$$ The Billion Dollar Question $$
Why is it that many established businesses struggle to come up with groundbreaking, new business models?
It’s the billion dollar question, the answer to which alludes many managers...
Yes, I know, your company is different and special. But is it really? Or is that just a convenient story you’re telling yourself rather than stepping up and doing something different?
It may be that you hear people at work talking about how the company is not what it used to be? You know the ones, where it’s always someone else that has caused the decline in sales, caused more competitors to enter the fray, facilitated escalating costs, allowed margins are being squeezed etc.
It’s not you of course. Somebody you work with. Right?
Well, the truth is that unless we are truly innovating within our industry, then are all part of the problem. Pointing to hiring freezes, exchange rates, changing import regulations and so on as justifications for declining business is just white noise.
Sure, these all have an effect of course, but simply sitting back and using them to defend this year's bonus or next years targets won’t cut it. The world is evolving at an incredible pace and we all know that whole industries are being disrupted, but is that bad?
Yes, but only if you continue to cling to traditions.
Instead, you can leave the ‘old guard’ mentality behind and choose to become a more progressive player in the game. But how to do that?
Well, it starts with understanding how you got to where you are today. Only then can you determine how you will get to where you want to be.
To tell the story we use a ‘space’ metaphor where the planets represent the customers. As with all businesses, once upon a time it was a start-up and created some sort of invention; a product or a service.
Of course, this offering needed to be made available to customers and therefore a spaceship was built to carry the payload. Naturally, it was decided to focus on specific customers and those who were the easiest to reach - so the spaceship is designed and built on that basis.
It’s not too big and therefore doesn’t require many crew.
Offering + Customers = a business. In simple terms, so far so good.
As the business is becomes more successful so planets further afield are targeted and the nearby ones are all served already. Of course, this means that bigger spaceships are required; to carry more payload [offering], more fuel to cover the extra distance, more crew to operate it and so on…
Business is good. And, especially in today's ‘information age’ news of the success travels fast. Before long the inevitable happens…
Copy cats appear.
Of course they don't have to worry about all the market research, R&D and so on. They can follow your business model and before long innovation starts fading off. Industry convergence sets in.
The fun days are over for the ‘old guard’.
Price becomes a regularly used lever. Features and functions, bells and whistles become the yard sticks. Margins are squeezed and the pressure increases as the established try to continue operating the large, expensive spaceships.
And then. The next attack takes place. A ‘little’ start-up comes out of nowhere and blindsides them… Renders them helpless in fact…
“That wouldn’t happen to us” sounds a bit foolhardy these days doesn't it.
We all know the ‘too big to fail’ belief is nonsense and we’ve all seen the success stories of ‘little’ start-ups like Uber, Airbnb, Tesla, Netflix, Spotify. In fact, chances are you use some of their offerings...
So, with the billion dollar question now answered, the more important question is what will you do about it?
Stay shackled to the ways of the ‘old guard’ or play your part in defining the future of your business?