Archive for the ‘Business Model ’ Category

A Tale of Two Economies

Tuesday, November 15th, 2011

Booming São Paulo

The West and the Rest

This is a tale of two economies with interlocking features. One has excess supply; the other has gnawing demand. In the West, economic growth is slowed while emerging markets are busting at the seams. An explosion in the number of urban, middle class consumers and related factors is powering growth in emerging markets.

The World Bank estimates that, on average, emerging nations will grow by 4.7 percent – double that of developed countries — through 2025. That growth isn’t only evident in the so-called BRIC nations, but in Turkey, Indonesia, South Korea, and across the developing world. Some of the fast growing regions are in Sub-Saharan Africa.

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Planning for What’s Next

Tuesday, April 5th, 2011

Scenarios are the most powerful vehicles I know for challenging our “mental models” about the world and lifting the blinders that limit our creativity and resourcefulness. ~Peter Schwartz

Using a longer lens

It’s been twenty years since the publication of Peter Schwartz’s insightful primer about scenario planning, The Art of the Long View. In the book, Schwartz makes a convincing case for using scenario planning in approaching strategic challenges of various kinds.

Schwartz, who led scenario planning efforts at Shell, Motorola, and Pacific Gas and Electric, concluded that the technique could be applied to handling the emergent complex threats that companies were confronting in the 90’s.

Since then, the world has grown radically more complex, more uncertain. Globalization and the Internet have woven together our institutions so that a crisis in one corner of the world can spread virally with far-reaching consequences.

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Unleashing a Coalition

Tuesday, January 18th, 2011

High stakes, high pressure

As our society debates the need for more civil discourse, we’re underplaying the value of competing perspectives among our leaders. I’m a fan of rival leaders who can come together despite their differences to redefine their company’s mission.

For institutions grappling with deep change, there’s no better way to start than by assembling a coalition of leaders and entrusting them to set a new direction. When the stakes are high, a team of diverse, tough-minded leaders reaching a consensus can yield resoundingly productive results.

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Lessons From Emerging Markets

Sunday, December 19th, 2010


Turning the page

Another interesting year is rapidly winding down. This year, I had the chance to work with many gifted business and tech leaders, but it was particularly satisfying collaborating with innovators in developing regions — the Sub-Sahara, the Middle East and South Asia.

It’s time for Western multinational companies — especially those in the customer-facing sectors — to enter developing markets where consumer-led growth is robust but capital and resources are in short supply.

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Africa’s Latest Asian Wave

Thursday, October 28th, 2010

India’s top mobile carrier, Bharti Airtel, is bringing its ultra low-cost services to the sub-Sahara. Can it adapt its managed services model to penetrate  Africa’s under-served, low-income markets? What are the implications?

Out of the East

Asia’s growing influence in Africa is receiving worldwide attention. China’s investment in Africa will top $100 billion dollars this year making it the continent’s biggest trading partner. There are 800 Chinese companies with over 4 million Chinese people living and working there. China’s impact on Africa, as author Richard Dowden observed, is the biggest economic shift of the twenty-first century.

Now, the story of Asia’s push into Africa is being revised to highlight players from India. In June, Bharti Airtel, India’s largest mobile carrier – the 5th largest telecom in the world – bought Kuwait-based Zain’s operations in 16 African countries for $10.7 billion in cash.

Bharti has been eager to grab a piece of Africa’s growing mobile market for some time. In 2009, it tried to buy MTN, Africa’s largest carrier, but the deal failed due to regulatory roadblocks. Undeterred, Bharti pivoted quickly setting its sights on Zain.  By June, Bharti bagged its African trophy, though some analysts thought it paid too much for Zain’s assets.

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In Praise of Impalas

Friday, September 3rd, 2010

The swift and agile

A recent Ewing Marion Kauffman Foundation study revived the term “gazelle companies” to describe the young, rapidly-growing U.S.firms that are producing the majority of new jobs in the U.S.  The report recommends that policy-makers nurture Gazelles to stimulate job growth at a time when unemployment is high.

I’m interested in another class of companies—agile, well-run firms in emerging regions like the sub-Sahara. Like their Western counterparts, they’re creating a disproportionate number of jobs. But these young African companies are playing a more crucial role than gazelles do in driving market growth.

