The motoring and mainstream media alike have scrutinized Detroit's Biggish Two-and-a-Half ad nauseum. Both experts and the car-buying public are questioning Detroit's ability to innovate in the post-SUV cash cow, post-bailout world. And rightfully so. Admittedly, there are a few bright spots on the horizon. But the real innovation story likely won't be the much-hyped Chevy Volt or even Ford's Fit-beating Fiesta. And it certainly won't be the ridiculous idea that positioning Chrysler to compete with Cadillac will somehow save the beleaguered brand (have you seen Cadillac's sales figures, Mr. Fong?). I'm betting Detroit's next disruptive innovation will be the rebirth of Saturn.
Tag: business model
Innovation success stories are all strikingly similar: a bright idea, supported by a zealot-innovator who sees it through. The windfall of goodies follows. But failures happen for all sorts of reasons, and they often occur even when the idea is sound
America's largest media and entertainment companies are richer than ever. But their profits overwhelmingly rely on an anxious business model.
If your company is already well established and has smart management, it is likely that it will become a hybrid in the next ten years, blending its legacy business with a new business model that is rising to threaten it.
In today’s world of changing business models, mass entrepreneurs, and a growing “maker economy,” we find a hotbed of innovation ecosystems.
Twitter plans to roll out a free real-time analytics dashboard in the fourth quarter, said Ross Hoffman of the company’s business development team at a conference yesterday. Hoffman said Twitter would start a phased rollout of the dashboard to show users information about how their tweets are spreading and who is influential in their network. WebTrends caught the remark in a session at the Sports Marketing 2.0 Summit and cornered Hoffman for further deets.
In the massive new Barnes & Noble superstore on Manhattan's Upper East Side, generous display space is devoted to baby blankets, Art Deco flight clocks, stationery and adult games like Risk and Stratego. The eclectic merchandise, which has nothing to do with books, may be a glimpse into the future of Barnes & Noble Inc., the nation's largest book chain. Electronic books are still in their infancy, comprising an estimated 3% to 5% of the market today. But they are fast accelerating the decline of physical books, forcing retailers, publishers, authors and agents to reinvent their business models or be painfully crippled.
Tony Hsieh is the CEO of Zappos.com, Inc. During the past 10 years, the company has grown from almost no sales to more than $1 billion in annual gross merchandise sales, driven primarily by repeat customers and word of mouth. Below is an excerpt from Tony's forthcoming book that describes the beginning of Zappos.
The term "business model" is often bandied about in the mainstream media as a way of capturing the essence of how a company makes money. To keep things simple for the home gamers, the media usually reduces the term "business model" to something impossibly simple - as in "advertising" or "paid subscriptions." When you talk to insiders, though, the reality is often much more complex and textured. In some cases, the way you think an industry makes money turns out to be nothing more than fiction.
Twitter. The privately held company received a new round of investment last fall, believed to be $100m, which values the business at a whopping $1bn (£624m). That makes Twitter roughly as valuable as WH Smith - which provides an excellent point of comparison. WH Smith has done well this year. Its annual revenues are likely to be about £1.3bn, and most analysts are expecting those revenues to result in pre-tax profits of about £80m. Over at Twitter, for all its glorious PR and amazing technological impact, there is nothing. Not a cent. Because Twitter does not charge for its service.
Here are my criteria for the best brand in the world. The benchmark against which other brands should be compared. This is more multi-dimensional than the tables of the world's biggest brands. I propose 10 criteria that look at how the brand has been built, not just its size. Based on these criteria, have a go at nominating your choice by adding a comment. And also add other criteria I may have missed. Next week I'll reveal what I think is the best brand in the world.
I gave a talk in Edinburgh last year to a group of TV executives gathered for an annual conference. From the Q&A after, it was clear that for them, the question wasn’t whether the internet was going to alter their business, it was about the mode and tempo of that alteration. Against that background, though, they were worried about a much more practical matter: When, they asked, would online video generate enough money to cover their current costs? That kind of question comes up a lot. It’s a tough one to answer, not just because the answer is unlikely to make anybody happy, but because the premise is more important than the question itself. There are two essential bits of background here. The first is that most TV is made by for-profit companies, and there are two ways to generate a profit: raise revenues above expenses, or cut expenses below revenues. The other is that, for many media business, that second option is unreachable. Here’s why.
