with the “too big to fail” banks – Schwab will always act to benefit its clients. The company has built it’s business model around this value promise. Not so Goldman Sachs. The SEC charged the investment bank with fraud for selling an asset to banks whose return depended upon a group of home mortgages being repaid by the home loan borrowers. The alleged fraud arises because Goldman Sachs did not tell the banks that the specific sub-prime mortgages in the group were recommended by another Goldman Sachs customer who planned to bet against these same mortgages ever being repaid by the home loan borrowers. (The fact that Goldman Sachs is selling bets and banks…
Market disruptions demand business model innovation
The 2008-2009 economic recession changed customer and business behaviors, not unlike how a hurricane reshapes the built and natural environment. If you are not incorporating recession-induced changes into your business model strategy, your market position will weaken. The Recession Has Changed Consumer Behavior – Forever A recent in-depth study of consumer attitudes and behaviors by Context-Based Research Group, an ethnographic research and consulting firm, adds to the growing evidence that consumers have changed for good. (Listen up B2B company leaders, because your customers will change along with these consumer changes.) Consumers, after living through needed financial downsizing or, for the wealthy, downplaying of wealth, have discovered there’s magic in less. According to the authors: “Our studies portray a society moving into an era where we measure the quality of our lives in social terms before economic ones. Forty-three percent of Americans believe the…
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…
What’s Your Version of Out-of-the-Box?
What do J&J, Fed Ex, Morgan Stanley, Microsoft, GE, HP, Hyatt, Trader Joe’s, SW Airlines, MTV, and CNN have in common? A recent Newsweek article identifies these 11 great icon brands as US companies that started in a recession. A recent Wall Street Journal article contains market share data for different markets showing how leadership is changing rapidly. Who thought CIT and GE would lose their strong lending positions to businesses? The game changes in recessions, especially one like the present when the other side of the downturn is anything but an equivalent upturn. Consumers and businesses are in “reset mode” and their changes create new opportunities for: Followers to unseat leaders; Leaders to consolidate their industry; and, New-to-market categories from existing and new companies. Add in game changing new regulations for green house gasses – which essentially alters every comparative price –…
Four Seasons Is Down But Not Out if They Adopt a Business Model Innovation Lens
One window into the nature of the current recession and the uncertainty that it’s causing is through the fancy curtains at the Four Seasons Hotels and Resorts. The revenue per available room (the hospitality industry’s key financial measure) is down 25% year-to-date and for the first time in its history, the hotel management company has cut headquarters staff by 10%. In this recession, Four Seasons’ customers are hurting – wealthy individuals, the business service companies that cater to Fortune 1000 companies and the vibrant venture capital/IPO markets – significantly reducing stays at Four Seasons. Hotel property owners who contract with Four Seasons (which interestingly does not own any of its hotels, it only manages them) to hire and train their staff and manage their hotel properties are pressing Four Seasons to cut back on expenses and lower room rates to attract more guests….