What do on-demand rental cars, music downloads, mailed DVDs, and online encyclopedias all have in common?
Each one – Zipcar, iTunes, Netflix, and Wikipedia, respectively – disrupted their industries. Their game-changing, paradigm-shifting business models challenged conventional wisdom and created a new way of adding value for their customers.
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A picture is worth a thousand words. But have you ever painted a picture of the way your business works?
Unless you’re an entrepreneurial Picasso, this might sound like a daunting task. You might find yourself staring at a blank page, wondering how to visualize concepts like business channels and revenue streams. It might even be unclear what elements of your business you should include. But if you were able to paint an accurate picture, the benefits would be many; a visual business model can help you:
These days, it’s easy to be overwhelmed by the prospect of a double-dip recession – or even a prolonged period of stagnant growth. The idea of a challenging economy doesn’t sound very inviting. But what does this really mean for business owners?
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It’s been quite a while since I felt this way. The sense of uncertainty lingering in the air like a heavy fog. The feeling of hesitation and insecurity for what the future holds. The underlying sense of pessimism everywhere I turn.
News flash from December 2012! Here are three potential headlines from the future:
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Like any emerging technology, there’s plenty of hype and unsubstantiated claims around social media. It feels a lot like the dot-com boom of the late-90's. In this climate, where it’s getting difficult to separate the hot air from reality, it’s a good time to catch our breath and look at the topic from a fresh perspective. Because while social media is no easy ticket to success, and it may not be a great fit for every company, it does have the potential to offer major benefits for business owners.
Unless you’ve spent the past month in a cave or underground lair, you’re acutely aware of the spike in gas prices. The dramatic upswing, stemming mostly from the unrest in the Middle East, has created an economic headwind (or at least an annoying breeze) for most small businesses. With its immediate impact felt in the cost of shipping, delivery, and sales trips, higher gas can translate to lower profit margins for entrepreneurs in any industry.
History is unfolding before our eyes as Egyptians struggle to free themselves from three decades of authoritarian rule. While the final outcome still hangs in the balance, the massive protests bring to mind the 1989 revolution that brought down the iron curtain across Eastern Europe. Just as in the late-80's, few analysts and pundits expected this to happen. Demands for democracy and representative government are spreading across the entire region. And seemingly overnight, the rules have changed, and the world has been transformed.
It's a good time to be a snow shovel salesman in New York City. The entire northeast U.S., which has barely had time to dig out from its recent mammoth blizzard, is once again in the cross hairs of a severe storm. The region could get up to 18 inches of snow, making for another rough week of living and commuting.
Happy (early) New Year! Just a few more days, and 2010 will be history. Most Americans find themselves drifting into relax-and-reflect mode during this festive time of year. But as a business owner, there's always that part of your brain that's living in the future – a voice in the back of your head that's constantly thinking about ways to improve and strengthen your organization.
The debate over privacy and security has reared its controversial head again, just in time for the holiday travel season. Applying the latest in x-ray technology, the TSA is using full-body scanners on certain passengers. Those who "opt-out" are subjected to pat-downs. Critics claim these measures go too far, while others argue that they're necessary to prevent terrorism.
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The element of surprise is part of what keeps sports fans hooked. At the start of this baseball season, few expected that the Rangers and Giants would be facing off in the World Series. But lo-and-behold, here they are, fighting for the championship. In a way, it's fitting that the two teams are matched up; they both have strong defenses, a solid pitching corps, and relatively few offensive weapons.
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If you’re a political junkie, you live for the next few weeks; there’s plenty to see and do in the lead-up to this crucial mid-term election. If you’re not...well, you’re probably just biding your time until the campaign signs disappear and the airwaves are free of political ads.
Fantasy football seems to get more popular every year. For sports fans, it's an enticing proposition: draft a team of NFL players, then do your best to "coach" it to a championship. The strategic week-to-week management of your team can be especially intriguing. Who should you put in at a key position? Are there any poor performers that need to be dropped? Are there any players just begging to be snapped up off the waiver wire?
Call it a hunch, but we wouldn't be surprised if pigskin-minded business owners tended to perform better during their fantasy campaigns; strategic thinking is the bread-and-butter of running a successful business. And as we're about to discuss, professional management goes beyond your employees; it can also be successfully applied to your customer base.