For today’s Signal topic, I’d like to talk about marketing as a portal to understanding your business. Now, before you roll your eyes and click away, stick with me for a minute. If you’re reading this post, chances are you are in business. And chances are also pretty good that business is media or marketing, because that’s the focus of Signal, after all. So, what business are you in? Or, more to the point I’d like to make: What is your business? You’d might be surprised at the number of folks I’ve met with in the past year who pause when I ask that question. Because, in the main, that number is exceedingly low.
Corporate America is emerging from the worst downturn since the Great Depression smaller and thriftier. To survive, companies have laid off millions of workers, closed hundreds of factories and vacated acres of office space. Like those who grew up in the Depression and still reuse sheets of aluminum foil, the experience has left them financially conservative and wary of risk. The road to recovery will likely be marked by slow and steady acceleration, rather than speed. Some companies will see opportunities to amass undervalued assets or steal customers. But it is unclear if their efforts will create enough new jobs to spark broader economic growth
Magazine executives spent much of last year telling anyone who would listen that they were taking their brands digital. Their message this year: Print rules. Five leading magazine publishers have pitched in on a multimillion-dollar ad campaign touting the "power of print." They say nearly 1,400 pages of the ads will be sprinkled through magazines including People, Vogue and Ladies' Home Journal this year.
I'm very much afraid the government has created a dangerous precedent by bailing out the "too big to fail" banks, insurance firms and auto companies. Now the marketing strategy of corporations will be to get big at any cost so that no matter how badly they screw up, the government will save their bacon. A good case in point is Delta Air Lines. Delta has gotten to be the biggest U.S. carrier by buying Northwest. But Delta wants to get even bigger by forging alliances with Japan Airlines and Australia's Virgin Blue.
Coca-Cola Co.'s deal Thursday to acquire the bulk of its largest bottler is likely to spell major changes in the way beverages reach stores and consumers in the U.S. Coke shares slipped 4% to $53.12 in 4 p.m. composite trading on the New York Stock Exchange following the company's announcement that it will acquire Coca-Cola Enterprises Inc.'s North American operations, representing about 75% of the volume of Coke products sold in the U.S. and all of its Canadian volume. At the same time, CCE will expand its European operations, acquiring Coke's bottling units in Norway and Sweden, and later possibly its 83% stake in its large German bottling operations.
As a metaphor, white space is at once ubiquitous and frustratingly ambiguous. There may be as many definitions circulating as there are business thinkers. Some people define it as a place where there's no competition. Others as an entirely new market. Still others use it, as Tim Armstrong has, to refer to gaps in existing markets or product lines. For all its ambiguity, though, white space is undoubtedly a metaphor about opportunity; different thinkers define it differently because they take varying approaches to capturing opportunity. In that spirit, let me offer up another way to look at white space — a very specific meaning I think would be particularly useful to Tim Armstrong and to any other top executive engaged in strategy formulation.
Is Apple's new e-book store a model for the television industry? It is clear the existing TV arrangement, under which cable operators sell packages of channels on behalf of media companies, is fraying. Fights between the two sides over subscription fees are escalating—another such dust-up looms this year when Time Warner Cable's distribution agreement with Walt Disney's channels, including ABC and ESPN, comes up for renewal.
Last week a temporary cease-fire went into effect amidst a brewing battle between Amazon.com and Macmillan, a unit of Germany's Verlagsgruppe Georg von Holtzbrinck GMBH and one of the largest publishers in the US. The battle was over the price of ebooks on Amazon's site. Macmillan insisted upon -- and eventually received -- a 30-50% increase over the $9.99 loss leader price for new releases that helped build Amazon's dominant position in the ebook market. But only after an attempt by Amazon to wield its distribution power to force Macmillan to back down. (You can read the details at this link).
When the going gets tough, costly good intentions can go out the window. Company spending has been squeezed by the global recession and budgets for corporate social responsibility have suffered disproportionately. A survey of U.K. businesses by KPMG and Business In The Community found a third of companies cut their corporate social responsibility budgets in 2009. Corporate philanthropy has also been hit, with a study by the Giving USA Foundation revealing that charitable donations by U.S. companies fell by 8% in inflation-adjusted terms in 2008.
Fueled by the music industry's ongoing turmoils and, finally, books going digital at a very rapid pace, there is a lot of debate on how to deal with the fact that many people habitually share i.e. redistribute digital content without any of the upstream users making their own payment. How can you monetize content when the copy is free? This question is a key issue across the board, whether it's in music, eBooks, news, publishing, TV or movies. The fear is, of course, that once a digital item has been purchased by one person it can be easily forwarded to anyone else if it is in an open format, thus seriously reducing the possibility that someone else will actually pay real $ for it, as well (of course, the same is true for supposedly locked or protected digital content as well - it just takes a bit longer). No more control over distribution = no more money. Right?
