Avoiding Business Model Myopia & Building a Category Leading Brand

In our blog called “Create a Category”, we made the case that winning today means selling solutions and creating/leading a category. When you do that well, your products will outsell the competition and in turn you will build an outstanding brand.

Let’s look a little closer at the challenging task of category cultivation and preventing business model myopia. Business Model Myopia (BMM) is caused by looking through the limited lens of the current business model.

Business Model Myopia Examples:

Through our work within the Silicon Valley, we have seen first mover brands enjoy an early advantage in defining a category. Palm and RIO mp3 players come to mind. They both enjoyed early success and dominant market share. The issue was that they didn’t define their category broad enough, they viewed changes through their current business model lens and, while they innovated the product, they didn’t innovate the category. It took Apple to show the industry how to recreate the category, focus on innovative customer solutions and take a whole systems view of the category. The broadened category, in turn, changed the music and entertainment industry and the phone/mobile computing industry.

Even a 150+ year iconic brand like Levi’s can fail to grasp this point. For a long time Levi’s defined the jeans category and was the nation’s largest apparel brand. Then, in the late 80's and 90's it began to focus primarily on lagging indicators (product sales, which looked good at first) but failed to act on leading indicators (brand relevance). Had Levi’s acted on its brand relevance indicators and challenged itself to innovate the category they may have better handled the urban hip hop surge or designer jeans and other category invasions. And maybe Levi’s would not have been reduced to less than a third of what it once was.

The Lesson: If you're leading the category your job is to reinvent the category before someone else does it for you.

This type of current business model myopia is a common disease with once big time industry leaders. To name a few—Kodak, Sears, Xerox, Chevy, Newsweek. When those suffering from BMM look at innovations through their current business model they can’t see the vast opportunities of new innovations, even ones they invented…like Kodak’s Digital Photography or Xerox’s graphic user interface or computer mouse (these innovations didn’t fit their business model of film photography or document copier manufacturer).

The key is to look, not through the narrow lens of the current business model, but through the broad lens of an expanding, re-invented new category. Then the enterprise must broaden the definition of its brand (Apple is no longer just a computer company) or expand its family of brands to take advantage of the innovative opportunities (Toyota Prius).

Expanding a category takes new resource devotion. This means the enterprise must milk or in some cases kill the current cash cows of its current business model to free up human and financial resources to expand the category. Maybe if several years back Sears had been visionary and brave enough to reinvent the direct selling catgory for the digital age it might have become the Amazon of today.

To be a major value-creating winner in the future, each enterprise must move out of the comfort of its current business model. It must challenge itself to envision an expanded, innovating category and shape its future business model to capitalize on the opportunities the newly defined category offers.

This is brand and business building at its best. 

—Dan & Meredith Beam

Create a Category...focus on more than selling products and building a brand

Everybody wants to sell products and build a great brand …right?

The best way to do this is to shift your focus to selling solutions and creating and leading a category.

If you go beyond products to sell solutions, and if you create a new category for these solutions, you will discover new ways to build your brand and create the greatest enterprise value.

Why Solutions?

People don’t really want things – they want a solution that delivers a desired experience, such as one that solves a problem for them.

As Scott Bedbury, former head of marketing for Nike and later Starbucks, said… “A product is an artifact around which an experience is created.”

Think about it. People don’t want rubber shoes, they want the experience of flying down the basketball court like Michael Jordan or Kobe Bryant…or to at least to feel like they could do that when they wear their Nikes.

Even people who buy industrial products don’t want things. They want solutions.

A chemical company we worked with sold chemical solvents to clean industrial machinery. The problem they were facing was that their customers weren’t handling the solvents properly, they were wasting them and flushing them into the water system – costing a lot of money. The solvent maker came to realize that the solution their customers sought was “clean machines”. So they changed their business model. They quit selling solvents and started selling “clean”. They set up a service to clean client machines and correctly recycle the solvents. The recycling saved money, the chemical company made more revenue from selling solutions and their customers were happier.

Think beyond products to experiences and solutions. 

Why Lead a Category?

Category creators and leaders gain the upper hand and the biggest pay-offs. They also open themselves to greater opportunity.

You don’t have to look far to see this is true. The second largest market cap company today is Apple. It doesn’t just make products, it opens new categories with its innovations…iPod, iPhone, iPad and most recently iCloud. Their whole systems innovative solutions focus, coupled with category leadership, enabled them to leap beyond old definitions of computers and allowed them to keep expanding the boundaries of the category. In turn Apple wins top honors as the most admired brand today.

Go through your favorite list of most admired brands…Amazon, Facebook, IBM, P&G, and you will find that they are category creators, expanders and reinventors.

To explore this topic further, go to our blog “Avoiding Business Model Myopia and Building a Category Leading Brand”. Then take a look around your industry or field and discover where you have opportunities to focus on solutions and create an expanding category. 

—Dan & Meredith Beam

Tell me what's important to you ...

Do you really know your values?

We find that most don’t.

It is not unusual for us to walk into a new client’s offices and ask them what their values are and get a reply like— “Oh, they’re something about excellence, integrity and, I think, teamwork. I don’t remember exactly, but I know I have a copy of them somewhere. I’ll send them to you.”

