Warning Labels

by Bob DeSena, Jan 18, 2011, 10:45 AM

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A friend reminded me recently about the need to rethink even our most basic daily assumptions, as he noted the warning label on a Superman costume in a store.  "Cape does not enable user to fly," it said. 

It was accurate, of course -- but I was amazed at the manufacturer's need to state it.

We're living through a unique period in the media industry. In fact, I don't think we should refer to the "media" industry, at least for a time, until we rethink the assumptions now transforming it.  It has become the mediatech industry.  No element of media is unaffected by enabling technology, certainly not TV,  and because tech is sexy and smart and not the core competence of most practitioners, it seems to be emerging sometimes on its own.  It might need a new warning label:   "Functionality does not enable provider to make money." 

A business model is a cool thing, as a successful one provides sustaining profitability for a growing enterprise. And an enterprise needs to grow, no matter what its size.  But the same way that many in "media" have a peripheral understanding of real technology, let's not assume that the components of a business model are widely understood. 

Some of the best work done to understand what we too easily refer to as a business model comes from Henry Chesbrough and Richard S. Rosenbloom.  Their work provides a set of components, a framework for thinking about how to develop such a model.  

First, say Chesbrough and Rosenbloom, define the value proposition  from the customer perspective. (Doing that requires research, and you would be amazed at the names of companies, and the amount of the money they invested,  without  such basic customer research.) 

Next, different market segments have differing needs for products and services, so segmentation of the market is key.  Which market targets have the greatest need of, place the most value on my solution? 

Determine the position you occupy in the value chain and what you do/will be doing to create, deliver and get paid for value.  Do you provide an enhancement to the current value chain, or will you disrupt it? 

How do you actually generate revenue, and how much relative to costs?

Who are you competing with, for which segment(s), and what is your sustainable advantage?  (Remember that, particularly in the change business, the competition can be inertia.)

As I've often said, language matters because it reflects what we think we know.  One of the great management thinkers of the last century, William Edwards Deming, said that ultimately all value is derived from customer value.  With the pace of change we continue to experience, let's remember what we know about "value," to insure that the things we create fill a defined and valuable (customer) need, that they have an explainable competitive advantage, and can generate sustaining revenue in excess of costs.  If we do all that, then I believe this is the year we'll celebrate -- not just the new devices, but the new businesses in the mediatech industry. 

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