Three years ago, I walked into a business that felt like it was 1982.
The office staff had older computers on their desk, but their business model hadn’t changed in at least 30 years. They did just about everything the same way as when they started in the late 1980’s. There was no sign of a breakthrough business model, only the same old approach to selling their services.
A business model describes the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction is part of business strategy. (Wikipedia)
Think about getting a taxi versus getting an Uber.
With a taxi, you waive your hand if you are in a city. Or, you might call a company and ask them to come pick you up. You wait until they show up. You have to pay them in cash or, if you are lucky, their credit card system works. They drop you off.
With Uber, you press a button on a device that is in your pocket. The car shows up. You see how far away it is. You know the type of car and license plate number and the driver’s name. You get in. They take you to their destination. You leave without the hassle of paying because you automatically charge the trip to your credit card on file. They changed the experience of for-hire rides.
Lyft and Uber created new businesses not based on technology but on eliminating the friction, pain, and inconveniences caused by a 75-year-old taxi business model.
Signs Your Business Need a Breakthrough Business Model?
- You are losing customer’s because there is an easier way for customers (consumers) to solve their need. At the push of a button, I can make a reservation for dinner through Open Table instead of calling them.
- You haven’t simplified and decluttered the customer’s experience. Do you really need all of those divisions, line extensions and extra services and are they distracting your team?
- You keep adding more services or products because you believe that more choice will help you grow. Customers want simplicity. You are making things more complicated.
- Your organization is scattered and unfocused because you have teams working in some many different directions and against different needs. Your team is not aligned.
- When you talk to customers who no longer buy from you, they tell you of easier ways to get things done. You hear them, but don’t know what to do or are stuck in the past with infrastructure that stops you from acting.
- You see your loyal customers being less loyal and buying less frequently. Do you have any insight as to why they aren’t buying and what to do about it? Maybe how you do business is no longer desirable in an ever-changing marketplace. (Want to buy toys? Sorry, Toys R Us is gone. Go online to find what you need).
- The new products you offer or the old product you revised, don’t solve customer’s critical needs that have changed. What job is that new product doing for customers?
You are living in a cable connected world when the consumers want on-demand Netflix streaming.
Solar Panel Example
Solar panels grew at a nice pace when they were first introduced. Yes, the cost of the technology has come down, but it wasn’t until that technology became available at a zero-money-down approach to getting your energy. When the model shifted, the business changed dramatically. The breakthrough technology is essential, but it is the breakthrough business model that can drive change in an industry. When the solar industries’ business model removed the friction, a light went off in the mind of consumers.
Business model innovations and breakthroughs are the future.
Watch this video to learn about Project Breakthrough and to hear what industry leaders think about this topic.
Is your business model dated, old-fashioned and behind the times? Need some inspiration? Let’s talk. Email me at jeffslater@themarketingsage.com or 919 720 0995 or set up a time to talk via my calendar. I sell seasoned advice.
Photo Credit; By Powerhouse Museum from Sydney, Australia (Eric Sheldon in his office) [Public domain], via Wikimedia Commons
