Success breeds complacency. Business school case studies are chock-full of innovators that truck along, and Pow! in comes a new player and customers are suddenly gaining value from somewhere else. Such formerly high-flying firms default to the approaches that brought them initial success, even when markets change.
Such upheaval is evident everywhere in the business world today. Did you know that big-box retailer Walmart now competes with Comcast, and Netflix for movie streaming on TVs? Or that a business-to-business network equipment giant Cisco now competes with Kodak and Sony for consumer camcorders?
Most market incumbents stick with their current products, business models and industry for their entire existance, such that they don’t see opportunities to move–or the risk of new entrants. Such tunnel vision presents a tremendous opportunity for savvy executives looking outside their current base to grow revenue or maintain leadership.
To Win, Look B.E.Y.O.N.D. Business Boundaries
My work with large corporate clients has uncovered a set of six questions that can uncover hidden risks and opportunities–I call these questions the B.E.Y.O.N.D.™ evaluation (Business Models, Encroachment, SimplifY Products, Overall Customer, Next Wave,and Distribution).
- Business Models: Can a competitor come in with a new business model and explode the economics of your industry? Industry players often cluster around a fixed group of business models or pricing structures. Automobile manufacturers, for instance, all earn revenues from a combination of sales and interest on loans and leases, but does it have to be that way? Could a competitor create a free or near-free car and charge for mileage, the way cellular service companies give away phones and charge for minutes? (Electric car company A Better Place is looking into it.) The point is that inside many companies the incumbant business model can feel like the “way things are done” right until someone else comes and shows a different way. The key is to rethink your options before someone else does.
- Encroachment: Do you evaluate the same competitors now as you did three years ago? Digital convergence, globalization, and the battle for limited consumer time and attention are causing businesses to expand beyond traditonal industry boundaries, as Walmart has expanded from retail CD and DVD sales into streaming video. Industry landscape analysis must take these shifts into account. Remove the industry blinders.
- SimplifY: Can your category be simplified? Is “good enough” at a lower price sufficient for most customers? Companies ranging from Japanese automakers, to Southwest Airlines, to Costco have built their success by simplifying or providing lower cost options within existing categories. Who is doing the same in yours?
- Overall Customer: How well do you evaluate the broader customer context independent of your products? Consider the fact that network solutions provider Cisco has recently entered the mature enterprise server market occupied by incumbents IBM and HP. Cisco views its value as offering a broad spectrum of “Cloud computing” services–not just hardware or implementation. Evaluating consumers from a 360 degree view including sequential tasks as well as simultaneous activity (multitasking, concurrent brands, media) will uncover helpful insights in today’s three-screen society (mobile, TV, PC).
- Next Wave: Do you regularly seek the “next wave” of technology or methods to serve customers, even when doing so will make your current products obsolete? Blockbuster missed the wave to mail-order movies and now appears late to the game for both low-cost kiosk rentals and streaming video, resulting in significant loss of market share and concerns about ongoing viability.
- Distribution: Do you have the same channel partner portfolio mix as three years ago? The emergence of mobile and software as a service/cloud technologies, creates many new options. Opportunities with alliance partners and affiliates are also changing the landscape. Consider the global market reach of Facebook, Google, Twitter, and Paypal.
A final question to ask is whether your current team is capable of providing a perspective beyond current industry paradigms. Blind spots may exist in your corporate radar. If you answered “Yes” to any of the questions above, your business may be vunerable.
Your answers to the B.E.Y.O.N.D.™ evaluation will rapidly identify game-changing opportunities and actions for your business to secure leadership in today’s turbulent markets. Are you prepared?
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