As I shared with you last week, the companies that are successful at long-term growth are the ones that find a new “S” curve for their business, according to Dave Power of Power Strategy, the speaker at our upcoming Growth Strategies Breakfast next Friday, the 16th. Whether it’s a new product, a new way of doing things, a new business model – in the long run, innovation wins!
“Business model innovation has a lot of facets to explore,” said Dave in a recent conversation. “You could be changing your channels, your pricing model, your value proposition – you don’t HAVE to dream up a brand new product or service.”
But what about some of those “practical” examples that I promised? Let’s talk about one that most people know…
Do you know who was one of the lead innovators in the arena of software as a service?
They were one of the first companies to come up with the idea of selling software on a subscription basis and getting paid monthly. Basically they said to their customers, “We’ll keep the software here, we’ll run it, and you’ll go on the internet and access it.” They’re in the software business but in a very different way.
Very radical thinking at the time but what’s the benefit for their customers?
I don’t have to keep upgrading.
I don’t have to have an IT department to make it work.
I’m not having to purchase expensive software.
I can access it from everywhere.
The cost is much more manageable.
I don’t have to do my own upgrades. Salesforce does it for me.
And the benefits for Salesforce?
First, they have regular recurring revenue – which is always a great model, especially for increasing your valuation.
Second, YOU as their customer put all of your customer data in THEIR product. Very sticky product and customer relationship.
Third, they lowered their cost of software development….and finally…
All of the software upgrades are done in their shop and they notify people with “Here’s a new feature” and it’s done.
Now, everyone’s doing it. They changed the paradigm – and successfully navigated the “S” curve!
What about other examples?
Well, Dell changed their distribution channel. Instead of having their customers going to Best Buy or some other store, they created the do-it-yourself model. You go online – in the comfort of your own office or home, you decide what parts and equipment that you want, then you order and they ship. (And they’re getting paid up front with very little in carrying costs.)
But here’s the big question: How do you know that the changes that you make will be successful? How do you know the new model will work?
Dave says that making the right decisions requires a deep insight into your customers. You’ve got to get out of the office and talk with them and if possible, seeing them use your product and service. If you have customers, you have a BIG advantage.
“Be very close to them,” he shares, “AND know what the problem is that YOU can solve. Then, do a positioning strategy around a problem. If you have the right problem statement, then you can do a much better job of getting the attention of YOUR market.“
Sounds intriguing doesn’t it? Want to hear some other examples? And get a few practical tools to do this type of strategic thinking and positioning in your business?
We’ll look forward to seeing you there!