"Glee" is ostensibly a show about a group of high-school misfits and nerds whose common love of song helps them get through the trials of adolescence. Yet in the real world, the cast -- and its songs -- are winning a popularity contest. Tied to the show's storylines, the cast's performances become so sellable that the program's production studio, News Corp.'s 20th Century Fox, believes it could have a new TV-show model on its hands, not unlike the kind of revenue juggernaut "American Idol" introduced.
You have to give it to Apple. The company has an uncanny knack for seizing the moment and whipping journalists and consumers into a frenzy. The latest wave comes from today's launch of the iPad tablet with iBookstore content store. As always, there's a lot to like about Apple's device. The user interface looks great, the bookstore seems intuitive, and Apple set a price point (at least for the entry level iPad) that positions the device well in the marketplace. The hype bar was set so high that inevitably some people were disappointed - Dan Frommer from Silicon Alley Insider called it a big "yawn" that won't define publishing the way many experts projected.
Apparently, half-naked models aren’t enough to entice customers anymore -- at least in the case of upscale retailer, Abercrombie & Fitch. Their once-enticing skimpy image is now resulting in nothing more than skimpy sales. The trendy teen chain has again reported a troubling decline in sales -- 21 straight months of declines, actually, in stores that have been open for over a year. Reports showed a 19 percent drop in December, a month that most retailers depend on to bolster their year-end profits.
Quick: Describe your company's business model. Having trouble? That wouldn't surprise me. In reality, there isn't really any consensus about what the term "business model" even means. Suggestions range from the all-encompassing, everything-in-your-value-chain approach to the reductionist "A business model is nothing else than a representation of how an organization makes (or intends to make) money."
Here's what the economic historians of the 23rd Century are going to say about the 20th. "They built giant, globe-spanning organizations, that employed tens of thousands of people working around the clock, to produce... sugar water, fast food, disposable razors, and gas guzzlers. Perhaps the defining characteristic of the paradigm of 20th Century capitalism was its astonishing lack of ambition. Rarely in history has such a void, a poverty of imagination been so deeply woven into the fabric of humankind's economic systems."
The coverage of Google's Nexus One "superphone" - officially unveiled today - was swift and almost universally positive. The HTC-designed device looks beautiful, its functionality sounds fantastic, and by all accounts it looks like a viable competitor to Apple and Research in Motion in the smartphone market. In this case, however, there's more to the story. Google's distribution approach has the potential to dramatically accelerate a broad disruption in the mobile phone market where the balance of power shifts from carriers and retailers to device, software, and applications providers.
Magazine publishers are taking a mulligan. After letting the Internet slip away from them and watching electronic readers like the Kindle from Amazon develop without their input, publishers are trying again with Apple iPhones and, especially, tablet computers. Although publishers have not exactly been on the cutting edge of technology, two magazines — Esquire and GQ — have developed iPhone versions, while Wired and Sports Illustrated have made mockups of tablet versions of their print editions, months before any such tablets come to market. Publishers are using the opportunity to fix their business model, too.
While they continue to slog through the longest economic downturn in decades, companies are no longer making cost-cutting their primary focus. Innovation is now front and center on the corporate agenda, according to a global survey we recently conducted with 65 senior executives from diverse industries. Executives are adding more breakthrough innovations and business model changes to their portfolio to fuel the growth engine for the recovery. Yet our survey reveals that companies by and large are having trouble making innovation efforts work. Executives are struggling to find the right combination of business strategy, operational model, and execution to deliver profitable growth.
The Internet has changed the scale at which we can observe and participate in activities that express or pay off our own human nature - that of being social. As technologies get cheaper and more ubiquitous, more people can join in, independently of social status, geography, age, etc. Before the Internet, businesses were the center of our active social lives - especially in the last ten years, and for most, not all, of us.
The right conversation strategy answers two big questions: What meaningful content will attract sufficient conversations with the right people? And, how will you jump-start conversations and keep them alive? When people are starved for time and already engaged in many conversations, jump-starting new and meaningful conversations is the big challenge of marketing today. Just building a website, writing a blog or posting videos on YouTube doesn't mean sufficient numbers to impact ROI will find them organically, much less take the time and energy to converse with you. By definition a conversation requires others to be present and participate -- otherwise you're talking to yourself. Perhaps therapeutic, but no way to make a living.
