Disney’s recent decision to restrict products advertised on its child-focused media properties might not appear to be business model innovation in the classic sense. But it is. With that one decision, Disney is redefining how, where, and why they will do business with other companies, and offering a leading-edge value promise to consumers. In reading societal tea leaves correctly and taking bold action, Disney will advance its financial and social value. Starting in 2015 Disney will restrict advertising on its child-focused TV channels, website and other media properties to brands that meet a strict new set of federal nutritional standards. The decision will reduce Disney advertising revenue from brands like Capri Sun™ drinks and Kraft Lunchables™, foods that may be fun to eat but not good nutrition. Concurrently, Disney will reduce the salt content of meals served at its theme parks and engage…
Culture as a business model advantage
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…
Segment markets on situation to unearth winning new business models
“Situation” is a powerful lens for identifying business model innovation opportunities and protecting whatever market space you now command. “Situational segmentation” recognizes that any one customer’s needs – for a restaurant for example – depend on the circumstances giving rise to the need – entertaining, date-night, shopping with a friend. You can disrupt a leader or protect your position by finding situations where existing offerings fail to address situational needs. Zipcar, founded in 2000, did just that. Errands and other short trips lead auto nonowners, like college students and young urban dwellers, to need a car for hours instead of days or weeks. Auto rental companies, designed for travel and longer-term rentals, are often too far away, too expensive and take too much time to transact with to meet short-hop situational needs. Zipcar’s car sharing subscription service addressed the unmet need, allowing its…
Blueprint Health inaugural class of start-ups reinforce business model lessons
I had the pleasure of being one of about 400 people attending Blueprint Health’s “Demonstration Day.” Angel, venture capital and corporate investors from across the US listened to investment pitches from the nine start-up companies that Blueprint Health selected (out of 300 applicants) for its inaugural accelerator class. I am an advisor to NEEDL, one of the nine. Blueprint Health’s out-of-the box success deserves a shout-out. It serves as the hub of healthcare technology innovation in NYC by bringing together a collaborative community of entrepreneurs who build businesses and learn from each other in a co-work space that offers a broad array of educational classes. Companies that want accelerated help can apply for a 3-month program of support (in exchange for an equity share) from Blueprint’s network of healthcare entrepreneurs, investors and industry mentors, the largest in the country according to Blueprint. These…
Use new information technologies to transform your business models
The newest information technologies on the block – social, mobile, cloud and data analytics – can and should do more than boost your organization’s efficiency. Far more than past IT innovations, these new technologies can positively transform your organization – where it competes, why it wins and how it operates. Smart leaders understand this. Meet one in this blog. As a young but experienced telecommunications industry professional, Nancy Peckham founded Madison, Wisconsin-based Valicom in 1991 to help companies reduce telecommunication costs. Valicom’s value promise for its direct services is very powerful: “We average 30.4% savings in telecom expenses across our client base,” according to CEO Peckham. Her company produces this savings by helping clients better manage the complex supply chain associated with providing their workforces with wired and wireless voice and data communications, internet connections, and wireless services. As device options and mobile…
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,…
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…
In Amazon vs. Netflix war, Amazon wins the battle for satisfied customers
Competition in a free market economy favors the lowest cost business model as markets mature and price-driven shoppers grow in size. Design a business model that delivers unique benefits, on the other hand, and you must also focus on efficiency. Because customers only pay price premiums for unique benefits, any inefficiency costs come right off your bottom line. Is it any wonder then that on-line retailing is growing by leaps and bounds, steadily gaining share against in-store retail? E-commerce is far more efficient, something Amazon understood in disrupting the book industry. In addition, on-line sales lower consumers’ indirect costs by saving time and gas money and, during the busy holiday season, avoiding the frustration of fighting crowds. Nevertheless, efficiency and convenience won’t overcome frustrating on-line shopping experiences. So how successfully are on-line retailers satisfying the increasingly demanding consumer? Better and better according to…
Disrupt your business model before you’re disrupted
A well-known case study by Harvard Business Review documents how Dow Corning elected to disrupt its own silicon business rather than allow competitors to steal market share by offering lower price points. The story is worth retelling because Dow Corning’s business model innovation keeps evolving to meet the needs of price-driven customer segments. As the information age took full hold in the 1990s and markets globalized, Dow Corning recognized that its high-end offering of services surrounding its product left the growing number of price-driven customers shopping elsewhere. “We recognized that a number of product lines were becoming commodity-like, and customers were no longer willing to pay a premium for them,” comments 20-year Dow Corning veteran Stacy Coughlin, an architect of the 2001/2 business model innovation project that created a price-driven brand, XIAMETER. Now the head of Global Marketing Communications for this brand, Coughlin…