Humanity generates as much data every two weeks as was generated from the dawn of civilization to 2003, according to Google’s Eric Schmidt. Whether his estimate is exact or as some argue exaggerated, we do know that two weeks will fall to two minutes then two seconds as use of data begets more data. Understandably, companies have had an increasingly hard time getting past all this noise. In response, marketers initially shifted advertising dollars from traditional media (TV, print and radio) to digital advertising’s banner ads and more recently to Facebook’s, Twitter’s and Google’s personalized ads, many of them location dependent. But “smarter” marketing – as personalization is called – isn’t the solution according to Mark Fidelman, Fortune columnist, author of Socialized! and CEO of marketing consultancy Evolve! In his view, we increasingly tune out to digital ads just as we learned to…
Are your business model strategy and marketing communications aligned?
A dangerous canyon often arises between business model strategy and marketing. Separate roles, meetings, deliverables, timetables, personalities and consultancies exist on each side of the divide. When business strategy and marketing execution move forward independently – as they often do – spin, distrust, poor customer experiences and commoditization result. A classic case of this problem was the latest branding of Plymouth as “Not your father’s Plymouth,” when the new model was in fact just like the dated car. Needless to say, the brand now belongs to history books. Ty Montague offers a needed bridge across this canyon in True Story: How to Combine Story and Action to Transform Your Business. Montague is co-founder of co:collective, a consultancy that helps its clients develop their strategy and brand story using the principles of Storydoing™. Montague’s premise – and it is a terrific one – is…
Has the drive for efficiency through cost cutting gone too far?
The drive for efficiency has gone too far in my estimation. “But efficiency is always good,” you might protest. True, productivity gains increase incremental profits all else equal. But “all else equal” rarely holds true in practice. Therefore, like all good things pushed too far, gains from incremental efficiency initiatives may not be worth the price paid to secure them. Why is the Efficiency Goddess who brought us big box miracles like Staples, online retailing and record corporate cash balances failing us? Efficiency initiatives usually pay attention only to readily measurable costs, ignoring unintended consequences and opportunity costs. Why do CIOs limit support to only PC-computers? Why do CFOs reduce support staff, forcing administrative work onto revenue-generating managers? Such is the thinking of modern corporate managers: They are brilliant at measuring costs and lousy at measuring professional productivity. Shortsighted trade-offs are magnified as…
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…
The role of Value Propositions in Business Model Strategy
A prospect recently asked, “What is the difference between strategy and value proposition work?” Since “strategy” is used to describe everything from how to stop a 2-year old’s tantrum to how to grow a Fortune 500 business, the question is best posed differently: “What is the role of the value proposition in a company’s strategy work?” A value proposition articulates: a promise of value being delivered to a defined target market, where value is the tangible and intangible benefits less the price the target pays to receive them; why this promise is to be believed; and, the offering that gives rise to the benefits. A value proposition should be defined and regularly reviewed at every level where you also develop a strategy. Remembering to do so will make you a better strategist. At the customer level, great sales reps know how to pitch…
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…
Demographics, GOP and business model strategy
Demographics don’t lie. They are one of the few external trends shaping organizational outcomes around which there is little if any controversy. The baby boom is aging. The voting electorate is getting more diverse. A critical question facing business models therefore is “What will be the impact of demographic trends on our future success?” The answer depends upon context. Lima, a small city in the eastern part of Pennsylvania, has a median age of 79. It suffered a 15% decline in population from 2000 to 2010. City officials and local businesses clearly have an issue! On the other hand, a large city with one of the oldest populations (Scottsdale, Arizona) experienced a 7.2% growth in population over the same period. Here, demographics work to city government and local business advantage, as Scottsdale attracts new residents by positioning itself as a retirement hub. It…
As CMOs become immersed in technology, beware of the CIO myopic thinking trap
If you thought that the move from the Industrial Era to the Digital Era was the last major economic transition that your business would have to deal with, think again. We are in the middle of yet another transformation of comparable magnitude. The slow but steady shift of power away from companies and to customers as we moved into the Digital Era will reach its zenith in the years ahead. Today’s customers, clients, and consumers are instrumented, interconnected, intelligent, engaged, informed and empowered. They want companies they buy from to know them, interact with them on their terms, and personalize marketing offers and customer support. They even want personalized products and services. IBM (my employer) calls this the Connected Consumer Era and it will lead into a digitization of the front office comparable to the back office digitization of the past two decades….
The yin and yang of business model innovation
The following quote (courtesy of a blog post by Esther Dyson, savvy internet investor) should be posted on billboards next to every large company, especially in Japan where once-great electronics giants face the Herculean challenge of reversing an accelerating decline. “Without order, planning, predictability, central control, accountancy, instructions to underlings, obedience, discipline — without these things nothing fruitful can happen, because everything disintegrates. And yet — without the magnanimity of disorder, the happy abandon, the entrepreneurship venturing into the unknown and incalculable, without the risk and the gamble, the creative imagination rushing in where angels fear to tread — without this, life is a mockery and a disgrace.” ~ E. F. Schumacher, Small is Beautiful Chico Harlan’s recent Washington Post column describes the “free fall” that Sony, Sharp, Panasonic and Toshiba are experiencing. They “once controlled the industry, outclassing and outselling their U.S….
Does your business model strategy recognize the facts?
Leaders often fail to recognize the underlying facts that will transform their markets, which creates opportunities for disruptors who work 24/7/365 for a share of the leader’s business. The economy’s move from the Industrial Age to the Information Age created three new facts that leaders must heed. Let me use newspapers as an example of an industry that ignored facts at its peril. FACT: Digital technology allows the creation of the same benefits at a lower cost. All markets evolve to the lowest cost solution, period. So it’s no surprise that the lower-cost way of communicating information is dominating media markets. But newspapers did not heed the call. The Internet has demolished printing presses and scale economies as a barrier to entry into both sides of the newspaper business model (information for readers and an audience for advertisers), with new entrants offering opportunities…