Digital business models: winning in digital channels

What does it take for established firms to develop winning strategies in online, social marketing channels?

How can legacy firms establish digital business models?

What are the key issues to winning in online, social and viral channels?

These were some of the questions I was asked to discuss in a recent keynote talk: Digital Businessmodels (in Norwegian).
A highly engaged crowd, packed to the ceiling with more than 125 people and a long waiting list, gave a great setting for shedding some light on some of these crucial areas.

Key conclusion: Today’s marketing managers are failing hard at using the strategic opportunities of social and digital technologies. You don’t have to like social media, but you need to understand it. Most don’t. They need to as the speed of digital disruption is only increasing.

RA PaperRead the full article here.

Digital business models: winning in digital channels

Sparking Strategic Innovation @ Front End of Innovation 2013

Front end of Innovation: one of Europe’s premier innovation events. In 2012 the event brought together over 300 global innovators in Zurich. Google, 3M, Starbucks, BMW, P&G Nestle’s Nespresso designers and Alberto Alessi were among the great storytellers.

Front end of Innovation 2013 takes place in Copenhagen. And this time Engage // Innovate is taking part.

We are delighted to run a half day workshop on Sparking Strategic Innovation. This is a fantastic chance to share our work around Strategy Tools for the Next Generation in the global innovation community.

Workshop: Sparking Strategic Innovation
Powerful, Hands-On Learning * Master New, Visual Innovation Tools
Led by Christian Rangen and Elisabeth Ovstebo

Learn how you can…

  • Connect strategy and innovation
  • Teach yourself to think outside the box and dream bigger
  • introduce more Pirate thinking into your organization
  • Help create more innovative strategies
  • Master new tools for strategic innovation

We need new strategy tools for the future. Most of today’s strategy tools are insufficient to explain many of our times most successful companies. The next generation of leaders, entrepreneurs, risk takers and pirates need new tools to master strategic innovation. They need new tools to make strategic innovation happen. Through our research and teaching we have developed or selected 32 strategy, innovation and management tools. Tools for the future. Join our work at Strategytoolsforthenextgeneration.com 

In this interactive workshop we will help you master:

This hands-on, idea-driven workshop will provide you with emerging tools for strategic innovation. You will learn how to apply these to your ongoing innovation challenges.

Come experience some of the latest thinking and new tools for strategic innovation. The session will combine emerging theories, case studies and new innovation tools into a highly interactive workshop.

  • Key take aways:
  •  Learn to te:think your mental models for making innovation happen
  •  Master new tools to kick-start your own innovation journey
  •  Get your personal action toolkit for making innovation happen in your business
  •  Receive a free copy of “Dream Bigger: your personal innovation sketchbook
  • Receive a special preview of the upcoming book “Strategy Tools for the Next Generation: strategy, innovation and management tools for the next generation of entrepreneurs, risk takers and pirates”.


About

Christian Rangen and Elisabeth Ovstebo are authors, consultants, entrepreneurs and lecturers. As founders of Engage // Innovate, they help companies make innovation happen. Working with leaders on all levels, they combine leadership, strategy, change management and innovation to create new business models, new business areas and more innovative organizations. Their moon landing is developing Strategy Tools for the Next Generation.

Join us in Copenhagen? 

We are bringing a handful of business partners and clients to this amazing innovation events. We’ll design a powerful learning experience that aims to bring powerful new ideas from the frontiers of innovation thinking in Copenhagen into your organization. Are you curious? Are you ready to boost your innovation? Contact us to learn more about this powerful learning experience of FEI2013.

Front end of Innovation 2013 
Learn more here.

“If you don’t invest in the future, there isn’t going to be one”
– Sir George Buckley, Former President and CEO, 3M and keynote speaker at Front End of Innovation 2012

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Dumb Ways to Die: perfect case of Social Media

Dumb ways to die. I absolutley love this little tune. Impressive to think of it has nearly 22 million views in less ten days. Even more so, when you realize this is a public information campaign by the Australian Metro service. Bravo!

One of my students mentioned this video earlier this week. Next week I’m giving a keynote talk on Winning in Social Media. Hence, I’m doing extensive research into leading ideas in social media marketing.  I have to tip my hat off to the Australian Metro. This is a perfect example of new generation thinking in communications and social technologies.

The campaign uses an integrated social strategy. The .com website and youtube channel are the two main plattforms. But the campaign also uses Instagram, Tumblr, Pinterest, Facebook and Twitter to generate viral effect. It is a perfect case study in integrated social technologies.

The traffic on Twitter alone is worth studying indepth for its global reach and viral chatter. Amazing, really.

Developed by John Mescall, Executive Creative Director at Mccann Australia, the campaign has been picked up in the global press as it goes viral. But this is a perfect example of a marketing/communication campaign designed to go viral. Dumb Ways to Die; a case study in the future of marketing communications.

 

Kolumbus could learn a thing or two….

Dumb Ways to Die: perfect case of Social Media

Boost! @Startup Weekend

Asked to give a talk to ”boost the energy and drive” for the Startup Weekend partcipants. Mix a bit of energy and a selection of strategy tools. This presentation introduce the participants to the Strategic Innovation Canvas, Innovation Thinking Modes, the Innovation Pyramid and the well-established Business Model Canvas. All tools can be downloaded in high resolution .pdf for use by the crowds at Startup Weekend. Good luck, people

Stay tuned, as we lauch Strategytoolsforthenextgeneration next week…

Boost! @Startup Weekend

Why SAS will go bankrupt (most probably)

Leadership. Culture. Lack of change. Lack of innovation.
These are the factors that will drive SAS into bankruptcy. 

