I went to see a play in Hamburg yesterday. It’s called “The Last Hour”. You see a couple on stage, both are dressed as if to read the news or attend a press conference. The only other object on the table is a clock used in chess competitions. Behind the couple is a large video projection of the two faces of this same clock.

The chess clocks are set at 11.30. Each have half an hour to tell the other and the audience the things they never said, things they remember or would just like the other to know before the hour passes. At the end of each person’s half hour, the chess clocks’ red indicator falls. When this happens, that person can no longer speak and has to wait for the other to finish their half hour.

Raw truths are expressed, raw emotions and facts you never shared with anyone before. The relationship edges up to a better, more truthful level. And you wish they didn’t need the last hour to finally reveal things they were ashamed to share with their loved ones throughout their relationship.

Brands should be part of a “Last Hour” exercise

Imagine your brand has only one more hour of life left. Nothing you do will save it. It doesn’t matter why the brand is about to disappear: Competition, comets – whatever. It’s over.

Wouldn’t it be worth your while to get all stakeholders in the same room and to openly discuss things people remember about the brand, what they would have done differently, what was good, what should have changed in time? By having this fictional exercise, people will open up and discuss more freely what should be improved and often isn’t because of internal structures, egos or hierarchies.

The evolving business landscape requires us to work under the “Last Hour” premise

Some call it “Always in beta”, others think we have to innovate constantly, staying agile. Whatever you call it: Brands can be gone within months, killed by more efficient competition, sub-par products, PR mistakes or a changing customer landscape. Not expressing your ideas, sharing your thoughts with all stakeholders, not being able to admit mistakes and move on from them is a recipe for disaster.

There are more innovative ideas waiting to be released from within your team than from outside consultants. Tap into this amazing potential. You never to want to be in the position where the last hour becomes reality.

The “Last Hour” exercise might be just the right recipe to prevent this from happening.

What has been the most revolutionary change in the automotive industry in the last decade? You might think Tesla, Chevy Volt or Honda’s FCX Clarity. I don’t think so. It’s been the introduction of  Zipcar. A completely new business model based on human insights and understanding where the world (and each customer) is going. BMW is latching on to that trend by developing a “DriveNow” sharing system in Munich.

While the iPhone was a major disruption, I would argue the App store is the real disruptor by introducing a new, innovative business model. Apple integrated the hardware with a crowdsourcing model for the apps in such a brilliant way, that it was something materially different from just being a phone, but from how phone manufacturers make their money.

The formula for survival: Innovate your business model

Whether threatened by classic disruption or not, companies have a tough time innovating their business models. In fact, they don’t change them significantly. Companies that do manage to adopt whole new business models do it by creating entirely new business units that have new business models. They don’t do it by taking an existing business unit and turning it on its head. So, I don’t expect Honda (and other automotive companies) to get out of the automobile business. But I expect them to start a new unit that focuses on a highly efficient car-sharing system. (And, in the decades to come, I expect all car companies to shift focus from the car-building business to the people-transporting business.)

By exploring new, disruptive business models entire companies will become more resilient to economic changes by better defining and focus the core business. Business model innovation is so important because it allows enterprises to experiment with something that might work out, then filter it back throughout the whole company. It helps brands to better understand where the world is going and what you as a brand need to do to address a specific customer demand, independent from your company’s existing systems and structure. It requires from a brand to understand and focus on where the customer is going, where the opportunity is, and then build the right business system to support that.

Advanced enterprises will be able to compare how different the new business model is from their current one (particularly in terms of margins, overhead, and success metrics), they can get a clear picture of what they will need to do to grasp the new opportunity. Would it be easy because it dovetails well with their current model, or would it require to marshal different resources and processes? Knowing that, if the world really is going that way, then they can be flexible and respond effectively because they’ve already experimented with and built a business model that will take advantage of that shift.

There are many industries ripe for business model innovation

Let’s start with the obvious one: Media. Newspapers need to redefine their business model, not just putting a silly “The Daily” on an iPad. That’s not a disruption, it’s applying the old business model to the new world of content sharing.

Healthcare – how can we take out real cost and create greater value? Healthcare reform didn’t pay any attention to changing the business model. We need to make better sense of all the health data available to us and increase efficiencies.

Defense – we try to fight WWII over and over again. Enemies have changed. Our response needs to change.

Energy – we need better systems that reward people to save energy, give them options in using energy (Should my house be powered by coal, gas or solar energy – with a different price for each energy form) and energy companies need to explore new revenue drivers to get out of the pure consumption model.

It used to be enough to innovate by increments. Product 2.0.

The time is ripe to innovate through bigger dreams. Business Model 3.0

This column appeared first on Jack Myers’ MediaBizBloggers site

Kirk McDonald, President, Digital, Time Inc. keynoted at the iMedia Agency Summit in sunny Phoenix and predicted the next decade will be the age of storytelling.

Why?

The pendulum that swings between art and science in advertising has moved too far to the science part of advertising in the past decade. We have focused on making markets more efficient and not focus enough on moving markets. While there’s a good case to be made to introduce algorithms into advertising, we have gone too far. We forgot that advertising is about people with lives and soul and energy, and we have to re-focus our efforts on developing creative ideas and innovation in advertising to make meaningful connections with people. While a good delivery mechanism is vital to deliver relevant messages to people, we have to put as much (or even more energy) in crafting messages that connect more with the heart and soul of people.

