Business: Become a market maker and not a follower
The Business Model Innovation Factory
By Saul Kaplan
'If netflixed isn't a verb, it should be," Saul Kaplan tells us in the first chapter of his book on business innovation. While it's a suggestion that's a bit cringeworthy, Kaplan is trying to make a point.
He relates the tale of US video rental chain Blockbuster -- which at one stage owned Xtravision in Ireland -- and how it failed to address the challenge posed by rival upstart Netflix, which began a mail order rental service.
Even when Blockbuster later realised it had to boost its online presence to combat competition, the move was thwarted by activist investor Carl Icahn.
He insisted the company continue its store roll-out in preference to growing its digital presence. The decision was near fatal. Blockbuster was forced to file for bankruptcy in 2010.
Kaplan, a former partner at Accenture, has run a business innovation centre for a number of years.
While some of his ideas and how he conveys them often contain the type of high-octane language one comes to expect from such books -- "innovation junkies", "road warrior consultant" are just two of his over-used phrases -- he does, to be fair, offer some good advice.
Companies and organisations need to move away from delivering incremental improvements to their business models if they want to survive. Rather, they need deep transformation.
"Incremental improvements to a business model are important," he notes, "they're just not sufficient to avoid being disrupted."
He says that many companies suffer from what he terms "death by 1,000 initiatives", where there's an over-reliance on tweaks to an existing business model in the belief that such minor alterations are in themselves enough to stave off the competition and marketplace evolution.
Kaplan makes it quite clear they're not. He also insists that developing new transformational business models requires input from everyone in an organisation.
Kaplan's book provides food for thought. In the current economic environment, it's also a useful reminder that survival requires differentiation from competitors -- not just on the usual things such as pricing or product range, but structurally.
Kaplan says organisations should seek to become "market makers", not just followers.
Available with free P&P on www.kennys.ie or by calling 091-709350.
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