The title of this book caught my attention in a book store in Hong Kong. I didn’t open or buy the book, just thought the title was funny. Meeting with a couple of friends here in Asia and the common topic is business is getting tougher and tougher. Out of the half-a-dozen people I’ve talked to you, all six of them are executing on business strategies that are not creating value in the long term.
They are smart people but somehow their businesses have lost market power, operating with a lack of perspectives of the future and underperforming from both ROE and ROA perspectives. And all without an exit plan. Luckily they all realized their business models are outdated and are working on getting out of it.
The question I always ask is "How do you know if you business models are truly creating value?" Why everyone is busy struggling with surviving carrying/maintaining yesterday’s legacies. Many industries and companies are now reaching their industry breakpoints with or without knowing it. It means there are bit changes ahead of them. Improving execution of a strategy based on any outdated business models that gives you only incremental gains is a sure way to fail. Nor are most mergers and acquisitions that put two weak companies together and in fact, the preoccupation with M&A integration inhibits companies from focusing on innovation and seeing the future.
Business Models are based on existing dominant logics, which are their latent beliefs about business. With that they can see what is applicable in the future and what’s not. Over time successful business recipes become irrelevant and successes lead to business structures that may become dysfunctional. They are slow to respond to external change. With external shocks that can now happen overnight instead of over a period of 10 years.
To survive and prosper, companies must do three things:
- To learn about the breakpoints potential in the industry and have a sense about when it will happen. They need to develop a set of perspectives about how the changes could happen and how it could impact an industry.
- Assemble the leadership team to commit to making a quantum organizational change (a “reset” in Jeff Immelt’s word and I am using this more and more). This includes re-assessing the market served and underserved, customer unmet needs and technological-enabled disruptions.
- Maintain a minimum level of stability with the core economic engine (cash flow) to sustain this transformation. You need a war chest to make it happen. Any business model transformation requires an investment period before there is any payoff.
The fun part of Idea Couture’s business is our eclectic team of thinkers, business strategists, multi-disciplinary designers, anthropologists, business foresight analysts, experience architects, human factor specialists, market researchers, technologists working together to tackle wicked problems for industries from healthcare to consumer packaged goods, fashion to financial services. We have in our toolbox proprietary tools and artifacts, among them brand personability cards, large-size visual artifacts, unconventional workshops, and immersive customer environments. After all, transformation should be fun. Although it does usually come with some pains too.