For more than a month now, BP has been struggling in vain to stop the oil leak in the Gulf of Mexico. The lack of progress and growing uncertainty has some government agencies – and President Obama – calling for increased federal involvement. If BP can’t solve the environmental crisis, then the thinking goes that the government should try to formulate a solution of its own.
The government also plays an important role in another sort of environment: the external environment in which your company operates. A prime example is the healthcare reform bill, which clocks in at a whopping 2,409 pages. That represents a whole lot of potential uncertainty and confusion for business owners. On the other hand, there's at least one positive aspect of this change in your external environment: it's clearly on the horizon, and you can start planning for it now.
Each year, entrepreneurs send off a large chunk of their earnings to Uncle Sam. Not a fun activity, to be sure, but at least the April 15th tax deadline is a predictable part of running a business. In a marketplace filled with uncertainty, where sure things are few and far between, business owners often find themselves feeling overwhelmed by the pressure that comes with confronting an ambiguous future.
The good news is that by asking the right questions, you can start to resolve this uncertainty. Last year, we outlined five questions posed by management pioneer Peter Drucker as keys to the lasting success of any business. Now, it's time to turn our attention to his fourth question, which deals directly with reducing ambiguity and putting your business on the path to long-term prosperity: What is my plan?
If you're just beginning to implement a system of professional management, it might seem a bit premature to answer that question. After all, isn't it important to define your company's mission – and your vision of where you want to take your business – before you start planning?
By now the story has become all-too-familiar: a Toyota owner suddenly finds that their vehicle is out of control, with a floored accelerator pedal that refuses to ease up. Panic and a wild ride often follow. Some drivers, tragically, have even died.
These sorts of acceleration problems have happened before in the auto industry, but what makes this rash of gas-pedal issues noteworthy – other than its large, nationwide scope – is the fact that it happened to Toyota. Yes, the very same Toyota that made a name for itself by championing efficient, effective manufacturing practices and stringent quality control.
Happy New Year! As with every turn of the calendar, this is a good time to reflect on where we've been and where we're headed. As a fresh year begins, the natural instinct is to focus on things we can do to improve over the next 365 days. But for business owners, it's also crucial to think about the longer-term picture, expanding your time horizon well beyond the coming year. As 2010 begins to unfold, ask yourself this: How will my company need to change to thrive in 2015?
One of the keys to keeping your business on the path to enduring success is to constantly "live in the future." This doesn't require some sort of supernatural ability to forecast changes in the marketplace; it simply means that as you deal with your immediate operational issues, you always have an eye on the trends and changes that could impact your company further down the road.
What a difference a year makes. Last December, skittish consumers scaled back their gift-buying in a big way. Now, with the economy stabilizing, early signs are pointing toward a more robust holiday season. Retail sales showed a 1.4% increase in sales for October – a notable turnaround from the prior month's decline. This bodes well for an increase in spending once Black Friday rolls around.
Whether or not you operate in the retail sector, the ebb and flow of the economic tides have probably had a direct impact on your business. And regardless of how much consumers are spending, companies should still strive to target and serve the right customers. A few months ago we touched on five questions that Peter Drucker, the late management expert, defined as crucial to the success of any business. Let’s take a closer look at two of those questions: “Who is your customer?” and “What do they value?”
After a blistering-fast manufacturing and approval process, swine flu vaccinations are being doled out to thousands of health care workers. Within a few weeks, roughly 45 million Americans will have received a shot or nasal spray to guard against the virus. This fact is remarkable, considering that it's only been six months since H1N1 was identified. Thanks to advances in medical technology, vaccinations can be designed, produced, and delivered in a relatively short period of time.
This recent medical victory reminds us how profoundly we are all impacted by technology. However, we still tend to take it for granted. Take the business world, for example. It wasn’t too long ago that faxes, “snail mail,” land lines, and face-to-face meetings were the primary means of communicating. In another decade or two, it’s a safe bet that we’ll be accustomed to new technologies that make our Blackberries, cell phones, and laptops seem antiquated.
Nope, that's not a typo in the title. As this year's crop of college freshmen head back to class, they're living and learning in a world that's undergone vast changes over the past few years. So, as a timely thought exercise, we figured it would be interesting to jump ahead to 2012. What will the world be like for those students? Will it be a return to the status quo and the "good old days" of a healthy economy? What will have changed by then, and how will those changes impact the marketplace?
