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Let's explore why you should stay focused on building on your initial business model advantages over competitors. Here are the reasons:
1. Focus on building from initial business model advantages adds to knowledge of what customers need and how to provide better solutions. Without that focus, competitors can gradually catch up with an improved business model as happened briefly to American Woodmark.
2. Having provided superior solutions for a long time also increases customer stability. From such longer-term relationships, even more can be learned. At the same time, your reputation grows with these customers in ways that makes them more willing to try your new products and services when you create them.
3. Most interestingly, building on the advantages of your initial business model can also help you create such better costs and service options for customers that you can afford to buy your most significant competitors. The premium price that they demand is easily justified by the value-added that your improved business model brings to their operations. Clearly, Iron Mountain understands this lesson, and is using its business model development expertise to build what will someday be an enormous company with very high market share.
4. Can this process of constantly improving business models ever stop? No. TriQuint's approach to constantly seeking to specialize its divisions into smaller and smaller sets of problems is a good model here. Even that fine approach will probably require reworking in the future. For example, at some point, the company will probably have to address how to take its customer knowledge and apply it to designing components using other semiconductor technologies. In addition, extreme narrowing of focus may eventually mean that optimization across the customer's total systems needs will be lost into fragmentation unless divisions become very good at teaming up with one another.
5. What is exciting about this challenge is that greater opportunities for creativity and success are constantly being opened, like doors along a never-ending hallway of success. Unlike most areas in life where more is less (like eating too much), building these business models, building on them, and rebuilding them seems more like designing and filling an expandable museum of new wonders. Each new attraction draws your attention, and the mass appeal of them all keeps you in close touch.
Are you convinced?
Then, be sure to start by making a business model breakthrough and then build on it!
Copyright 2008 Donald W. Mitchell, All Rights Reserved
Donald Mitchell is chairman of Mitchell and Company, a strategy and financial consulting firm in Weston, MA. He is coauthor of seven books including Adventures of an Optimist, The 2,000 Percent Solution, and The Ultimate Competitive Advantage. You can find free tips for accomplishing 20 times more by registering at:
www.fastforward400.com
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