“Today everything computes. Intelligence has been infused into things no one would recognize as computers: appliances, cars, roadways, clothes, even rivers and cornfields.” So begins an IBM Smarter Planet ad in the Wall Street Journal arguing that computing must get smarter to manage today’s wealth of data. This data is not your father’s data of computer bits and bites. It now includes tweets, visual images, videos, machine output, etc. In this new world, IBM argues, computing must be: Designed for new data streams Optimized and fine-tuned to specific user tasks Managed in cloud-based solutions that offer security and flexibility Major computer models don’t change often, IBM states. But when they do change they “unleash enormous productivity, innovation and economic growth,” capturing the conclusion of economists who study Kondratiev long economic cycles. Does your business model capitalize on a rising sea of data from…
Best practices from mid-size gazelles with winning business models
Four fast-growing mid-size company CEOs shared success drivers at the recent Milwaukee Biz-Tech Conference-Expo. With rapid growth rates and distinctive business models, their advice is worth heeding. The panelists Mary Isbister, President of GenMet, a custom metal fabricator Mike Malatesta, founder and president of Advanced Waste Services, Inc. a customized service provider that reduces customers’ risks and waste. Sue Marks, founder and CEO of Pinstripe, Inc. a talent sourcing solution Craig Schiefelbein, president and CEO of PDS. PDS architects, supplies and implements IT solutions for mid-size companies. (See my PDS blog.) Their advice Never waste a downturn. Pinstripe invested in self-service infrastructure during the downturn that will speed throughput of candidates and allow its employees to do more work and higher-level work as the economy recovers. According to Harvard Business Review, market shares shift significantly during a downturn, a lesson Pinstripe capitalized upon….
Businesses start to die when business model innovation stops
Young women and teens are ruthless customers, shifting from one on-trend store to another as quickly as they shift love interests. The retail clothing industry is therefore a great place to learn this vital leadership lesson: In today’s information-age economy, business model innovators emerge as winners, while those delaying business model innovation steadily lose market share. Business Week’s Benetton: A Must-Have Becomes a Has-Been tells a sad story of a retail chain I first encountered and fell in love with in the late 1980s. Founded in 1985, this Italian clothing maker brought consumers the look and feel of European clothing at an affordable price, accompanied by its bold United Colors of Benetton advertising that paralleled the bold colors of its clothing lines. By 1993 the company was 7,000 stores strong, with locations in high-end shopping malls in major US and European cities.While Benetton…
Trader Joe’s Business Model Wins in a World With Excessive Choices
All too often the rationally best alternative comes with subtle trade-offs that reduce the emotional benefits of your purchase. Take the Accura I purchased owing to the high service costs I had experienced with my Audi. Within hours of driving out of the Accura dealership, I grieved the Audi’s zippier feel and realized that I had just paid a huge price premium for a Honda with fancy wrapping. The emotional loss need not always be the case. Take Trader Joe’s, in a class by itself when it comes to grocery stores. Fortune magazine captures the Trader Joe’s experience perfectly in saying, “Trader Joe’s is not an ordinary grocery chain. It’s an offbeat, fun discovery zone that elevates its shelves with a winning combination of low-cost, yuppie-friendly staples (cage free eggs and organic blue agave sweetener) and exotic, affordable luxuries – Belgian butter waffle…
Five Indicators of Broken Industry Business Models
How do you know when an industry is broken and radical change is undoubtedly on its way? The question is an important one for established and start-up companies. Industry transformations offer rich opportunities and devastating risks. Take the case of college education. I’ve seen enormous progress in my daughter’s writing and critical thinking skills since her arrival at Bates College in Maine where she is a Junior. Yes, the tuition payment (without any scholarship or financial aid) is very high, but I see significant value in the exchange, based on the college papers Lauren has shared and conversations about issues at the dining room table. Apparently Lauren is the exception to the rule among college students, according to a recently released book, Academically Adrift: Limited Learning on College Campuses by Richard Arum and Jospia Roksa. “According to their analysis of more than 2,300…
10 best practices of business model innovation leaders
I love the ease with which marketing-guru Seth Godin communicates vital concepts. In a recent blog A Paradox of Expectations he writes: Better than expected might be the level of quality that’s necessary to succeed. Of course, once that becomes the standard, the expectation is reset. The basis of competition has shifted to business models because features and benefits of individual products and services have become so easy to copy. But even business model value promises are subject to the Paradox of Expectations. So how does a leader stay ahead of the commoditization curve? Follow my Ten Commandments for staying out of commodity market quicksand. They form the epilogue of my book about business model innovation, Beyond Price: Differentiate Your Company in Ways that Really Matter. Practice these behaviors in the next year and you’ll better fulfill your unique and highest value role…
Apple’s Business Model Lesson
The blogosphere is aflutter with talk on Apple’s recent customer satisfaction issues linked to the new iPhone 4’s antenna design. A quiet whisper turned into thunderous noise once Consumer Reports decided to not recommend the phone because calls are dropped if the antenna is covered while in use (for example, by the user’s hand holding the phone). Much of the on-line conversation centers on public relations lessons and a debate about the sensitivity issues of the iPhone versus competitive products. (For a good assessment of the PR lessons for Apple, see The Leadership Playlist blog.) There is more to this lesson than public relations. I think in terms of business model and strategic leadership, and I believe Jobs ignored Apple’s business model in resolving an internal debate about the antenna, a product design decision that I’m confident Jobs now regrets. Apple’s value promise…
Business Model Evolution
The technology sector is rapidly moving from companies competing as technology specialists to vertically integrated companies competing on solutions. HP acquires EDS and (pending) 3Com Corp. Dell quickly follows with acquisition of Perot Systems. Oracle buys Sun Microsystems (beating out IBM by 10 cents a share). Even Apple, the original vertically integrated company, is deepening its integration by acquiring chip-maker P.A. Semi. I could go on and on. What’s creating these seismic changes in business models and business model strategy? Economists call it the natural evolution of industry structure. After new technologies are proven, horizontal strategies (i.e., going after multiple market segments) often win the game, as they secure economies of scale and afford the significant innovation costs required to stay on the leading edge of technology. But over time, thanks to the dynamic forces of competition, maturing technologies become commodities. The “unmet”…
Web 3.0 Demands Business Model Innovation
Will Web 3.0 shatter axioms behind your current business model? I am writing from in the future, thanks to a day with the University of Wisconsin Madison’s E-business Consortium conference. Experts are presenting the implications of Web 3.0 for marketing, supply chain management, IT infrastructure and information security. Aged-old assumptions underlying many business models no longer hold true as Web 3.0 tec hnology changes how we communicate and communications infrastructures. First, for the uninformed (count me in) – Web 1.0 – One-way Internet sites for commerce. 10M users. Gave birth to Amazon and other on-line retailers and information sites. Web 2.0 – Two-way conversations. 100M users. Gave birth to Facebook/Linked-in and collaboration. Web 3.0 – Real time instant communication. 1B users and rising. Started in 2006, it gave birth to Twitter, video, location-aware applications and cloud computing. So what? Web 3.0 will obsolete…