One thing is certain: these future consumers will have a very different mindset from students of the past. How different? Well, consider this: the freshman class of 2012 never knew a Soviet Union, have always had a caller ID on their phones, and have no memory of the first Bush Administration.
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Business is suddenly booming at car dealerships around the country. Thanks to the government's "Cash for Clunkers" program, Americans are trading in their old beaters and getting great deals on new vehicles. The wildly-popular legislation has just been given more time and a larger budget, which could translate to half a million auto sales by the time it ends.
This program, despite its immediate benefits, is probably not a game-changer for most dealerships. From a long-term perspective, there are other elements that will play a larger role in their success. In fact, every business should keep an eye on these factors for success in the long run.
Peter Drucker outlined five of these crucial areas in his sensibly named book, The Five Most Important Questions You Will Ever Ask About Your Organization. Let’s take a closer look at each of his questions:
- What is our mission?
Forty years ago, two men set foot on the moon's dusty surface and made history. The Apollo 11 mission was a stunning achievement by any measure, and even more impressive when you consider how quickly it came to fruition – just eight years after President Kennedy unveiled his lunar vision. But making those dreams a reality required more than billions in taxpayer dollars. Without the technical know-how, creative spark, and entrepreneurial spirit that are fostered by our capitalist society, the Apollo program would have never left the launch pad.
While history reminds us of our greatest achievements, it also has a funny way of repeating itself. As the economy struggles to right itself after a painful downturn, the fundamentals of our capitalist system are once again being called into question. And government, once again, is being embraced as the solution. It’s a stark contrast to the late-90’s, when President Clinton famously proclaimed an end to the era of “Big Government.”
Restoring confidence in the U.S. economy has been one of the Obama Administration’s top priorities. As part of these ongoing efforts, the President recently announced plans to create or save 600,000 new jobs over the next 100 days. His secret weapon to achieve this lofty goal is to ramp up spending of the funds allocated by the economic stimulus package, which was passed in February.
When the government passes new legislation, it takes time for its full impact to be felt. This “policy lag” was on display with the stimulus package. As a result, business owners have had trouble grasping its full potential.
"The Hitchhiker’s Guide to Lean: Lessons from the Road" is written by two management consultants with an extensive background in lean manufacturing and services. The book skips over the theory and offers business owners a practical guide to implementing lean practices and principles. These insights can help you find ways to manage costs, fine-tune your operations, and avoid cutting into the muscle of your workforce as you confront the challenges of a down economy.
President Obama's 100-day milestone has attracted a lot of media buzz as analysts and commentators try to gauge the effectiveness of the new administration. But these days, there are plenty of alternatives to the one-way conversations of TV, newspapers, and other "traditional" media sources. In this era of social media, anyone can jump online and weigh in on the latest hot topic.
Over the past few years, applications such as LinkedIn, Twitter, Facebook, YouTube, and blogs have emerged as the most popular social media methods of connecting and sharing. Each passing month sees thousands of new users jump headlong into these services.
UNC has claimed yet another championship title. The team's road to the top cut a wide swath through the Big Dance, where 63 other teams were vying for number 1 – but this was only the last leg on a long journey. It started a year ago, when the Heels suffered a devastating defeat to Kansas. After this demoralizing loss, UNC regrouped and set its team and individual goals to achieve one thing: nothing less than a national championship.
Goal-setting is important stuff – in fact, it's one of the fundamental characteristics of any championship organization. Of course, every team does its best to make it to the top. But among the handful of teams that truly have the talent to compete, the ultimate champion always fits the same profile: it’s the team that starts out with a clear picture of the end goal and a solid understanding of how each member’s level of performance contributes to achieving it.
Just over 100 years after its inception, General Motors stands on the precipice of bankruptcy. The fallen giant, once viewed as a bellwether for the entire U.S. economy, is now a symbol of failure. GM has been dying a slow death for years, thanks to a lack of forward thinking and innovation. To have any chance of surviving, the company will need to do something it should have done years ago: revise its business model to meet the changing demands of its customers. Yet this may be a classic example of "too little, too late;” the recession has all but guaranteed GM's collapse.
Of course, GM is hardly the only organization that's been shaken to the core. The economic downturn is a lot like a colossal earthquake – a richter-10 tremblor of historical proportions that's being felt around the globe. Its seismic shockwaves are creating new fault lines, rifts, and fundamental changes in the landscape of the marketplace. Surveying this new landscape, you may find that your customers, competition, and even your capabilities have undergone a tectonic shift.
