It was the best of times for Best Buy and the worst of times for Toys “R” Us in the news this week. Years ago, analysts expected Best Buy to go the way of Borders, a bookseller disrupted by Amazon’s online magic. Instead, Best Buy has held up well against Amazon. It not only avoided the fate of electronics chains that did go bankrupt (e.g., Radio Shack and Circuit City) it’s a stock we all should have purchased. Toys “R” Us, on the other hand, announced its bankruptcy this week. Economists love natural experiments, and the Best Buy versus Toys “R” Us comparison offers one for retail markets. Why did Best Buy succeed where Toys “R” Us failed? What lessons can we glean? The key takeaway: You cannot beat Amazon at its own retail game. You must win at a different game. Toys…
What business are you in?
Baby carrot farmers are attempting to transform their vegetable into a daring, naughty snack food. The tiny orange roots are now branded Baby Carrots Rock. New packaging, bold ads and social media are part of a $25M marketing campaign. Two young entrepreneurs start College Hunks Hauling Junk, differentiating the experience they offer from what you’d except when the typical crew of a local mover shows up on your doorstep. Second Harvest Food Bank of Southern Wisconsin, which supplies food pantries with food donated by grocers and others, faces an insufficient number of food pantries to serve a growing number of needy families. Driven by its mission to eliminate hunger, it transforms itself into a mobile food pantry business after purchasing and outfitting large trucks. Harley Davidson changes the concept of its business from motorcycles to motorcycle experiences and the rest is history. Sweden’s…
Technology Strategy as Part of Larger Business Model Strategy
A potential client in a technology industry called me with an all-too-familiar story about his privately held company: • Established decades ago as a niche technology company • Successfully executed many technology evolutions and disruptions • Earned price premiums for decades due to outstanding service and quality • Survived the 2008 decline – hardest years in the leader’s professional life • Previously distant competitors (by geography and technology) are moving into his markets intensifying price competition • His largest direct competitor is now offering “one-stop full-line” solutions which are far more comprehensive than his company’s niche offerings Furthermore, his company’s sales force used to work directly with buyers, with relationships keeping win rates high. Now an online bidding system decides which company gets each order. After becoming “qualified” to compete by proving his company meets quality and service standards, his company must bid…
Business Model Innovation and Sustainability
For decades, corporate social responsibility has been managed by most CEOs as a Pubic Relations activity, financed through philanthropy and Marketing Department budgets, rather than as a core principle guiding decision-making. What a loss to companies, consumers, the environment and communities. Those few companies who were early adopters of sustainability as a business practice versus messaging opportunity gained attractive financial and market position advantages. Fortunately, “The times, they are a changing.” A recent Accenture-UN Global Compact report states that sustainability is moving from the sidelines into senior leadership team meetings where sustainability issues will influence corporate decisions on capabilities, processes, systems, in fact the entire supply chain. “According to the survey, A New Era of Sustainability – UN Global Compact-Accenture CEO Study, 2010, the global economic downturn did little to dampen corporate commitment to sustainability, in fact it seems to have done the…
Saving Newspapers Before Google Rescues The Day
Media provides a great case study of creative destruction, to coin Joseph Schumpeter’s term for capitalism’s ability to destroy while creating anew. Yet even massive creative destruction will not reverse the basic economic principal that customers buy based on highest perceived value, where value is perceived benefits less the perceived costs to acquire those benefits. Newspapers, for example, were highly profitable when they held the unique advantage of cost-effectively and frequently reaching customers with an advertiser’s message. Editors focused first and foremost on readers, with the publisher paying most attention to advertisers. The symbiotic relationship worked … … until Cable TV and the Internet fragmented markets and provided alternative and less costly routes for commercial advertisers and classified ad purchasers to reach their target markets and paying readers to find news. The monopoly position of the newspaper as a frequent advertising vehicle was…