To belabor the metaphor, I call them Impalas, after the lean, swift gazelles indigenous to Africa. Impalas provide technology-enabled and outsourcing services to a growing number of multinational (MNC) service providers – mobiles, airlines and banks – in Johannesburg, Accra, and Nairobi, etc.  They share many of the characteristics of gazelles, but there are some notable differences.

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The Hat Trick

Tuesday, May 25th, 2010

The thrill of victory

One of the best things about my work is what my colleagues and I call the “hat trick”.  In sports like cricket and hockey, a hat trick is accomplishing a feat three times in a contest.  I’ll explain what a hat trick is in my world and why it’s thrilling to pull one off.

Our mission is to help clients enable their customers to enjoy richer, more satisfying service experiences.

A hat trick is when we not only help clients to better meet the needs of their target customers, but also enable them to increase customer loyalty and revenue. We do all this while also cutting service costs — sometimes up to 20%.  Almost every assignment offers hat trick potential.

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“Get a Load of Our Stuff!”

Wednesday, November 4th, 2009

The Wall Street Journal/MIT Sloan Management Review published a disturbing paper on why Western companies are failing to transform the Bottom of the Pyramid into a booming consumer market.  The author argues that the base of the world’s economic pyramid – where people live on $2 a day or less – isn’t panning out as a market because potential consumers “haven’t been conditioned to think that the products being offered are something one would even buy.”

To support his argument, he cites the case of PUR, a low-cost water purification system developed by Procter & Gamble. The product provides the obvious benefit of affordable clean water where the risks of drinking contaminated water are high. But curiously, PUR* achieved low market penetration rates in test markets.

Why would consumers reject a product as salient as PUR? The author contends that Western companies simply haven’t created demand among low income consumers. “Companies must create markets—new lifestyles—among poor consumers,” he insists. His prescription is that Western businesses need to do a better job “conditioning” low-income  people to be better consumers.  Really?

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Tell Us One More Story, Don

Thursday, August 27th, 2009

“The formula is simple and it’s reduced to four words every kid in the world knows: Tell me a story. It’s that easy.” -Don Hewitt

Last week, Don Hewitt, founder and long-time producer of 60 Minutes, died.  He’ll be remembered, among other things, as an impresario who created one of TV’s most successful programs.  There’s a potent lesson for all of us in his “storyline”.

Hewitt’s vision and instincts culminated in a new, highly successful form of entertainment known as the “news magazine”. As important as that accomplishment is, his greatest feat may be his proving that story-telling is the key to success, not only in TV, but in every medium.  We, in business, have much to learn from Hewitt’s dogged pursuit of the story.

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Virgin America Transforms Air Travel

Wednesday, May 27th, 2009

Virgin

You never know with these things when you’re trying something new what can happen. This is all experimental. ~Richard Branson

Over the years, there have been surprisingly few breakthroughs in the airline customer experience – until recently. Sir Richard Branson’s venture into the U.S. market, Virgin America, (VX) is redefining air travel by providing passengers with a fresh, distinctive on-board experience. The carrier is less than two years old but it’s quickly becoming a template for what’s possible in the future.

The choices VX is making demonstrate a “customer experience mindset” that’s all too rare in the industry. It’s evident that the VX team devoted their attention to passenger comfort and convenience. Features “baked in” to the customer experience include seats with power-outlets and USB ports. Cabins in their new A320s have soft mood lighting.

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Restructuring is What’s Next

Monday, November 24th, 2008

Nearly every business we’re working with is re-evaluating if not totally rethinking their economics.  Businesses in every sector will have to revise if not fundamentally restructure their business models. 

Companies have begunb scrutinizing their value chains from the bottom up and the top down because none of our customers has the extra time or money to be wasted by underperforming partners or suppliers.   The smart  firms have already started this process in earnest. 

Organizations we work with are mustering the self-honesty and diligence to impose greater process discipline and rigor while, at the same time, becoming “turn-on-a-dime” adaptable.  To succeed in this low-demand cycle, businesses will have to focus on what matters most to their customers and relentlessly discard what’s leftover. 