Looking for useful, timely, and relevant resources that can help you navigate the challenging economy? In this section you'll find solutions, new perspectives, and fresh insights into addressing your immediate issues and strengthening your business to emerge from the downturn in a stronger position.
The Financial Crisis Portal – Wall Street Journal
Looking for a deeper understanding of the economic downturn and its impact on business? This is a good place to start. The Wall Street Journal maintains a regularly updated checkpoint for news, articles, and blogs that can help you gain a big-picture perspective of the rapidly changing external environment.
Books for Understanding
This useful book list focuses on current economic events, and is split into four categories: Wall Street and financial markets, financial panics and market crises, market regulation, and business ethics. Check out a few of these titles, which may help you spot threats and opportunities in the economic downturn. To keep the content timely and fresh, the site updates its lists whenever there's a major breaking news story that could impact businesses. This could be helpful if you're looking to keep tabs on the latest economic twists and turns.
Perceptions of the economy can shift on a dime. When the stock market strings together a series of winning sessions, sentiment and expectations tend to become unreasonably optimistic. On the same token, unreasonable pessimism can take hold when the market suffers a brutal sell-off that lasts for days. The culprit is human nature – a psychological tendency that also can influence an owner's understanding of their external environment.
Ten flips of a coin come up tails. Any guesses on what happens next? Your knee-jerk reaction might be to expect another tails – or, if you’re the contrarian type, you might think that the coin is due for a heads. The reality, of course, is that there’s a 50/50 probability of either outcome.
In operating a professionally managed organization, the owners of Northwoods Consulting Partners, Inc. are executing a plan focused on a clearly defined target segment – document management software designed exclusively for county human-services agencies in Ohio, California, Minnesota, New York, and North Carolina. Due to their willingness to change, Northwoods is managing a high rate of growth; revenue is expected to top $15 million this year, far beyond the $250,000 the company earned in its first year.
But none of this would have been possible if Gary Heinze and Mike George, co-owners of Northwoods, weren’t ready and willing to change. According to co-owner Gary Heinze, “the biggest obstacle was to change ourselves.” This fundamental shift in thinking was instrumental in the company's ongoing success.
Today's customers face a hornet's nest of frightening developments. Each week brings another round of layoffs and dismal economic data, which together have a large impact on the collective psyche of nervous Americans – and it isn't likely to get better anytime soon.
In this climate of widespread consumer fear, it's more important than ever to focus on your current customers. Do you really understand them? Do you have a solid understanding of their top needs and wants? The answers can help you meet those needs and wants better than your competition – and in turn, strengthen your revenue base as you weather the recession.
By all accounts, the current recession is ugly and getting worse. Unemployment has spiked to a 15-year high. Nervous consumers are scaling back their spending habits. Credit is harder to come by. And most analysts expect the weakness to persist throughout 2009.
While we can't say exactly how bad things will get, it's a safe bet that the failure rate for small businesses will accelerate. In a marketplace that's always intensely competitive, the struggle for profits and market share will become even fiercer. In this Darwinian recession, it seems only the strong and smart will survive.
When volatile market conditions lead to feelings of uncertainty then looking backwards can be a good place to gain perspective.
"We know the story – fueled by easy credit, the real-estate market rose swiftly. Members of Congress determined to ensure the continuation of that easy credit. Suddenly, the party comes to a devastating halt. Defaults multiply, banks fail. The economic troubles spread beyond real estate. Depression stalks the land.
But this story is about the year 1836"
The news on November 7th was that the United States elected a new President. But, unknown to many that Tuesday was the big hurdle that wireless broadband cleared with a little-noticed decision. Federal regulators set aside a disputed slice of radio spectrum for public use, hoping it would lead to low-cost, high-speed Internet access and the creation of new wireless devices.
This is important to business owners because establishing subsidized national wireless broadband would enable businesses to shed the current costs associated with providing servers and Internet access to employees. This new spectrum will be abandoned by television broadcasters when they start broadcasting digitally in 2009. This means a national broadband footprint the same size as television could blanket the nation. As a business owner, how would you benefit if every person who worked for you had access to subsidized wireless broadband every place they can now watch TV?
