The last chapter in my book “Beyond Price” focuses on culture change as a key mechanism for realizing the growth potential of new business models. Business model specialist Patrick Stahler also emphasizes values and the culture they create. Chicago-area’s Tasty Catering provides an excellent demonstration of our arguments. Tasty Catering has an ambitious goal: being one of the best-known and most highly regarded companies in their industry. The Chicago-based company, which employs over 70 full-time and 150 part-time seasonal workers, is well on its way to realizing that vision. Inc. Magazine Best Top Workplaces, Wall Street Journal Best Small Workplaces, and Catering Magazine awards, among others, cover one wall. The secret of Tasty Catering’s success lies in the company’s culture of individual excellence and initiative, aligned around a shared aim of customer delight. Sound business practices with a customer focus Brothers Tom, Kevin…
Can you shape your industry to better support your business model’s success?
Leaders make a mistake when they assume industry dynamics are unchangeable in their model innovation work. Industry collaborations that change dynamics can be very smart strategy in both mature and emerging markets. Industry cooperative marketing efforts can advance an industry’s products. Remember the successful “Got Milk?” campaign creatively placing milk mustaches on famous faces? Cranberries would merely remain a Thanksgiving staple without farm cooperative Ocean Spray’s efforts that landed cranberries in juice, cereals, salads toppings and snack foods. Setting standards also shapes industry dynamics. During my tenure at Datex-Ohmeda, global leader in anesthesia systems that’s now owned by GE, we worked closely with competitors and the American Society for Testing and Measuring to establish basic monitoring standards for anesthesia equipment. Yes, the standards advanced patient safety, but they also blocked low-cost competitors from entering the market, accelerated machine replacements and reduced our product…
Reflections on business model innovation from a company strategy retreat
“Select a once rapidly growing company whose growth stalled. Then, contemplate the root cause for its decline and be prepared to share your reflections at the retreat.” This assignment was one of many I asked leaders of a rapidly growing, omni-channel apparel retailer to complete in preparation for our two-day strategy retreat. (Omni-channel refers to the fact that people increasingly engage with companies across multiple channels, using each channel for different tasks.) The chosen once-celebrated examples of stalled growth included company names that used to fill articles on “best practices” to secure revenue growth. If nothing else the following names serve as a testimony to why leaders should never assume their existing business models will remain vibrant over the long haul. Kodak Too slow (or quarterly profit focused) to change from film to digitally-based business models Never fully immersed itself in digital photography…
How do customers experience your business models?
My only experience with AT&T is as a customer. But even as an outsider I can tell that the company has huge organizational silos (albeit with a workforce that finally understands customer-friendliness). Every transaction for each of my multiple AT&T services appears to require interfacing with a completely separate information system and likely business unit that often has no record of what’s happening in the other accounts. For examples: I get three bills. When I ask for one bill I am told, “All your services have different cycles and that would be a mess.” After moving to a new residence, I returned the U-verse device (which enables TV, wireless internet and the land line connection) from my former address to the AT&T wireless store, where I was told, “We don’t accept U-verse returns here. You have to go to the UPS store.” In…
Three root causes of failed strategic planning
Is your strategic planning designed to fuel growth? Unknowingly and all too often, the answer for leadership teams is “No.” When strategic plans, effectively executed, fail to drive growth a number of root causes are usually at work. Leaders view strategic planning as the process for achieving next year’s revenue goals. Every organization needs a process for resource allocation to achieve annual financial targets. But when you start strategic planning as that exercise, you end up with largely incremental improvements that get quickly copied by competitors. True strategic planning is a design process in which you assess the strength of your business models in light of a changing external environment and identify: New business model experiments Innovations to existing business models, not merely incremental improvements Strategies to strengthen the competency, process, technology and solution platforms that your business models leverage. All markets get…
Big pharma faces big business model questions
To pick the best vacation spot for hiking in February, I look at climate patterns. In the world of business, external trends help suggest the most attractive market spaces. Arrive before the crowds, and you’ll have the best experience, a principle as true for industry convergence as it is for hiking. Nevertheless, leaders too often stay stuck in current market spaces by failing to challenge historic answers to the vital business model strategy question, “What business are we in?” They get left behind as their industry converges with others, with pharmaceutical companies the latest example. As scientists’ understanding of cellular and molecular mechanisms deepened, pharmaceutical manufacturers added biologics to their offerings by evolving their internal R&D approaches and acquiring or partnering with biotech drug discovery start-ups. But with a few exceptions, drug companies’ core business remains developing and selling drugs that treat specific…
Business model lesson in Komen’s public relations disaster
Susan G. Komen for the Cure®, global leader of the movement to eradicate breast cancer, learned a painful lesson last week that we should all remember. An organization’s value promise must guide every decision it makes unless it has previously alerted stakeholders to caveats. Your value promise captures the beneficial outcome your organization aims to create for your customers. Komen promises donors a terrific feeling of making a difference, by allowing them to honor a friend or relative affected by breast cancer and by giving hope for better treatments and even a cure. A remarkably successful non-profit and the leader in the breast cancer space, Komen protects its coveted “pink” and “Race for the Cure” brand identifiers like a lioness guards her cubs. So powerful is Komen’s presence that for every US woman who correctly identifies heart disease as women’s greatest health risk,…
Do you have a strong portfolio of business models?
The news has gone from bad to worse. The bad news: Kodak, the company that fueled the growth of the photography industry is selling its patents. Not the patents for intellectual property related to film photography, but its more than 1,000 patents for capturing, storing, organizing and sharing digital images, according to the Wall Street Journal. And the really bad news? Kodak has filed for bankruptcy. Yes, Kodak was that hard up for cash and did not find it. Its leaders failed one of the most important tests of strategic leadership – building a balanced portfolio of business models. Kodak invested in new business models too late. As film stopped delivering the riches, the printer/cartridge business model demanded too much cash for too many quarters, creating an unsustainable situation. A company can be viewed as a portfolio of different business models, each using…
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…
With less shine, what will happen to Apple’s performance?
How will loyal Apple customers react to Apple’s first public supplier performance report card? Recent news about abuse of labor hours and environmental standards by some of Apple’s Asian supply chain partners might lead the loyal and merely satisfied to shop elsewhere. After all, loyalty, past satisfaction with purchases and implicit expectations about corporate behavior are woven together in a rope that can propel or, in Apple’s case, choke off future growth. About loyalty, satisfaction and expectations Customer satisfaction measures, “Did the product or service I purchased meet my expectations?” If it did not, once satisfied customers become dissatisfied, shop elsewhere in the future and, depending on the magnitude of dissatisfaction, encourage others to do the same. Customer loyalty is more than very high levels of satisfaction. A disappointed loyal customer gives a brand a second chance following any disappointment. Most of the…