“adapt and evolve or become extinct”
In Tim Ferriss’ blog he writes: “The game today is all about changing the game. Competing head-to-head on products and services is table stakes. Innovators are looking for a new business model that will destabilize their rivals and produce a breakthrough opportunity.
In fact, in a recent survey of top-level executives in established companies IBM found that the biggest shared concern is that somewhere in the world—in a garage or a dorm room— someone is coming up with a new business model that will overthrow their established way of doing business.”
In Alan M. Webber’s, co-founder of Fast Company magazine and former editorial director of the Harvard Business Review, book ‘Rules of Thumb’ is a collection of 52 truths he’s culled from notes specifically related to winning in business. These were a collection of notes, lessons, and insights he gleaned from his experiences travelling the world and in his interactions with people ranging from CEOs and spiritual leaders to basketball coaches, novelists, and stars from dozens of other worlds… Here is Rule #24.
RULE #24 – If you want to change the game strategy; change the economics of how the game is played.
Once you start to look you’ll find companies in every industry that have changed the economics to change the game: from razors to cameras, computers to airlines, magazines to nonprofits. Companies that start by redesigning the economics of an industry often finish by redesigning the whole industry—and owning it.
Start by analyzing the status quo. What’s the standard economic model the industry uses today? When you pull it apart, how does it work? What are the assumptions that it’s based on? How and why has it become the industry standard? Take a look at it from the point of view of the customer. Exactly what is the customer paying for? And where does the business make its real money? Go back to Business School 101 and ask the fundamental question: what business are you really in?
After you’ve analyzed the standard business model, take a look outside your own industry. You may be able to learn some new tricks—or at least borrow some inspiration. What would happen if the whole business moved to the Web? If things that customers paid for now became free? Free, as the saying goes, is a pretty good price. What if you did a King Gillette and gave away the razor? What could you charge for? Take it one more step: are you hurting your business by charging for something you should give away free? (As daily newspapers watch their circulation numbers decline, some critics argue it would make more sense to give the papers away for free.)
After you’ve looked at the economics from inside the industry and from other industries, try looking at new platforms. Can you imagine new revenue streams that reflect changes going on in customer habits, customer experiences, or customer loyalty? Is emerging technology opening up new ways of connecting—or making customers pine for the good old days when things weren’t so high-tech? Don’t forget, everyone agreed that retail outlets were dead and all commerce was shifting to the Web. Then Steve Jobs opened up Apple stores with their Genius Bars. Counterintuitive can be a great economic model.
There are a lot of ways to reinvent an economic model. But most established companies are unwilling to do it because it would mean destabilizing their own operation. Which is exactly what those innovators and entrepreneurs in the garages and dorm rooms are counting on.
Rule #38: If you want to think big, start small (an interaction with Muhammad Yunus)