Your strategic focus for business model development has to stretch to match what your best customers need. If you don't, someone else will and they will eventually own the opportunity.
Whenever I meet entrepreneurs who want to start businesses, they are usually thinking in terms of a size for their operations that won't serve their customers very well. When that happens, a business will achieve only a few percentage points of its potential.
Why leave so much opportunity behind?
People don't see the opportunity.
But with continuing business model innovation, even too-small plans can grow up to gain the required size and focus that's needed. Here's an example of how a small operation grew rapidly to become the right size and shape for its best customers:
Iron Mountain started out as a regional data and paper records storage service, based in the New York and New England areas. Auditors had been concerned that their clients' computers have appropriate back-up records in case of failure, and usually insisted that companies employ off-site storage.
The ideal location for such off-site storage was a cave because security cannot be better, which just happened to be what Iron Mountain had to offer as its first storage facility. Since trucks were carrying data storage back and forth from customer locations and there was plenty of empty space in the cave, it was logical to bid for the paper storage business as well.
Gradually, management began to see that it could provide an outsourcing business for customers' records and information management. But it wouldn't help unless Iron Mountain could serve all of a customer's needs. Served by many tiny companies, the industry was ripe for consolidation and an improved business model.
Bell & Howell had the same idea, and had started in this direction by purchasing the Bekins records storage business in California. Soon, the company was acquiring small storage operators across the country. But Bell & Howell decided to do an LBO, and didn't have the resources to continue this strategy for Bekins.
So Bell & Howell sold the Bekins business to Iron Mountain. Now, almost by serendipity, Iron Mountain became the only national vendor of these services. The company could add economic value to local storage companies when it acquired them by bringing in national account volume, and more professional management of outsourced customer accounts. Soon, business was growing like crazy.
Without continuing business model innovation, Iron Mountain might easily have ignored the Bekins opportunity and the importance of handling all the needs for firms with a national footprint.
What are you doing to ensure that your business model fulfills what customers need?
Copyright 2008 Donald W. Mitchell, All Rights Reserved
Navigating the Waters of Business Success: The Strategic Launch of Business Objects
In the competitive world of business, the trajectory of success is often determined by the initial strategic decisions made by a company. The story of Business Objects, a pioneer in business intelligence software, exemplifies the importance of a well-planned entry into the industry. By choosing the right location, assembling a diverse team, and innovating their business model, Business Objects set a precedent for rapid and sustainable growth.
Genetifcally Engineer Wonderful Business Models That Deliver More Stakeholder Benefits
Using genetic engineering, scientists can take qualities of a weed for hardiness and transfer those strengths into a food crop. In the same way, you can genetically engineer your business model by adding on all of the attractive qualities of complementary business models. If you combine enough business models, you'll have an amazing advantage that will deliver myriads of benefits to large numbers of people.
Don't Just Play Around -- Your Industry Is Full of Excellent Opportunities Everyone Has Overlooked
Companies want to grow faster and always imagine that areas they haven't explored are full of better opportunities than where they are. The truth is usually the opposite. This article explores the missing opportunities at toymaker Hasbro.
