schneiderism

Matt Dickman recently conducted a really interesting reader poll over at his blog Techno//Marketer to get a sense of what people felt the most influential medium might be. The results are presented in the graph above. I believe it is a safe bet that his readers skew massively to the internet, but I believe they are still representative of the paradigmatic changes that have occurred in the greater media landscape. The broader theme here, that the ways in which people interact with information is changing, is something I am actively exploring myself. What is absolutely not surprising from Matt’s survey is the incredibly low performance of newspapers and radio. The EBITDA of newspapers has been trending down for years, and many historically prominent rags are facing irrelevancy to their audiences. Audience preferences and expectations with regards to how they engage information is changing, this interaction is very fluid, and while some struggle to adapt to this reality others have been slow to respond and are suffering the consequences of a dwindling subscription base and shrinking advertising revenues. That spells doom for those newspapers. The same is happening in radio, and the EBITDA of radio is tracking similarly to that of newspapers. At the heart of this is the reality that we are increasingly moving away from having things pushed at us, and increasing moving toward technologies and mediums that allow us to engage media and information in ways that are dynamic and customizable to our preferences. Also, there is an informational frequency issue and newspapers, especailly, have struggled to compete with the 24/7 nature of the informational engagement model of the web. Those that have moved to a comprehensive web strategy have struggled to find an appropriate revenue model, especially one that can scale. We are watching media evolution and the survival of the fittest, of the most innovative.

Going back perhaps a decade, many newspaper publishers failed to appropriately survey the landscape for strategic risk to their organizations. As a result, they missed important opportunities to substantively investigate and innovate their business models. The web has moved incredibly quickly and efficiently in becoming pervasive in our society, in our culture, and many publishers now face the incredible challenge of trying to change a business model when it is absolutely too late.

There are several components of varying complexity that make up any business. It is the quality of these components, and their unique combination (hopefully), that provide businesses with a competitive advantage in the marketplace. From the investment side, understanding the quality of an enterprise is very much tied to understanding the business model of that enterprise, and how it contrasts to its competitors - what advantages that business model creates for the business in the marketplace, and how those advantages will scale over time. Additionally, there is tremendous value in understanding at a deep level that the framework of a given business model gives an edge as companies survey the competitive landscape for strategic risk, and the opportunities inherent to that risk. It is common for businesses to take a very haphazard approach to analyzing, understanding, and building the foundation of their own business model, it is also common for businesses to miss the opportunity of conducting the same analysis of their competitors. This oversight with regards to understanding their own context in the marketplace is most likely due to myth of complexity as it relates to “putting the pieces together” and taking a hard look at the constituent components of the business in question.

I was excited to find the slideshow above, and the related posts, by Alex Osterwalder. Alex has put forth a model for analyzing, understanding, designing, and contrasting business models that is easy, straightforward, and, I believe, incredibly valuable. He provides detail for what actually makes up a business model here. There is a lot of writing in business pubs right now about business model reinvention and business model innovation due to the nature of the economy and the competitive environment of different industries. This is all good, but often what is missing are the practical matters of creating an effective baseline from which to engage in exercises and experiments into innovation and reinvention. I believe that Alex succinctly provides us the tools for creating this baseline in a way that is quickly revealing of problems and opportunities, and tied to creating understanding.

Take a moment to review the slideshow and then read Alex’s latest post at his blog Business Model Design and Innovation.