As stated in one of the previous posts: coping with a crisis is no sexy business. Traditional approaches to stay financially in shape concentrate around cost cutting, very often leading to reducing headcount by layoffs. Many major companies such as IBM (5000 people), Bombardier (10% of work force), GM, and many others saw themselves forced to let people go. In fear of layoffs at a French Caterpilar site four bosses were even helt hostage for several hours.
There is an other way to cope with market decline and even crisis while building stronger businesses: Business Model Convergence.
Most companies run a portfolio of products and brands, active in various markets, across the globe. In terms of business models they have numerous.
In itself this is not really a problem… as long as markets are growing. When growth seizes to a halt this can become a problem. The organization that needs to deliver all these business models is by all means not the most focused one. Maintaining all the business models is extremely challenging.
When converging business models it becomes apparent that a company basically has a few generic ones that apply to most businesses. Focusing on the implementation and how to run these effectively enables a company to distinguish between the activities that seem important and the ones that are.
Elaborating capabilities around the activities that are truly important grows a organization that understands the most important aspects within the core business models and that is able to implement them flawless.
Companies that aim to simplify their businesses first need to create an overview of all of its’ (most important) business models. From there an assessment needs to be made to highlight the main commonalities and discrepancies and captured into core business models.
Next is to translate the generic business models into implications they brings to functions and functional domains within the organization all the way till the level of concrete actions. Implement those and you will have an organization that is better able at delivering its’ core business models.
Side effect is that the business models that are more distant from the core ones are recognized based upon their true merits which enables them to choose and pursue their own business model without being forced into a core one that will not do the job.
Business Model Convergence is a way to strengthen business by simplification of the portfolio of business models aiming to build stronger businesses based upon outperforming, excellent organizations by focusing, freeing up potential to spur new business growth.
Many people are interested in how a new Value Proposition is created. Of course, understanding this process and being able to execute it, provides a basis for continuously staying ahead of competitors; it would be the Holy Grail of business. In workshops I have used various methods such as Blue Ocean and TRIZ. These methods help to frame thoughts and give directions. What they do not do is provide you with a new Value Proposition gift wrapped.
Creating a new Value Proposition can be done in several ways, each of which differently partitioned into stages. Here is an example of how the creation process is broken down, brought in a very creative way; in an animated Chinese painting style. The movie clip is by Ada Kwok and is presently really popular on youtube. Clicking tot Ada’s website it is clear that the company does graphic business design. Ada has used succesfully as a mechanism to draw traffic to her site. This is yet an other example of how youtube can significantly boost the number of potential customers.
I really like how each of the creation phases is broken down and expresses in the video:
- Imagination
- Visualization
- Formation
- Transformation
- Bring to life
[pro-player]http://www.youtube.com/watch?v=ce9f0JP6eks&feature=fvst[/pro-player]
Recently Business Models and Business Model Innovation received increased attention. The term devaluated during the high rise of the Internet Bubble, when all you needed to get venture capital was a new type of Business Model, without any sanity check.
Now in an era of ever increasing competition from emerging markets, re-thinking your Business Model seems very appropriate as being an incumbent player in your market. Difficulty is maintaining the relationship with your current customers while achieving growth. Key is consistently managing your identity.
Traditionally companies focus on technology when driving innovation. This is not strange from a R&D perspective, but what to do with the great new technology created? Will this sell itself?
The answer is NO. Look at examples history provides us with such as Philips’ Video2000 system. With the hindsight from today many people state that Philips did have the superior system, but lacked the capability to successfully sell it, loosing the battle to set to standard to VHS.
This presentation shows the necessity to take Business Model Innovation into account as well as Technology Innovation. Building a portfolio which contains provide a sound basis for future growth and success.
Recently I stumbled upon an interesting article which states that we should not focus on the things we are good at, but concentrate on the areas we are not so great at. The theory behind it is based on researching to-be chess masters. Of course this differs 180 degrees from our common sense.
Applying this line of thinking to business it even becomes more interesting. Most companies have a strong focus on what they are good at, mainly because here the largest part of the cash flow is generated. In the excellent areas firms want to become ever more excellent, with trajectories such as Six Sigma. Nothing wrong here, unless you want to stay on top of business and innovate. Then you have to be aware of your current strengths, and more important where the room to grow is.
In the presentation I have plotted this concept on different Business Model areas.
The Sky Commuter, built by Flight Innovations Inc., which never left the prototype stage is now for sale on eBay. The fantastic machine, built in 1990, was intended to replace traditional car traffic. It is said that one of the engineers is now offering it at eBay. Current selling price around 50,000 dollars, which is nothing compared to the 6 million that was put into it. The machine offered is said to be one of originally three. The sad story behind the Sky Commuter is that for some reason the production plant was closed down before it ever went into production and present in the hangar then was either taken or destroyed. Due the the fact that this machine was at a different location this beautiful dream is still around to inspire. (source:
Before each rugby match the New Zealand team performs a traditional Maori dance: the Haka. Of course this underlines their identity. The dance basically fits two main purposes; first build up the tension for the team, and second intimidate the other team. I think it is a great, inspiring example of how a team breaths as one, one critical factors in executing any strategy, and a Blue Ocean Strategy in particular. Creating one clear picture helps so that both customers as well as employees do not get lost in the woods.
In a Blue Ocean strategy the execution has to be build into the strategy itself. The Haka, seen as an expression of the team’s strategy, is an example of how the execution of their strategy of build into it by the New Zealand rugby team.
It is that impressive that Adidas used it in their commercials around the Rugby World Cup recently held in France.
[pro-player]http://www.youtube.com/watch?v=GcN-fKEWzFQ[/pro-player]