Even if they know them, they don’t seem to invoke much meaning.

Just in case you haven’t defined your values statements yet, you can always borrow Enron’s—Integrity, Respect, Communication, Excellence.

Now, ask people in an organization…”What seems to be really important around here?’’ You get real replies like—”Make your numbers at any cost” or “No surprises for the boss” or “Grow, grow, grow” or “Never let down a customer” or “Collaborate to innovate.”

So what are the real values of an enterprise?

Just to be clear…it’s okay to have character values like integrity or respect, but they have to be real, they have to be lived and they have to be a part of the dominant discourse in your organization or you are better off dropping them from your official employee handbook. People hate insincerity and hypocrisy.

The thing we find most important is to discover the true core values and make sure they are the ones that will drive your company's success over the long haul. If you find “Make your numbers at any cost” or “No surprises for the boss” are not the most important operating values you want instilled in organization, then you need to do some deeper work. You need to ensure that the four or five operating values that will make or break your long-term success are lived by everyone in your organization.

So, what’s important to you?

—Dan Beam



Whose ladder to success is it?

Let’s drag out the old cliché one more time – If you only have a hammer, everything looks like a nail. If you think you only have one choice for a solution, then you use that one for every challenge.

Sounds stupid doesn’t it?

Well, that is what organization leaders do when they assume that there is only one option for rewarding success and for motivating people to develop and improve their performance.

That one option for professional growth … climb the organization ladder … become a good performer … become a supervisor, then a manager, then a director, then a vice president and then you are successful. As one CEO asked us recently, “We only have thirty people in our organization and there are only four top positions. How do we motivate and promote people in this situation?”

The answer is simple: (1) Recognize that there are more options than the pyramid climbing career path and (2) Actually see the person before you and discover what success means to them and then together set a path for success that makes sense to what is important to them and to the success of your organization.

More Options:

Only a few people are actually motivated to climb to the top of a company’s organization chart. Many only do it because that is the only way their company provides more pay, more juicy assignments and more development as a professional.

There are at least four major patterns for success progression that organizations can utilize. Note: This model came from the research of Will McWhinney at the Fielding Institute. (Thanks, Will!)

1.    The Expert or Craftsman

Many people, such as surgeons, artists and scientists, are motivated to become better and better at their craft. This also holds true for many designers, engineers, or any person who identifies more with that profession than with a position or even company. They like more and more complex and juicy projects that allow them to hone their skills and improve their status as a top professional.

2.    The Episodic

Often sales people, venture capitalists or serial entrepreneurs are motivated by the thrill of the hunt. They love the next challenge and chance to add to their “pinball game score.” Give them new territory to explore and new challenges where they can score big.

3.    The Life-Long Developer

They may look at times like pyramid climbers because they often move up in positions, but they are really on a pathway of self-development. For example, one top insurance executive started out as a company lawyer and soon became in charge of the whole law department. Then he decided to take a lateral step to the line operation side of the business and soon became the top leader in one of the divisions. Later he became interested in organizational change and headed up a major change process for the whole company (this is where we met him). His pathway was not a straight line up the pyramid, He moved laterally, back and forward and upward across the organization. His motivation wasn’t titles, it was personal and professional growth that satisfied his diverse interests and his need to learn and explore his abilities.

4.    The Pyramid Climber

This is what most organizational charts and reward systems are designed to honor and reward. It is all about gaining more responsibility, bigger titles, higher pay and greater control of the performance of the organization.

Leaders will better serve their people and their entire enterprise performance if they begin to implement these major four pathways to success. Giving people more options for recognition, rewards and development will give the organization more options for successfully growing and innovating.

How many ladders does your organization have?   

—Dan Beam



“If Money Weren’t an Issue”

…& other things that challenge you to live your own life

If money were not an issue, what career path would you choose?

That was the question posed to recent Harvard graduates and they made choices that may surprise you.

• Top choices—(1) the Arts, with 16% picking it as their dream field; (2) Public Service at 12.5%; (3) Education at 12%.
• Only 5% of the grads picked Finance or Consulting.

However, money is often an issue after graduating so how did the big money makers for graduates from Finance and Consulting, faire in the “real world” of Harvard graduates?

• Finance—11.5% chose this field in 2009 but this is a big drop from 23% in 2008.
• Consulting—8.5% chose this field in 2009 but this too is a big drop…down from 16% in 2008.

Is this a new trend? Perhaps. Perhaps it is a momentary deviation from the two-decade trend of “going for the gold”. Or perhaps it is a part of a fundamental change in our world.

That is what Richard Florida posits in his recent book “The Great Reset”. Like the Toronto School of Business professor’s previous books on the growing importance of the “Creative Class”, there is a big change in our world driven by changing values that reflect new realities of a world experiencing simultaneous breakdown (from environment to all major institutions) and breakthrough (in creative arts, sciences, sustainability and social enterprise).

It is my observation that individuals, like the recent college grads, need to be redesigning their personal career and life plans at the same time companies in every industry are fundamentally resetting their business models.

There is a new world emerging and any thinking person living an examined life owes it to themselves to question what future success looks like to them, assess what their core values are and begin to move into a life that reflects their true passions and source of fulfillment.

Don’t you wonder what the world would be like if we all did that?