The Business Model Stranglehold

Recent developments in the architecture of markets could end up putting companies in a situation they haven’t trained for: Having to compete for customers, not against competitors. Will this create a business model stranglehold where the current B2B business model is suffocating the business? But its former success can’t be matched by a new customer centric approach and is therefore kept in place?

The news media industry is an easy example. They have given away poor journalism for two decades in order to sell clicks and views to other businesses. But now they are suddenly faced with a situation having to sell a product directly to customers, a product that they very efficiently have made worthless. How do you unlearn that?

Why is this a new problem?
Because as the world grows increasingly customer centric the hostility some industries have demonstrated towards their customers becomes apparent. In some cases this ingrained malevolence, mixed with a profound lack of important/relevant/actionable/valuable/any customer insight, has become so deep-rooted that companies are left helpless to the customer churn.

In the case of the hospitality industry (one of many) I would argue they are asking customers the wrong questions and wasting their resources on solving the wrong problems..  At the same time you can read from their discussions that they are working hard to brand AirBnB as something else, rather than admit to the new challenges of competition.

Companies have grown up accustomed to customers as assets at the end of a value chain. Assets to be sold of to the highest bidder. The customer, having little or no choice but to buy from the incumbent industry has accepted the negative aspects in order to gain access.

As an example look at bundling in the cable-tv industry.

But as customers get more conscious of new opportunities – and slowly unlearn what the incumbent industries have spent decades teaching them. They slowly drift to new industries in order to solve their jobs.

And this is where the stranglehold comes in. Because as companies have become experts at making deals with middle-men customers now want direct access (we are waiting Disney) and choice. This means that the business has to figure out how to stop earning large swaths of money by lumping together gigantic pools of customers and slave auctioning them of to other companies. And figure out how to survive on earning less money directly from each individual customer.

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