As host of the Twitter chat, #KaizenBiz, I am often on the lookout for interesting topics for us to take apart and discuss. So the headline for this HBR post, “Embrace the Business Model That Threatens You” caught my eye. What could this mean? What are the pros and cons of this?
The definition is not really complicated. It is the variations that are devised that are fascinating.
Just last week, we took a look at the ideas about the future of social entrepreneurship which uses various business models as differentiators. But even conventional businesses of all sizes present their own different models as well. At the most basic level, most of us are familiar with models that might use charging a fee for time, selling products and combinations of these.
In the HBR post, Embrace the Business Model That Threatens You”, Leonard Fuld uses a number of companies who have begun borrowing from competitors and creating hybrid business models. As examples, Amazon introduced lockers for the brick and mortar experience some customers prefer and Netflix has produced original programming to accompany its usual catalogue of television series, documentaries and movies.
Companies, big and small, are aware that this is a time of great change. It has been noted in previous KaizenBiz conversations that technology is driving a lot of change for organizations. With the recent introduction of Google Glasses plus the omnipresent tablets and smartphones, customer engagement with brands can be much more immediate and fickle. Just the simple practice of going to a store to shop has morphed into seeing and touching a product…and then ordering it online. Retailers either have to come up with some other means of converting foot traffic into paying customers or meeting them online. And that is just retail.
Seasoned business owners and executives have told me anecdotally about a perception that the environment and the “rules” are different since the economic downturn in 2008. Uncertainty, or predicting the future, has always played a part in organizational decision-making. Alexander Osterwalder (in this great overview post from Doug Williams) is saying that all companies are doomed if they continue to operate as they always have. Yet we see with JC Penney (a US retailer) that following a business model that attempts to disrupt the marketplace can be disastrous for a company. It might be a safer or prudent move to borrow from a competitor rather than putting all of your resources into a model like the one used by JC Penney.
Setting the stage for the future is what your business model is attempting to do. It could get complicated if you design it that way but it is simply “we create revenue by selling X and this is how we sell X.” Grant McCracken writes, “…the future is never defined, organized, boundaried, or anchored. Really, it’s all just hints and whispers. Fragile melody, no refrain.” Hybridization of your business model or simply borrowing this tactic and that tactic from your competitors might set the stage for a business with no set direction or one that is self-reflective and using current best practices about how to engage with its marketplace.
How accurate is the perception that disruption in business models is due to external factors?
What are the different variables in the business environment that you would want to consider when designing your business model?
How would you describe business models who borrow aspects of competitor’s models?
When would disrupting a current business model be the wrong choice for a company?
When would a merger make more sense than simply incorporating your competitor’s business model into your own?
What are the ramifications of “being in the moment” with your business model as you anticipate & respond to your marketplace?
This entry was posted in KaizenBiz Chat, KaizenBiz Chat Framing Posts and tagged Alexander Osterwalder, business model, Grant McCracken, HBR, hybridization of business model, Leonard Fuld by Elli St. George-Godfrey. Bookmark the permalink.