Refocus, Redesign, Rebuild

Wed, 27 Jan 2010 14:43:08 +0000

Sitting in my study listening to the radio as the excitement built over the launch of a new product and how it might “change the world” as the iPod did juxtaposed with some snippets from the Davos conference with the strapline “renew, redesign and rebuild” I am struck by the implications for companies who have survived the recession and are now able to face the slow recovery. Let’s take this with an example close to the iPod - music.

Refocus
Technology and the increasing confidence with using it is changing how customers are consuming products. In the music industry people now no longer buy a CD - they sample the tracks on iTunes and download the tracks they want to their iPods - maybe 2-3 tracks from the CD at a cost of £2.50ish rather than the £15 for a CD. The music industry sees the problem as how to get customers to go back to buying CDs with the 2-3 killer tracks and 5-6 fillers. My view is that they are unlikely to succeed here - the iPod has changed how the world consumes music Refocusing would suggest a more fundamental think of the business model for the music industry and a think about what is the new business model that fits that new consumption. Is it that the industry sells individual tracks only? Is it that they can no longer afford to sponsor artists who can’t produce a whole album of killer tracks - listening to Fleetwood Mac’s Rumours in the car I was struck by the fact that this is a whole album of killer tracks, not a filler to be heard (perhaps the future for the industry is in it’s past after all)? Is it that CDs are no longer artist specific but a collection of music of the genre?

My point is that each business needs to take a long hard critical look at what it’s customers have been doing in the recession and to look at the implications of that for it’s business model. That change may not be required right this minute but changing a business model needs to be a deliberate decision and might take some significant time to achieve so the sooner we start to recognise where our customers are going then the sooner we can start to lead rather than play ostrich in the market. That doesn’t necessarily mean trading down in price - after all the high end of the market is the one that has held up particularly well during the recession and reducing price can damage your brand.

Redesign
Most businesses have had to respond to the recession through making changes, usually quickly and through ad hoc arrangements. Add this to the need potentially to adjust the business model going forward then this is a good time to look to redesign the business in line with what we have learned in the recession and our new focus. For the music industry this might mean new processes for finding, discovering and signing artists along with different kinds of contracts for some. It might also mean that more resources have to be put into “production writing” for artists so that perhaps the writers are paid more than the artists as they will be much more part of the wealth generation process and will be much more in demand. The production process might therefore need to change and with it perhaps the decision making infrastructure of the business.

Rebuild
Some businesses have downsized through the recession and with a combination of the above will perhaps need to think about starting to rebuild their capacity to deliver. Also as transport costs increase, some transportation of goods becomes more risky. consumers start to focus more on the environmental costs of goods and the emerging markets become more mature and labour there more expensive then perhaps manufacturing will need to be brought back to closer to it’s customer markets. Could market leaders here steal a competitive advantage?

Other businesses will need to recruit/reskill staff in line with the refocus and redesign. The challenge will be to get the people who will be right for tomorrow and who can work in today to generate the wealth for the change.

So - how does your business shape up here? Do you know what your customers are doing and where they are going? Are you framing your challenge in terms of changing the customers to fit your business model or changing your business model to fit and possibly lead the market? How are you going to leverage the changes you have had to make during the recession to build future success? How are you going to take forward your business in line with the changing world environment which will impact on business? Are you going to wait for others to take the lead then play catch-up or are you going to lead?

Gill Marsh
Gill Marsh is the Principal Consultant of Amazing Organisations Ltd, an Organisational Design , Development and Transformational Change practice.  gill@amazingorganisations.org
+447973 665913

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Refocus, Redesign, Rebuild

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