We have to stop the race to the bottom

While his message is clearly self-serving (publishers can’t live on CPM rates of $0.23), it still rings very true. For years, the digital marketing community has been engaged in a race to the bottom. The problem when you race to the bottom: The winner is still at the bottom. For the advertising community to find its footing again, we need to reverse that trend and race to the top again. Connect with the heart and soul of people. Tell stories they want to share. Tell stories that inspire them. Listen to the stories of people and share them with the world. New tools and platforms allow advertisers to co-create and collaborate with people. This is a unique opportunity. The industry is at crossroads: It is our responsibility to stay away from the pull of short-term gains and focus on the long-term health of the advertising industry. And regain its soul again.

Image: Courtesy of Emil Kozak

Organizational design produces the vision of an organization and a desired behavior. The gaps between what the organization is and now is doing, and where it wants to be and to be doing, expresses the challenge to be tackled by gap analysis and gap planning.

Gap Planning determines how the gaps are to be closed or reduced. It is the preparation of the design’s “initial  drawings” which provide the instructions required to close or reduce the gaps. Gaps can be filled by adding things, eliminating unnecessary things or by changing things.

Assessment

Before any assessment can take place, each stakeholder needs to understand and agree on the new direction of the organization:

• Communicate widely the vision, mission and pie in sky design
• Design the data-gathering process and explain to all stakeholders that an enterprise-wide gap analysis will take place
• Discuss with each stakeholder the benefits and difficulties involved in the transformation process
• Establish the initial design and data-gathering lead teams
• Determine the stakeholder task force
• Establish expectations for ongoing communication, and communicate the philosophy for staffing the organization

Using a combination of survey and group interview techniques, gather information on the effectiveness of the current organization. Data gathered should include: core processes and their effectiveness, additional customer data, critical tasks or key activities, work load, roles and responsibilities, decision-making authority, qualitative data on management practices, and internal issues and suggestions for improvement. Enterprises need to consider the current culture, how change has been implemented in the past, and how is has been received by employees at all levels.

Gap Analysis

In planning the analysis, it is essential to clarify what information is most relevant. This involves specifying intended outcomes and possible unintended outcomes. It also involves plans for assessing how well processes have been implemented and where improvements are needed.

We use the example of a luxury car dealership to illustrate the gaps. In this example, there are several gaps that are important to measure. From a service quality, these include (1) service quality gap; (2) management understanding gap; (3) service design gap; (4) service delivery gap; and (5) communication gap.

Service Quality Gap

Indicates the difference between the service expected by customers and the service they actually receive. For example, customers may expect to wait less than 10 minutes for their loaner car but reality is an average waiting time of 20 minutes. Most cars are being dropped off early am and 10 minutes before work are more valuable to people than after 5pm.

Management Understanding Gap

Represents the difference between the quality level expected by customers and the perception of those expectations by management. For example, in a car dealership customers might expect expediency on their repair but management focuses more on excellence than expediency (for many legal reasons).

Service Design Gap

This is the gap between management’s perception of customer expectations and the development of this perception into delivery standards. For example, management might perceive that customers expect someone to answer their telephone calls timely. Customers might think “timely” is less than twenty seconds and management defines “timely” as less than 40 seconds, thereby creating a service design gap.

Service Delivery Gap

Represents the gap between the established delivery standards and actual service delivered. Now, management might establish a new standard of answering each call in less than 20 seconds but average time of answering is 27 seconds, creating a service delivery gap.

Communication Gap

This is the gap between what is communicated to consumers and what is actually delivered. This happens frequently when dealerships offer low-price oil changes and then charge customer for questionable labor.

Gap Fillers

The most important criteria used in evaluating the gap plan is whether it will the enterprise to push in the right direction, avoiding a chaotic transition and helping the organization to utilize opportunities. It’s extremely important to refer back to the mission statement, and understand if the gap plan will help to fulfill promises made in the statement.

When an individual or a group is confronted with a gap between where they are and where they most want to be, they can respond in four different ways: absolution, resolution, solution, and dissolution. Learning and creativity are enhanced more by design (dissolution) than by research (solution), more by research than trial and error (resolution), and more by trial and error than by doing nothing (absolution). The goal is to design an organization that considers dissolution as their main goal. Dissolution of boxes,  paradigm, linear thinking. Through organizational design, all stakeholders will contribute to the creation of a world they are envisioning to live in.

The efficiency and effectiveness of the gap fillers selected in gap planning are not only matters of selection one of a set of available gap fillers, but are also a matter of creating gap fillers not previously available. Organizational business design unleashes creativity in developing a vision to be pursued by an enterprise. But creativity also has an important role in selecting the gap fillers by which to pursue it. Therefore, the selection of gap fillers can also be more a matter of design than research or common sense.

Last but not least, the gaps treated as challenges in gap planning are almost never independent of each other.  Therefore, their solutions interact systematically. The selection of solutions to close the gaps should take into account these interactions, especially their joint efforts on the enterprises’s overall performance.

Tomorrow we will discuss asset planning.

For your reference, you can find the previous chapters here: Part 1, Part 2, Part 3, Part 4, Part 5