In formulated strategy we use a lot of words like innovative, based on core competencies, market driven, customer centric, operational excellence, best-in-class, top quality, leveraging existing brand, etc…. You named it and of course business model and business model innovation are now part of these buzz words. Are they still meaningful or did we forget the deeper concepts behind the words? Do we use the technocratic jargon to signal others that we are the experts?Continue reading Let’s commit a thoughtcrime
The question what a good strategy is is difficult to answer. With hindsight it is easy: A good strategy is one that works. But in foresight? Many formulated, intended strategies are plain boring, generic and not customer centric, but focused on investors. Many business model innovators on the other hand have clear strategies that are focused on customers and on the value proposition.Continue reading Does a customer care about your corporate strategy?
Thinking in business models helps you in change projects, particularly in the unlearning of unwanted tacit assumptions and knowledge of the past. Forgetting what made you successful in the past is the key challenge in any change project, learning new things actually the easy part.
I am currently involved in a large change project. The company involved was living in a cozy environment. Demand was stable, predictable; project cycles were measured in years to decades and due to high entry barriers the firm was sure to “win” all business from its customers. Quality was so defined that the products lasted for eternity, most of the time longer than they had to last. Due to the heavy duty nature of its customers’ business everything was engineered to customers standards and very little of the components were bought off the shelf. Cost was not a major issue as long it was in budget.
And now the world has changed. Their customers had to change due to pressure from their clients. So the world of my firm will never be the same but since the change is coming slowly, there is time to adapt. The question is now: How can the firm change? How can it forget the habits that made it successful in the past but impede the future?Continue reading Change, unlearning and the business model
These are the slides of the second part of my lecture I gave at Leuphana University in Lüneburg in May. The first set of slides you find here.
The typical answer from managers to the question “What is the purpose of your business?” is: “to make money”. Well, that is to some point right but the money comes from customers and therefore the purpose of a business is to find profitable customers. And financing your sales to your customers is only sustainable when you see the cash in your pockets in the end. That basic purpose got lost over the last years of shareholder value thinking.
I gave last week a workshop on business model innovation for a large Swiss technology firm. The firm is well entrenched with its customers, you can almost call the firm a purveyor to the court for some customers. But times are changing and therefore did the new management arrange a workshop on customer centric business model innovations.
The first question I asked was the classical Peter Drucker question: “What is the purpose of your business?“ And I got the typical answer from the senior managers: “To make money or to make a profit.”
That is of course right but: Where is the money coming from? How can you earn money for your shareholders without somebody who pays you? Where is your salary coming from? Is it really the company or where is the cash coming from?Continue reading It is the customer!
This video shows extremely well why companies just not need to do more of the same (MOTS) since it leads to more clutter. More clutter in features, more clutter in products, more clutter in advertising, more clutter in PR messages, more clutter of everything.
In this strange world of more of everything simplicity and clarity in your business model helps to find real differentiation, not just little differentiation but radical. Differentiation in the image, the message and the product helps but business model innovation where you create a fresh business model that is based on fresh customer insights is one key to reach this needed radical differentiation.
Enjoy the video by Scholz & Friends.
This video is particularly funny for all Germans that were socialized by the brands mentioned on the side line. Think that we have only limited brain capacity for each product category.
I was asked lately, when it is time for a disruptive innovation or a business model innovation? When should a company try to steer away from sustaining innovations toward a blue ocean of less competition.
Well, I would like to open this question to all of you. Please, tell me when you think it is time for change. Do we need a crisis or can we do it deliberately?
Please use the comment function for the discussion.
Diversity in teams helps to overcome mental models that frame and impedes fresh thinking. The solving of a case study gives an interesting example who diversity helps.
I gave recently a lecture on business model innovation for managers of a large German corporation. During the session they had to prepare a case study on Bosch Power Tools.
Bosch Power Tools faced at the beginning of the Millennium a crisis. China entered the market, trade and no-brands gained markets share, Bosch’s share decreased, the market stagnated and the business was loss making. So the division faced the choice of ‘fix it, sell it, or close it‘.Continue reading Diversity and Mental Models
Beginning of the week, I had a long discussion with Dr. oec. Susan Müller and Prof. Dr. Thierry Volery, two researchers at the University of St. Gallen. They want to figure out how high the excess return is earned by business model innovators. They want to know which kind of business innovation like value innovation or architectural innovation leads to what kind of über return or excess return.
Very interesting question in particular since most researchers including myself are still using case studies to make our point.
What made the discussion even more interesting was that we discussed what a business model is. There are several technical definitions like mine but for us more interesting was why the term became so prominent in the last years. With the term business model the word business returned to prominence in the conversation on strategy.Continue reading What is the purpose of your business?