A general focuses on the battlefield and where the enemy is coming from, while the soldier in the foxhole keeps his sight within a 10-yard perimeter. In a similar vein, business leaders must understand the lay of a more expansive external environment while others define and execute day-to-day tactics. Leaders supply fresh strategic insights by connecting the dots between things they observe, read or hear about to identify patterns and themes. It’s called conceptual thinking. Let’s see how it works. Three articles caught my eye in one day’s news. In the first article, The Council of Public Relations Firms was reported to be reinventing itself and the PR profession as traditional PR strategies of media relations and placement backfire in an era of consumer-generated social media. The profession made sense when NBC could reach 1/3 of US TV viewers. Now there are thousands…
Value Promise and Profit Potential, Part Two
If you need a differentiated, superior value promise to win customers’ votes, how do you know when your value promise is no longer working and business model innovation is called for? Make sure you measure repeat purchases, your consideration rates and your win rates. Discover where you’re losing business and why you’re losing business, as losses signal a weakening value promise and threats to profit potential. Lost order autopsies can reveal – Nascent industries reducing customer interest in your categories Your differentiators becoming standards to be considered Non-traditional competitors entering your space Subgroups of customers exiting for simpler offerings Reduced profit margins also indicate a weakened or less differentiated value promise. But leaders too often forget that a compelling value promise creates the best context for reliable profit potential. They fix profits by cutting costs, forgetting value promise implications. A vital strategic leadership…
Value Promise and Profit Potential, Part One
Image via Wikipedia All customers buy on perceived value. Unfortunately, Walmart’s advertising has led us to define value as lowest price. We’ve forgotten that there are value promises beyond lowest price in today’s recession. Value is a mental scale with benefits on one side and costs on the other. Both sides contain tangible and intangible, emotional, functional and/or social factors. More benefits, more value, a formula Target exploited and Sears forgot. We stay in business if the customer exchange (benefits for price customers pay) is consistently profitable for us or, if we’re a venture-financed start up, promises profitability. Value promise and profit potential are interrelated. Understanding this interrelationship explains how to win. Way #1. Build the lowest cost structure for delivering required benefits. Your higher margins can be channeled back into the business to create further advantage. McDonalds dominates Wendy’s. Way #2. Offer…
Business Model Innovation – About My Blog
It’s gotten harder and harder to succeed in business for a long list of reasons that, like gravity, pull leaders into a short-term focus. Our planning deceives us into thinking we’re being strategic when in reality we’re just working at different degrees of tactical. The end result is that we’re too often operationally terrific and strategically shortsighted. Are you ready to unearth an exciting new growth strategy versus incremental improvements to today’s business? If so, you’re ready for business model innovation. My blog uses the lens of business model innovation to help you radically rethink what your business is all about in order to see previously hidden growth opportunities. Together, our conversation will help you create the mindset, mental-wandering, strategic thinking and knowledge that produces better growth strategy decisions and faster execution. Every organization has a business model whether or not leaders articulate…