{"id":1217,"date":"2021-03-20T08:29:40","date_gmt":"2021-03-20T08:29:40","guid":{"rendered":"http:\/\/janbosch.com\/blog\/?p=1217"},"modified":"2021-03-20T08:29:45","modified_gmt":"2021-03-20T08:29:45","slug":"dont-go-down-with-the-ship","status":"publish","type":"post","link":"https:\/\/janbosch.com\/blog\/index.php\/2021\/03\/20\/dont-go-down-with-the-ship\/","title":{"rendered":"Don\u2019t go down with the ship"},"content":{"rendered":"\n
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Image by David Mark from Pixabay<\/figcaption><\/figure>\n\n\n\n

Last week, we had a workshop with the Software Center companies on new business models and their coexistence with traditional models. The overall trend is that all companies are looking to transition from traditional, transactional business models to more continuous ones. The challenge is that the more continuous you aim for your business to be, the closer you need to be to the end-customer and user of your offering.<\/p>\n\n\n\n

Many companies work in a value chain where there are other parties in\n between them and the end-customer. The network of typical high-volume \nbox product providers includes wholesalers, retailers, installers and \nperhaps even companies operating the products on behalf of the \nend-customer. These partners understand that you have that interest and \nworry about them being disintermediated and forced out of business.<\/p>\n\n\n\n

The risk of being disintermediated and forced out of business \ntriggers the lizard brain in any human exposed to this. The result is a \nfight-or-flight response. The response of value network partners is \ntypically a \u201cmutually assured destruction\u201d approach: if you start to \nwork straight with our end-customers, we\u2019ll ditch your product and buy \nfrom other suppliers.<\/p>\n\n\n\n

The threat of the channel locking you out is, for many companies, a \nsufficient reason to stop any attempts at experimenting with new \nbusiness models. Typically, the revenue from any business model \nexperiment is tiny, especially compared to the company\u2019s existing mature\n businesses. So financially, it\u2019s a trivial decision to kill the \ninnovation experiment to maintain peace with the partners.<\/p>\n\n\n\n

The problem is that killing innovation and experimentation is a \nrecipe for ecosystem-wide disruption. If everyone holds each other \nhostage and locks down on any changes, it means that the ecosystem grows\n stale. The consequence is that not only individual players, but the \nentire ecosystem will be upset by new players bringing an entirely new \necosystem. Unless protected by government regulation \u2013 which is a major<\/em> factor \u2013 static business ecosystems will get disrupted.<\/p>\n\n\n\n

The classical example is the Nokia mobile phone business, where the \noperators were holding the Finnish company at a short leash, not \nallowing any changes to the existing business model, especially \nconcerning app stores. The consequence was a new entrant, Apple, that \nmanaged to force the operators to accept its terms and that reduced \noperators to the bit-pipe provider role that they were so afraid of \nbeing pushed into by Nokia. In hindsight, the operators would have been \nmuch better off partnering with Nokia to find a mutually beneficial \nmiddle ground.<\/p>\n\n\n\n

How to get out of such a conundrum? Based on the discussions in the \nworkshop and my earlier learnings, four strategies can be pursued, \neither in combination or separately. First, the starting approach has to\n be one of transparency, inclusion and collaboration. This may sound \nobvious or weird, depending on where you come from, but taking a \nconfrontational approach will trigger the lizard brain, easily resulting\n in a conflict. The starting point has to be that you don\u2019t want to \n\u2018screw over\u2019 your partners but rather to jointly find a new approach \nthat gives you both what you want and still works with the market. It\u2019s \nnot that you want to take the business from your partners, but that \ntechnology and business evolution will have that effect. It all begins \nwith establishing a basis of trust that you\u2019re both trying to take this \nforward in a good way.<\/p>\n\n\n\n

The second strategy, to be combined with the first one, is to agree \non joint innovation efforts to explore the new opportunities. Find out \ntogether whether customers even want the new setup. Explore where the \nlogical boundaries are between the responsibilities of the different \nplayers. Figure out how to deal with the coexistence of the old and the \nnew business models and go-to-market strategies.<\/p>\n\n\n\n

When partners \u2013 typically wholesalers and retailers \u2013 only have an \ninterest in the physical product, a third strategy is to separate the \natoms and the bits of your product. Especially in the consumer space, \nthis happens a lot. The manufacturers of wearables, for instance, use \ntraditional retail channels to get the physical product out and then \nbuild a software-based direct connection with the end-customer.<\/p>\n\n\n\n

A fourth strategy, which some companies have resorted to, is to \nsimply buy some of your partners and use the acquisitions to forward \nintegrate into the ecosystem. This strategy requires careful management \nof the coexistence of old and new. For example, when executing this \nstrategy using a regional approach where you buy one partner per region,\n the partners in the other regions will either bail ship or change \nbehavior to maximize the chance of you buying them.<\/p>\n\n\n\n

Digitalization often requires you to reposition yourself in your ecosystem, which naturally upsets your existing partners, causing them to use tactics to keep you in your place. The risk is that the ecosystem grows stale, causing it to be disrupted in its entirety. To avoid this, you need to find ways to experiment and innovate that are transparent and inclusive to your value chain. Don\u2019t let yourself be taken hostage by your partners so you go down with the ship.<\/p>\n\n\n\n

To get more insights earlier, sign up for my newsletter at <\/em>jan@janbosch.com<\/em><\/a> or follow me on<\/em> janbosch.com\/blog<\/em><\/a>, LinkedIn (<\/em>linkedin.com\/in\/janbosch<\/em><\/a>), Medium<\/a> or Twitter (<\/em>@JanBosch<\/em><\/a>).<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Last week, we had a workshop with the Software Center companies on new business models and their coexistence with traditional models. The overall trend is that all companies are looking to transition from traditional, transactional business models to more continuous ones. The challenge is that the more continuous you aim for your business to be, … Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"generate_page_header":"","footnotes":""},"categories":[5,10],"tags":[],"_links":{"self":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1217"}],"collection":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=1217"}],"version-history":[{"count":1,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1217\/revisions"}],"predecessor-version":[{"id":1219,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1217\/revisions\/1219"}],"wp:attachment":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=1217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=1217"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=1217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}