It has become a popular game, even among investors who should know better, to dismiss Twitter based on lack of a business model. But there is a difference between not generating income and lack of a business model. I believe that, in just a few short months, Twitter will show the world that not only do they have a business model, but that theirs is the most sophisticated around. As the founders have admitted, they did not necessarily plan out their success. But the result of their outside funding and considerable valuation is that they have been free to watch and learn what might be possible. Most publishers talk about the two common monetization streams — advertising and subscribers — as though there are no other options. As many have seen over the last year, dependence upon advertising is a slippery slope in a downturn.
In times of economic hardship, businesses are more tempted than ever to batten down the hatches. After all, management literature agrees: Transformative innovation involves taking a risk with absolutely no guarantee of a payoff. And who would want to get tangled up in that type of strategy just as a company's core business is struggling? Surely only a crazy person. Not so fast. As the saying goes, "When everyone zigs, zag." And, as our two guest columnists argue in this BusinessWeek special report on Growth Through Innovation, a resilient approach to innovation, whatever the economic weather, is critical to building long-lasting businesses.
Journalists are truth-tellers. But I think most of us have been lying to ourselves. Our profession is crumbling and we blame the Web for killing our business model. Yet it’s not the business model that changed on us. It’s the culture. Mainstream media were doing fine when information was hard to get and even harder to distribute. The public expected journalists to report the important stories, pull together information from sports scores to stock market results, and then deliver it all to our doorsteps, radios and TVs. People trusted journalists and, on our side, we delivered news that was relevant—it helped people connect with neighbors, be active citizens, and lead richer lives. Advertisers, of course, footed the bill for newsgathering. They wanted exposure and paid because people, lots of people, were reading our newspapers or listening to and watching our news programs. But things started to change well before the Web became popular.
Students starting school this year may be part of the last generation for which "going to college" means packing up, getting a dorm room and listening to tenured professors. Undergraduate education is on the verge of a radical reordering. Colleges, like newspapers, will be torn apart by new ways of sharing information enabled by the Internet. The business model that sustained private U.S. colleges cannot survive.
We presented our CUNY New Business Models for News at the Aspen Institute and on the web yesterday. I’ve been sitting in meetings nonstop, so I haven’t had the chance to read all the reaction yet. But so far, we’ve met our goals: to get these models and specifics discussed and to inform that discussion.
With all the news coverage today on financial mismanagement, I can tell you from first-hand experience about a company that continues to prosper amid all the chaos. And I think it is worth trying to understand why.
The New Business Models for News Project is now well underway at the City University of New York Graduate School of Journalism. Here’s the blog and post explaining our work:
Is Twitter the next huge e-commerce site? According to a story in The New York Times, it could be. The report puts a few pieces of information together to conclude that Twitter could “couple e-commerce with advice from other shoppers, an element that most search engines do not offer.”
The lack of income isn't the only hard thing about being unemployed: There's also isolation and a loss of purpose. Ariel Horn, who runs The Horn Corp., a Manhattan ad agency, has found both a way to help the numerous unemployed ad workers in New York, and a new business model.
A heated debate is breaking out among Wall Street analysts over whether online videos should be available for free, and their advice is putting as much as $300 billion in media company value at risk. Not unlike entertainment executives themselves, analysts are divided over which is the correct strategy to pursue.
Since its inception in 2005, YouTube has opened up online video to the masses. Its embedding and sharing features helped make thousands of viral of videos. Today, YouTube has over 100 million unique viewers every month for everything from cute kittens to university lectures. Innovation and change in the social media space occurs lightning fast, though. YouTube, once without rival, is feeling the heat from new competitors, primarily the fast-growing Hulu. Other innovations, like live streaming video, are also ratcheting up the online video stakes. So where exactly is online video headed? Let’s talk about the YouTube and Hulu models.
For the New Business Models for News Project at CUNY a key model we want to build is hyperlocal. There are, of course, many views of hyperlocal and it will involve many different kinds of players, from sole bloggers to news organizations. The way I’d like to attack this is to try to create one or two optimal models for sustaining coverage in a towns, or collection of small towns, or neighborhoods in a city - the size of critical mass of the ideal minimarket is itself a key question.
