McKinsey article: New approach to business-model innovation

This article is authored by Marc de Jong and Menno van Dijk. Following is the gist.


Existing industries such as financial services, education, telecommunication are being disrupted by the likes of Bitcoin, MOOCs, Wattsapp. What can an existing player do to disrupt themselves instead of being disrupted by other companies:

1) Reframing beliefs: Existing players have set of beliefs about the value creation and what drives profitability. Authors suggest an approach to articulate the underlying notions and reframe them.




The fuller process and the questions to ask along the way look like this:

1. Outline the dominant business model in your industry. What are the long-held core beliefs about how to create value? For instance, in financial services, scale is regarded as crucial to profitability.

2. Dissect the most important long-held belief into its supporting notions. How do notions about customer needs and interactions, technology, regulation, business economics, and ways of operating underpin the core belief? For instance, financial-services players assume that customers prefer automated, low-cost interfaces requiring scale. Because the IT underpinning financial services has major scale advantages, most of a provider’s cost base is fixed. Furthermore, the appropriate level of risk management is possible only beyond a certain size of business.

3. Turn an underlying belief on its head. Formulate a radical new hypothesis, one that no one wants to believe—at least no one currently in your industry. For instance, what if a financial-services provider’s IT could be based almost entirely in the cloud, drastically reducing the minimum economic scale?

Executives can begin by systematically examining each core element of their business model, which typically comprises customer relationships, key activities, strategic resources, and the economic model’s cost structures and revenue streams. Within each of these elements, various business-model innovations are possible. Having analyzed hundreds of core elements across a wide range of industries and geographies, we have found that a reframe seems to emerge for each one, regardless of industry or location. Moreover, these themes have one common denominator: the digitization of business, which upends customer interactions, business activities, the deployment of resources, and economic models

HBS Research: Link between incentives and quotas

1) Link the bonus with clear goal
2) Keep your high performers in seasonal goods if you want smooth sales

http://hbswk.hbs.edu/item/7810.html

Link between happiness and investment

I read an HBR research that discovered an interesting link between the happiness and long term investment tendency of a firm. While it sounds intuitive (as most of the research results) I would be interested in it's application - should a city (company) invest more to become happier or should it first work on being happy to attract more investment. 

"Companies located in places with happier people invest more, according to a recent paper by Tuugi Chuluun of Loyola University Maryland and Carol Graham of Brookings. In particular, firms in happy places spend more on R&D. That’s because happiness, they argue, is linked to the kind of longer term thinking necessary for making investments for the future."

https://hbr.org/2015/06/companies-in-happy-cities-invest-more-for-the-long-term

Summary HBR Article: You’re Spending Your Money in All the Wrong Places

Old MetaphorMarketers have long used the famous funnel metaphor to think about touch points: Consumers would start at the wide end of the funnel with many brands in mind and narrow them down to a final choice. Companies have traditionally used paid-media push marketing at a few well-defined points along the funnel to build awareness, drive consideration, and ultimately inspire purchase. But the metaphor fails to capture the shifting nature of consumer engagement.

Shifting Nature of consumer
Today’s consumers take a much more iterative and less reductive journey of four stages: consider, evaluate, buy, and enjoy, advocate, bond. (CEB and EAB)

Consider: Old spending - highest amount in this stage. Digital Age - Don't spend too much at this stage

New Concept
First, instead of focusing on how to allocate spending across media—television, radio, online, and so forth—marketers should target stages in the decision journey.

Wrong Spending: 70% to 90% of spend goes to advertising and retail promotions that hit consumers at the consider and buy stages.

Digital Age Correct Spending: Consumers are often influenced more during the evaluate and enjoy-advocate-bond stages. In many categories the single most powerful impetus to buy is someone else’s advocacy.

Action Steps
Understand CDJ and reorganize roles

The shift to a CDJ (Customer Decision Journey)-driven strategy has three parts: understanding your consumers’ decision journey; determining which touch points are priorities and how to leverage them; and allocating resources accordingly—an undertaking that may require redefining organizational relationships and roles.

New Roles for Marketing
Orchestrator
Many consumer touch points are owned-media channels, such as the company’s website, product packaging, and customer service and sales functions. Usually they are run by parts of the organization other than marketing. Re-organize.

Publisher and “content supply chain” managerCompanies where the marketing function takes on the role of publisher in chief—rationalizing the creation and flow of product related content—consumers develop a clearer sense of the brand and are better able to articulate the attributes of specific products. If not marketing then re-organize.

Marketplace intelligence leaderIn many companies IT controls the collection and management of data and the relevant budgets; and with its traditional focus on driving operational efficiency. Marketing data should be under marketing’s control.

Prepare A Customer Experience PlanA deep investigation of decision journey often reveals the need for a plan that will make the customer’s experience coherent.


https://hbr.org/2010/12/branding-in-the-digital-age-youre-spending-your-money-in-all-the-wrong-places/ar/1

Another post on motivating employees

I read a post by a communication specialist Shari Alexander. Though the title is less serious as it says, 'how to motivate employees in less than 5 minutes', she has couple of good points.
Number one is same as mentioned by Daniel Pink - Purpose. It is equally important to keep communicating the purpose (big picture) as it is to keep reminding oneself of it.
Her another point, 'pay attention to what excites them' is more of a communication (listening) skill but one can use the pointers to excite and motivate people, especially in the short-run.
I liked her suggestion of, 'use positive reinforcement' as I have realized that it is really easy to forget this. Though intellectually most of the leaders and managers are aware of the benefits of positive feedback to reinforce a particular behavior, practice of the same is not as common. 

Get ''excited'' instead of ''anxious''

Alision Wood Brooks, Assistant Professor at HBS has some interesting research findings on the effect of anxiety, which is common amongst corporate employees.

Research participants who were asked to give an impromptu three-minute talk scored higher on persuasiveness and confidence if they first said to themselves “I am excited,” in comparison with those who said “I am anxious” or explicitly tried to calm down, says Alison Wood Brooks of Harvard Business School. Similarly, karaoke singers who first said “I am excited” scored an average of 81% on pitch, volume, and rhythm, compared with those who said “I am anxious” (69%) or “I am calm” (53%). People who are in a “high arousal” state tend to believe that calming down will help them perform, but it can be better to channel that arousal in a positive direction by being energetic and passionate, Brooks says.

In psychological terms, anxiety is an emotion characterized by both "high arousal" and "negative valence." Common wisdom says that the best way to overcome anxiety is to calm yourself down, creating an emotion with low arousal and positive valence. But enacting a transformation across two axes at once is difficult to achieve. Turning anxiety into excitement, however, only requires a person to switch from a negative to a positive valence, while remaining in a state of high arousal, an easier prospect.

"When your heart is already racing, you can use that high arousal in a positive way by being energetic, enthusiastic, and passionate," she says. "People's intuition is to try and calm down. You are better off running with your high arousal and channeling it in a positive direction."

In the case of that high-stakes client presentation, Brooks's findings suggest that an employee might perform better after considering the opportunities for success rather than the consequences of failure. Managers, meanwhile, can help subordinates by keeping them focused on the positive.

Simple method for motivating people

One of the simplest methods of motivating people on a day to day basis is Ferguson's Formula based on the methods of Sir Alex Ferguson. He recommends using 'well done' when you find people doing good work and to not be shy of giving clear criticism right away, without harping on it too long. He recommends to not express anger and be mindful of timing and tone while criticizing.