Fresh Thinking for New Business Models

FRESH BUSINESS MODELS - GLOBAL SUPPLY CHAIN GROUP

Old Business Models are Getting Redundant

When General Motors filed for Chapter XI protection in 2008, it also marked the closing of a type of business models in modern commerce.

General Motors was seen as the paragon of modern American management theory as popularized by Peter Drucker in the middle of the twentieth century.

It was at this venerable company that Peter Drucker formed his early thoughts about management as a profession, separation of the ownership from management of enterprise, the key functions of management, division of labour, theory of leadership of enterprise, indeed the very concept of the corporation.

His writings were the need of the time, and were picked up by ivy league business schools and corporations alike and formed the basic foundation of management profession.

Indeed there was a time when General Motors and the US commerce were thought of as interchangeable entities with popular aphorism that “what is good for GM is good for America and vice versa.”

Some people still think this is the case.

They see the decline of General Motors as symptomatic of a wider malaise in the US economy.

Others think that General Motors will rise like a phoenix again to become an industrial powerhouse.

While we do not know what will eventually happen to General Motors, we know that new models of commerce, new industries, new technologies and new ways of solving old problems will be required to build a stronger economy on a global level.

All of these will not necessarily come out of one country, one continent or even one region.

Drucker foresaw some of these changes in his writings on the information age, post-capitalist society and post-industrial man.

Prescient as he was, he did not yet fully see majority of the changes that have happened in the last 6 years since his death.

The rise of China and India, the global financial crisis, the zombification of the western economies as a result on intense focus on the rapid gains from FIRE (Finance, Insurance, Real Estate) industries, hollowing out of real capabilities are nowhere to be seen in his writings.

However, this is not just true of Drucker, most of the management thinkers, writers, academics and authors can be painted with the same brush.

It is not a surprise that the established thinkers find it difficult to think outside the box.

Since the times of Aristotle, Socrates and perhaps even before that (for the history of mankind maybe older than that), new thinking must come from new places – from outside the established order of thinking.

No wonder then that the most innovative companies in the US still choose to locate on the west coast, many of the most successful corporations were formed by the college drop outs and the most successful business models do not even have a name yet.

— Excerpted from the introduction of THE 5-STAR BUSINESS NETWORK

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Vivek Sood

I write about "The Supply Chain CEOs", "The 5-STAR Business Networks", and, how to "Unchain Your Corporation". In my work, I help create extraordinary corporate results using several 'unique' supply chain methodologies. Contact me for interesting, high impact projects, or, to get access to my IP for creating transformations using these methodologies.

  • Kennedy Global says:

    The result is a fresh wave of thinking – identifying new approaches organizations can take to tackle growth and innovation challenges, looking right across the value chain.

    There is no hesitation in getting agree with Sood’s statement it is not a surprise that the established thinkers find it difficult to think outside the box.

    Slow growth across most of the world economy means that business growth slows too. This creates new challenges for businesses as they try to maintain their return on investment, at a time when the returns on incremental innovation are slowing and other routes to growth are erratic and expensive.

  • FMCG CEO says:

    The fast-moving-consumer-goods industry has a long history of generating reliable growth through mass brands. But the model that fueled industry success now faces great pressure as consumer behaviors shift and the channel landscape changes. To win in the coming decades, FMCGs need to reduce their reliance on mass brands and offline mass channels and embrace an agile operating model focused on brand relevance rather than synergies.
    The FMCG value-creation model
    This success owed much to a widely used five-part model for creating value. Pioneered just after World War II.

  • Marilyn says:

    I Am Agree With You Mr. Sood, The New Economy’s Old Business Model Is Dead

    Today innovation is everyone’s business. Whether you are a manager in a global corporation, an entrepreneur starting up, in a government role, or a teacher in an elementary school, everyone is expected to get lean – to do better with less. And that is why we all need design thinking. At every level in every kind of organization, design thinking provides the tools you need to become an innovative thinker and uncover creative opportunities that are there – you’re just not seeing them yet. In this course, we provide an overview of design thinking and work with a model containing four key questions and several tools to help you understand design thinking as a problem-solving approach. We also look at several stories from different organizations that used design thinking to uncover compelling solutions.

    The titans of the new economy are different from their predecessors in one very important way: They aren’t job creators — at least not on a scale to match their dizzying growth in value. General Motors, at its peak in 1979, had some 618,000 employees in the United States and 853,000 worldwide. Facebook had just a few more than 25,000 employees in 2017, up from nearly 12,700 as recently as 2015. Google’s parent corporation, Alphabet, is the third-largest company in the world by market capitalization but has only about 75,000 employees.

    But the exponential difference between technology companies’ revenues and their payrolls probably won’t last. The fact that they can have billions of users but only tens of thousands of employees are in part thanks to algorithms and machine learning, which have taken the place of many ordinary workers. It is also the result, however, of political decisions made back in the 1990s that freed these companies from regulation — and those political decisions probably won’t withstand increased scrutiny. As politicians and citizens get more worried about the behavior of technology giants, these companies are going to have to shoulder new regulatory burdens — and will then have no choice but to hire many more people to manage them. In other words, the new economy’s old business model might be about to come to an end…[https://bit.ly/2DAd8ZW]

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