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Virgin Connect Invades Russia

Thursday, May 29th, 2008

Sir Richard Branson’s Virgin Group has announced it will team up with Swiss telecom Trivon to launch Virgin Connect in Russia. Virgin Connect will deliver services over a WiMAX network that covers 32 regions throughout Russia. The venture will offer broadband, voice and other services.

Branson said, “I am delighted to announce Virgin’s first business in Russia – Virgin Connect. We have entered Russia with Virgin Connect because we believe the potential for growth in the Russian broadband market is extremely exciting. Virgin‘s fundamental business principle is: ‘Delivering an outstanding customer experience’.”  He added, “We will provide a fresh and human customer experience to Russians and believe that Trivon is the ideal partner to deliver this. Virgin Connect plans to gain a market share of 10% within 5 years in this promising market”.

Trivon, founded in ’04, has bought up several Russian communications operators. They grabbed up the 5.7-5.9GHz spectrum licence across Russia and also acquired a 5.9-6.4GHz spectrum in some regions to set the stage.

It’s a shrewd move. The venture wants to exploit a fragmented, underserved market which only has a 5% broadband penetration rate.  The Russian market still suffers from the legacy practices of their monopolistic, post-Soviet era culture.

The company didn’t provide details about its service model yet but judging by the Virgin Group’s progressive approach to consumer services in other verticals, they could reshape the services industry in a region that lags far behind the rest of the developing world.  I’m betting on Virgin’s succeeding and, in any case, this should be interesting.  Stay tuned…

Build a Better Smartphone

Sunday, April 27th, 2008

Don’t miss today’s NYT piece on the showdown between the smartphone heavyweights –  R.I.M.’s Blackberry and Apple’s iPhone.  The battle is pitting competing models that evolved along two different paths, and each is scrutinizing the other as the market grows and stratefies.

Both field generals – Lazaridis vs. Jobs – are brilliant strategists, but each has a unique vision and problem solving style reflected by their respective organizations and their products.

R.I.M. has long appealed to business users who demand relentless connectivity; the company shaped the category due to its combination of functionality, stability and security.  Those features were enough to give R.I.M. a critical mass of market share which has grown incrementally.

Then came the iPhone with its silky touchscreen and utter seamlessness.  It was a category killer from Day One. I’ve never met a user who wasn’t enthralled.  The user experience is the message.

What’s next is their battle for the hearts and minds of business users in the rarified 3G space.  Both companies will likely co-opt the best features of the other.  (Look for R.I.M. to come up with a niftier interface while upgrading its functionality and security in the 3G world.)

This battle couldn’t be more fascinating. I’m betting – and this is a very safe bet – that the real winner will be the consumer.

The “Learning Hub”

Thursday, April 24th, 2008

What’s next in corporate education? Our agile corporate learning programs have evolved over the past 5 years through successive approximations, i.e. experimentation. Our current framework is that of a Learning Hub (LH) which is designed to promote on-going, self-directed learning among our clients’ workers at all levels.

Why this approach—why now? Simply put, we’re seeing corporate learning increasingly move away from a traditional skills training-passive learning approach to more of a performance engineering process, and for good reason.  Traditional training doesn’t build the capabilities that today’s market leading companies need to succeed.  Moreover, it doesn’t address the needs of sophisticated learners in the Knowledge Economy.

In contrast to conventional training, our efforts are directed at improving overall organizational capabilities while stressing frontline performance — connecting performance to the desired business impact. We’re aiming at driving performance improvement through all levels of the organization.

In addition to building the skills, knowledge and talents needed to improve performance now, we help clients anticipate the skills, the knowledge, the talents necessary as consumer demands shift over the 18-24 months.

The LH isn’t a training center, or a set of dedicated classrooms. It’s conceptual — a web-enabled learning environment that provides access to a wealth of knowledge resources–both internal and external. It entails on-line learning, peer collaborations, links to outside resources, and partnerships with academic institutions, all intended to deliver knowledge that is necessary at the moment the employee needs it.

The LH enables leaders to be able to emphasize the importance of learning to the success of the organization. It enables our clients to come together around a shared educational platform. This formal approach to on-going learning enables different units to come together which is one of those key business challenges that organizations are dealing with today – that is, trying to get different work groups to collaborate.

Technology is enables access to and connectivity with resources that couldn’t otherwise be reached in person. It also allows us to do things such as simulations — a lot of things that we can practice, which we would not be able to do in the operational environment, are enabled by technology.  This is aparamount in a world where workers are distributed across continents.

