Posts Tagged ‘Business Model ’

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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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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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”.