Ever since we have the Internet everything is abundant. So many information at your fingertip, billions of webpages, millions of articles on Wikipedia, millions of articles at Amazon and other hundred of thousands of specialized ecommerce shops with even more articles. But is more choice always better?
Abundance of choice is today the norm. That is due to the Internet. A physical shop is always limited by its physical space. The Internet knows no limit.
When I started my research on business model innovation in 1997 we were pretty much alone in this field. Actually, we had no word to describe the profound changes in industry structures due to the emergence of the Internet at that time. The term business model innovation just popped up in 2000 as a pure academic accident. I just added innovation to business model, a term that emerge in the 1990s and I secured the URL business-model-innovation. Today, Google gives me 190.000.000 hits for the term business model innovation. So you have abundance of sources of information about business model innovation. However, can you use them all?
More choice the better: The value proposition of the first wave of Internet ventures
The first battle cry in e-commerce and on the web was that now people have more choice than ever. More choice, the better was the value proposition. There was no limitation any more. You find any product today on the web in thousands of variations.
Sport Conrad, one of the largest online shops for skis in Europe,
has 186 pairs alone for ski touring or ski mountaineering. And Sport Conrad does not even have all brands in the world. G3 from Canada eg. is missing. The choice is overwhelming.
In desperate need for the right choice
We have now choice than we can cope with. I do not want 186 products of skis I have to choose from. Think about it. 186 is the number just for ski touring skis. There are hundred more for classic alpine skiing. That is a pseudo choice. I want the skis that fit my personal profile the best. And in my case, it was Ruedi Bergsport that gave me the choice of two perfectly fitting skis and I than choose the one I will hopefully love when skiing over New Year. Actually, I choose the Dynafit Grand Teton in 191cm with Fritschi Freeride bindings.
Does Ruedi Bergsport offer 100 of skis? No, there are well-known in Switzerland that they have the best choice for freeriders and ski tourers that love freeriding. So they have less choice but much better fitting choice for me, who loves freeriders. With the help of a sales expert, that had skied already all skis they offer, they proposed just two choices. I loved it since I had a really choice (a light one for easier accents and a more stable one for better descents) and not a pseudo choice of 100 of skis that did not fit my needs.
The call for business model innovation that give us the right choice
The next years we will see many new business models that put the right choice in the center of the value proposition and build a business model around this. With Spotify, a music streaming service, I have more than 20.000.000 songs available. So the value proposition of a potential competitor should not be to have access to even more songs but to find the right songs for the right place, right time and right mood I want to listen to.
eBookers or Expedia gave me the choice to book all flight by myself. However, they offer hundred of pseudo choices when I want to book a flight. The same flight is in their system with different prices due to different flight numbers due to code sharing. That does not help the customer (see also the strange business model of airlines). It just confuses the customers. And thanks to the price comparison engines the price is key in the travel industry. What is forgotten here is that price is just one component for customers’ choice. Reliability of connections is key as well. I do not want the cheapest flight, I want the best flight that will fly on time from the airport of choice. And that might be the flight that might be a bit more expensive than the cheapest. Unfortunately, no online travel agency gives me a quality-adjusted choice where the price is just one criterion.
You can book now every hotel in the world with hotels.com or booking.com. Actually, you have the choice of hundred of hotels when you want to book a hotel in Berlin. But I do not want hundred hotels, I want the choice of hotels, I will love. At least, there is hope in this travel segment with TripAdvisor or AirBnB, that let you chose the right place to stay.
The right choice, not more choice
In the past the scarcity of choice was the problem that Amazon, Expedia, Spotify or all the other e-commerce shops solved. Now, the next challenge is not about more choice but the right choice. And that depends very much from the individual customer.
Google is so mighty since it fights for relevance in this sea of abundance. Hopefully, we will see more business that see this drive for personal relevance as their core value proposition. Give me the music I just want to listen right now. Give me the place where I can have the best vacation for the mood I am in the moment.
The right choice will be differentiator of the next wave of business model innovations.
To all of you:
A Merry Christmas and a Happy New Year.
May 2014 be a year of peace, happiness and health and lot’s of interesting, customer-driven business model innovation that will see the light of the world.
My personal wish is that we inspired some readers in the last years and that we will inspire more readers in 2014 and I will finish the book on founding the right business, I am currently work on.