As I look at today’s business models, I see more and more evidence of how old business models that fail to adapt are becoming rapidly outmoded. One of the best examples of this phenomenon is Kodak, which totally missed the digitalization of photography at a time when photos are more popular than ever. The company hasn’t had a profitable year since 2005, and has been burning through over a billion dollars annually trying to figure out what it is going to be in its next life. “I know that the work of completing our transformation to a profitable, sustainable digital Kodak is hard,” the company’s CEO, Antonio Perez, wrote in a letter to employees last week “I also know that nothing is as satisfying as the difficult.” Perez also insisted that “there is plenty of good at Kodak.” But Perez, his employees and executives need look no further than this fall’s network TV premieres for a chilling reminder of how a world-renowned and high-flying brand such as Pan Am can cease to exist except as the name of a nostalgic television series.
The fact is that even the most iconic and seemingly impregnable institutions can crumble if they don’t find ways to speedily transform themselves. Blockbuster, for example, once the dominant name in video rentals with more than 4,000 stores nationwide, found itself unable to compete with Netflix and other more technology-savvy competitors and filed for bankruptcy last year, finally being acquired by Dish Network, which is attempting to keep a few hundred of its store open. (And recently, the CEO of Netflix admitted to having “messed up” by instituting a price increase that caused thousands of subscribers to cancel and the company’s stock to loss half its value.) Another major chain, Borders, one of the country’s two largest booksellers, recently folded up its operation entirely after failing to keep pace with the revolution in both on-line sales and digital books (as well as music). And at the end of September came word that Bank of America, whose shareholders lost billions over the past month, might have to reduce the value of its stock even further after making the wildly unpopular decision to charge a $5 monthly fee for use of its debit cards (a move whose timing couldn’t have been more heedless of the growing nationwide protest against the “greed” of financial institutions). I could go on and on with examples of companies whose failure to adjust to new technologies and market conditions have adversely impacted their fortunes (or soon may).
The importance of staying ahead of the curve is something that is always on our minds when discussing how best to make Greenopolis more engaging and more fun. Or when helping guide our team’s academic or strategic approach to re-launching the Wild Oats brand in order to avoid repeating the mistakes we made in the marketing of organic and natural foods that have limited their growth to less than four percent of total food sales. But while contemplating such matters and looking at new companies and new ways of doing business, a couple of words keep popping into my mind — almost to the point where I wonder if they should replace the “unique selling proposition” that was my mantra for so many years (or help define it). I call them the “double D’s” – “disrupt” and “delight”.
Let me give you a few illustrations of how these terms apply to some of the new business models out there, such as iTunes, which disrupted the entire music industry by selling songs at 99 cents each and by keeping a customer’s entire music library in one place. But while it created an incredible technological disruption, it also provided subscribers with the delightful experience of being able to listen to their favorite music anywhere, to shuffle it when they want, or just listen to a certain genre. In short, it was a model that both disrupted and delighted.
Another model that lives up to both those descriptions is Chipotle Mexican Grille which has disrupted the marketing of Mexican food in a number of ways. First, the company (once referred to by Forbes magazine as ‘the anti-McDonald’s in all things except profitability”) customizes its offerings, allowing you the option of putting whatever you want in the burrito or tortilla, or if you prefer, just eating it out of a bowl. It also uses only ingredients that are healthy for both you and the planet, and has done more to save family farms than any other company I can think of. And guess what? – again, it provides its customers with a delightful experience. All of which has no doubt contributed to its incredible doubling of sales over the last few years.
A further example is one that people in cities have begun to experience – the transformation of the parking meter into something that has totally disrupted the old, disruptive system of having to deposit enough coins to avoid an “expiration” notice (and often still getting a ticket anyway). Now you can simply swipe your card into a solar-powered meter – a very simple action that has eliminated the need to collect coins or to worry about always having to run back and feed additional quarters into the meter. While most people might not enjoy paying for parking, the contrast with the old system can’t help but delight many drivers who will no longer have their shopping trip, dinner, or business appointment rudely interrupted in this manner.
So, going forward, as I look at the things that can help keep today’s companies surviving and thriving, I will be keeping two questions in mind – does this “disrupt” current trends and is this going to “delight” consumers?