And we bring technologies that simulate the work setting. The result is there’s no demarcation between the learning environment and the work setting. So, when learners move from the LH Lab to their day-to-day jobs, it’s a seamless transition.

Learners come to the LH environment expecting not only to get particular knowledge or skills but they expect to enjoy a learning experience that contribute to their ability to effectively engage customers while also feeling more confident and therefore more satisfied workers.

U.S. airline mergers re-visited

Wednesday, April 23rd, 2008

What follows the Delta-Northwest merger? United Airlines and Continental have been talking, despite Continental’s independent culture.  Whether this deal goes down or not is heard to tell.  But more mergers seem likely if not inevitable.

The forecast for airlines is gloomy and getting darker by the day. Network carriers in the U.S. are facing high costs for aircraft ownership, fuel, labor and maintenance. With rising fixed costs, no pricing power and negligible profit margins, reducing capacity to relieve pricing pressure seems to be mission imperative.  But network carriers are reluctant to reduce their inventories much further.

Due to their low credit ratings, airlines can’t borrow money at reasonable rates to invest in more fuel efficient planes and more efficient facilities.

All this means that the industry will have to consolidate – out of sheer necessity – despite the thorny challenges of integrating large, people-intensive organizations and fragmented legacy systems.

Can consolidation fix the ailing economics of the airline industry?

It’s too early to tell, but it probably won’t be enough.  In the end, new and innovative airline business models are needed to solve the industry’s deep, structural problems.

Airline disruptions and mergers

Tuesday, April 15th, 2008

While considering the much anticipated Delta-Northwest merger, with many more mergers on the horizon, I recalled Clayton Christensen’s book The Innovator’s Dilemma.

He pointed out how the Southwest Airlines model is “disruptive” because their low-cost strategy targeted customers who had been using trains and buses and or those who used out of the way airports.

But, Christensen believes that low cost carriers have a limited shelf life, because the incumbents can ultimately match them on the cost side, whereas the incumbents can’t climb the value chain.

I wonder what comes next in the evolution of airline service models — few of which are working well in mature markets, particularly in the U.S. and Europe.  Carriers suffer from overcapacity during down cycles like this while customers receive less than stellar service.

Just when we figured there’s nothing new and interesting in the industry comes Virgin America’s innovative business model. Their planes feature custom-designed leather seats, mood-lighting, and the best in-flight entertainment (IFE) system in the industry with on-demand TV and movies, high end games, music and even online chats with other customers.

The IFE is a great example of how the airline got it right.  As a practical matter, customers can plug their devices into USB ports.  The real genius is that the system runs on twin Linux servers–meaning an “open source” platform that is equipped to handle a range of new software and harware add-ons down the road.  This innovation occurred because the company had the wisdom to recruit forward-thinking, Silicon valley engineers – not airline entertainment vendors – to design it.

And, the airline managed all of this using a surprisingly lean, yet scalable operations model.  By allocating costs on non-perishable components that customers value, Virgin has come up with an effective airline model that will alter the way we think about flying.

While the legacy carriers fight it out using conventional warfare, Virgin America is rolling out new, novel features that today’s high value customer desires.  That’s what’s next — along with more mergers among the majors.

P.S. [April 18, 2008], Notice Time magazine’s 4-17 article, “Richard Branson’s Flight Plan”.

EM learning model

Tuesday, March 11th, 2008

We’re developing, in successive approximations, a hybrid model of delivering premium training to emerging companies—those emerging regions that are clamoring for competitive capabilities to succeed in a world with more competitors along with more demanding customers.

It features, among other things, “modular” content design which enables us to reduce development cycles and labor without compromising content quality.  A new quick-check knowledge management system is powering this effort.

Today, many organizations offer innovative solutions for improving knowledge transfer, as well as products that enhance the learner experience. But, we want to go further by translating our vision for delivering premium learning services to emerging markets where we can achieve superior learning outcomes at significantly reduced costs.

We aim to further our mission of creating substantial business impact through initiatives designed to provide research-based solutions, expertise and structured peer interaction.

And, of course, we must do all this without compromising quality.  Not easy, but worth the effort to be sure.