The growing popularity of free video-viewing site Hulu could test the viability of Apple's pay-as-you-go iTunes download business.
I read with interest today the removal of Chris DeWolfe as CEO of MySpace. According to the "growth" model of capitalism, MySpace has a problem. If senior management can't renew growth, change is called for. But what if this growth model is, at least for new media purposes, mistaken? If we embrace a new model of the kind someone like Henry Jenkins, David Weinberger, or Don Tapscott might endorse, then this might be precisely the wrong way to think about things.
Julia Cheiffetz, 30, edits books at HarperStudio, a new imprint of HarperCollins that's trying to rethink both the format of books and the business model. HarperStudio will publish just two books a month and offer authors 50-50 profit sharing, rather than a traditional 7% to 15% royalty.
In the New Business Models for News Project at CUNY, we will be fleshing out three kinds of business models to start: hyperlocal from the local perspective; a news ecosystem that comes after a metro paper; and paid content. We will be joined by business analysts who’ll be making the models. But to make them work, we need much information and many perspectives.
The global publishing giants have declared war on the new technology generation of content distributors -- but they have lost sight of what consumers value and how they want to get to the value. It's time to separate content creators from distributors. It's time for a new business model which requires technology understanding and leadership to develop -- and one that new generation search applications like Google News and Digg for the consumer, or FirstRain for the professional investor, can sign up for to get the right news to the right people at the right price for them.
The launch of MySpace Music six months ago was supposed to herald a new era, with the four major labels at long last embracing social media as a disruptive force of good and developing a business model which didn't repulse their customers.
Can transparency be a business model? Not, can it be good business, but can a business dedicated to transparency prosper?
Originally a charter company that ferried passengers from the Midwest to Atlantic City, the privately held company has, since 2006, been taking the ultra-low-cost, à la carte approach to air travel to places it’s never been, at least in this country. Spirit’s specialty is the supercheap ticket from a major American city to vacation spots like Jamaica, the Dominican Republic and Puerto Rico, and it’s ideal for people spontaneous enough to jump on last-minute sales, sometimes for tickets that cost as little as $9, one way.
In the three years since its launch, the messaging service Twitter has attracted millions of users, but its fast growth hasn't translated into significant revenue. Now, other companies are trying to profit from Twitter's popularity by experimenting with business models that incorporate parts of the free messaging service.
Twitter has multiple business models to choose from.
MySpace CEO Chris DeWolfe talks about why he thinks he has a better business than Facebook and what it’s like to work for Rupert Murdoch.
One of the most basic requirements of effective problem solving is a clear definition what that problem is. This truism came strongly to mind as we watched a panel at this week's McGraw-Hill Media Summit moderated by Businessweek columnist Jon Fine.
This week, someone asked me about sustainable business models in the Internet. Earlier the same day, another person asked me about defensible models. Both questions left me perplexed. I wasn't trying to avoid them. I just didn't know how to answer. So, some 48 hours later, I offer this column as a somewhat belated response. It isn't an answer, as I'm still just as perplexed. But now at least I know why.
Newspaper and magazine execs have long regretted making their crown jewels -- quality content -- available for free. No one has really been able to make a go of digital subscriptions. As the tangible media era ends, the media formerly known as print can't count on advertising alone to survive. They need to find healthy subscription revenues. Thankfully, an unusual white knight has emerged: the Amazon Kindle.
CEO Chris DeWolfe outlines his strategy for expanding profits, luring advertisers with "hyper-targeting," and keeping MySpace's U.S. edge over rival Facebook.
Many in the advertising business are calling for a new business model for ad-supported TV. It is clear that the value of traditional TV as a medium for delivering advertising messages effectively is quickly eroding, and there is a scramble for new technologies and models to fill the void. Three current and emerging ways for consumers to get TV or video content (including advertising) offer a good place to start to understand how we might answer these calls for change.
There is a quite battle raging in the advertising industry over who will become the Agency of Record (AOR) for marketers' social media efforts. With traditional media for delivering advertising declining in reach and effectiveness, and an even greater call for advertising efficiency in a down economy, becoming a marketer's social media AOR can be a huge win and provide a map to a much-needed new business model and revenue stream for agencies.
In a battered economy, free goods and services online are more attractive than ever. So how can the suppliers make a business model out of nothing?
Carmakers need to let go of their musty business models and start thinking like 21st century companies—like Google.
An upside to the downside of this brutal recession will be the widespread rejection of broken old business models and the development of new structures fit for the digital age.