Thought Leadership
February 17, 2020
Asking Questions to Unearth New Business Models
Nitin Rakesh
Chief Executive Officer And Executive Director
Tags: leadership

Businesses have always had to keep up with the times. But the exponential growth of technology that the world has witnessed in the last few decades has given it a new meaning. Not only has the digital reality of “everyone being connected to everything” paved the way for greater insights, it has also improved productivity and in the process radically transformed the role of the customer.

Freed from the fetters of being beholden to companies for “giving” them things, customers are now in the driving seat as enterprise co-participants. It is they who steer decisions about which of these things “should” be made, in what precise form, shape, and size, to fulfill which specific requirement.

Suffice to say that tried-and-tested approaches to either setting up a new enterprise or keeping an old one running do not make the cut anymore. Instead, what is called for is an entirely new approach to doing business where enterprises no longer dictate or prescribe products and services for customers but co-create solutions and experiences with them by analyzing consumer behavior.


Getting ready to operate as a player in an ecosystem

In order to set off on such a transformation journey, one of the first things that organizations must do is extend their view outside the confines of their company. They must do this by relooking at themselves through the lens of a player that occupies its space beside other players, including manufacturers, consumers, and competitors in a larger ecosystem.

Consider, for example, how Danish toy production company LEGO co-creates its products with its consumers. Members of its online community, LEGO Ideas, are given the opportunity to share their designs for new playsets and browse the creations submitted by other Lego fans. Ideas are continually assessed and voted on. And when a project garners 10,000 votes, LEGO reviews it, and selects a winner whose idea is then used to create an official LEGO Ideas set that can be produced and sold worldwide. The creator gives final product approval and goes on to earn a specified percentage of the new set’s sales while being duly recognized as its creator on all marketing and packaging.


Taking brands beyond “things”: the need for companies to connect to customer values

But this is not the only way that customers are playing a leading role in reshaping how companies operate. Increasingly, what they are drawn to is an organization’s ability to stand for something bigger than what it sells. A majority of today’s customers seek to patronize brands that are mindful of their impact on communities, the social and natural environment, and how they walk the talk in demonstrating their commitment to ethical values.

For example, Swedish furniture giant IKEA decided to broaden its social reach by recently announcing its intention to employ refugees at its production centers in Jordan. The move, which is a part of IKEA’s long-term goal to employ about 200,000 disadvantaged people from around the world, helps to further cement its already well-established reputation as an ethical, purpose-led brand. It not only secures the Swedish company’s loyalty from its value-conscious customer-base but also encourages millennial designers—often staunch supporters of social causes—to become IKEA’s prospective employees.


Taking a risk to bolster trust

This brings me to the related issues of trust and transparency. Before the exponential growth of technology changed our lives, providing us with smart tools and social networks to verify information about nearly anything, it was not uncommon for customers to have “blind faith” in the companies they customarily patronized. This is no longer true. In today’s information age, customers want verifiable information. They want to know how a company operates, where it sources its raw material from, and how fairly it treats its employees. So, the decision taken by the software management platform Buffer to disclose who made how much and according to what set of criteria, was a resounding success not only for its customers but also for its employees.

Within the first 30 days of making its salaries public, the company received more than twice as many applications as it had the previous month. They found employees responding positively to internal surveys that assessed the new policy’s popularity and wider workplace happiness. What Buffer ended up doing was flip conventional thinking around pay. It sent out a strong signal to all its stakeholders that the commitment to being open about employee salaries was just a natural part of the corporate value of transparency it lived by thus furthering its reputation as a fair player and as an ethical company.

As companies try to find better ways to stay relevant, they must reconsider their current business models. Unless they prioritize thinking out-of-the-box with the customer in clear sight, they stand to lose ground, customer patronage, and market relevance. In the next post, which will conclude this special blog series focused on Architecting Disruption, we will discuss why businesses must cast their talent net far and wide to pick and deploy innovative thinking. Stay tuned!

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