I love flying SAS. Always have. I think they have a great product with good service at a fair price. Yet, I still believe they will go bankrupt. Regretfully. And the main reason: leadership. Or more specifically, lack thereof.

This week I’ve had an interesting Twitter exchange with an highly engaged SAS-employee. That exchange prompted this blog.

Taking the cut

SAS’ troubles have been heavily featured in the news recently. The Scandinavian airline has lost most of its nok 11 bn equity provided by the owners over the last three years. Today, the national governments who own 50 % of the company, has said “no more government support’’. Well, they revised that to, ‘’no more government support – until you save nok 3 bn and sell off assets for 3 bn. Then and only then might we step in to save you once again’’.

So, SAS needs to shave nok 6bn of its cost structure, and do it fast. They need a plan; a good one. The company was scheduled to present this plan last week Thursday. They postponed it. Now, the date is set for Nov. 12th, tomorrow. I guess a lot of people are working around the clock this weekend to come up with a solution. But I am afraid they will fail. Not in the planning. That’s easy. But in the implementation. That’s the change part.

Why?
An absolute lack of leadership at the top level of SAS.

Hilarious leadership behavior

Over the last few days, sources close to SAS, have leaked cost-cutting ideas like “Employees’ salaries will have to be cut by 15 – 25%, effective immediately”. A good idea, and most probably a required one in the short run. But here’s the fun part.

Asked by the press how much the management team would cut its salaries by, the reply was “we don’t know”. An answer that’s easily interpreted as “nothing at all”. This caused a few prying journalist, most notably DN.no, to look more closely at SAS top management salary structure. And their findings are funny.

SAS CEO takes home a fixed salary of NOK 10 million yearly, and a  pension scheme that pays nok 3 million a year. Should he keep the CEO post until retirement, he will have a total pension package of nok 56 million.

Asked by the press, SAS press officers stated “he has a competitive pay package on market terms”. Hahaha.

First of all. Nobody should take home a fixed salary of 10+ million in a company that’s losing a cool billion a year. Nobody.

Second. If we were to compare SAS vs. Norwegian:

SAS Passenger flown pr. employee (metric for efficiency in business model): 1818

Norwegian Passenger flown pr. employee: 6400

SAS market value: 1,79 bn nok

Norwegian market value: 4,35 bn nok

SAS annual result: -1,7 bn nok

Norwegian annual result:  167 mill nok

Fixed salary SAS CEO: 10 million

Fixed salary Norwegian CEO: 1,3 million

In fact, SAS’ CEO takes home more than the entire seven person management team of Norwegian combined. That’s one CEO losing billions taking home more fixed salary than the entire management team of their main competitor, combined.

The stockmarket has seen this coming for months.

Development in share price SAS (orange) vs. NAS (green)

Change o’hoy

This wouldn’t be an issue if SAS was profitable. But it is not. It’s been losing an average 1,3 bn  a year recently. In fact, the company needs to cut 6 bn. It needs to cut 3 bn in salaries. It has hinted at employees to take a 15 – 25 % pay cut. But the CEO is not taking part in it.

Back to the Twitter conversation with the engaged SAS employee:

I wrote:
‘’#CEO #SAS has zero credibility with 10 million in fixed salary – and demanding cuts by others. He should cut 90% of his fixed salary”

Her reply:
“The CEO taking 90% pay cut would earn the same as a captain. Sure, I agree, but is it likely?”.

Well. Not only should it be likely. It should be a requirement. SAS is facing perhaps the most challenging moment in its history. There is a very real chance of imminent bankruptcy. Turning this situation around requires significant and massive change. Now. Doing so requires leading by example. Managing this change requires true leadership. Handling unions who refuse to discuss any lay-offs or salary cuts makes it an requirement. SAS employees are fuming already.

The airline industry has a long history of poor leadership, strikes and forced bankruptcies. There are two one significant exceptions: Southwest Airlines and JAL. Southwest Airlines has a long history of managing change, managing external disruptions and handling difficult times. Looking into CEO compensation at Soutwest Airlines reveals a series of voluntary pay cuts over the years.

Herb Kelleher, former CEO says about tough times: ‘’you should share it. When we were experiencing hard times two years ago, I went to the board and told them I wanted to cut my salary. I cut all the officers’ bonuses 10%, mine 20%.”

Japanese JAL, successfully managed a dramatic turnaround between 2008 and 2010. As one part of this process, CEO Haruka Nishimatsu cut his own salary below that of the airline pilots. Financially significant; not really. Symbolically important; absolutely.

If SAS is to have any kind of chance to survive in, the CEO and management team will have to lead by example. This means cutting costs. Starting with their own. By 90%. Then, and only then, does the leadership show that they are willing to walk to walk. Not just talk the talk.

Will they?

Cutting is not future

But, regardless how much SAS will be able to cut, I am afraid it’s too little, too late. Steve Jobs once said: ‘’The cure for Apple is not cost-cutting. The cure for Apple is to innovate its way out of its current predicament’’. SAS has been cutting costs and searching for a strategic direction for the last 10+ years. This is the reactive side to change.

The essence of change: innovation

The essence of change management is innovation and creation. Creating the future. Creating a better tomorrow then yesterday. Stir up the positive emotional forces of the organization and the greater eco-system and direct them towards a shared aspiration. Reinvent dying industries. Create new markets. Launch new business models. Shape the future, don’t get shaped by it. ‘’Lean into the future’’, to quote Amazon CEO Jeff Bezos. This is the proactive side to change. “Change is fun”, says former GE CEO Jack Welch, “because we are the ones doing it”.

Strategic innovation needed

When I look at SAS today, I see a company stuck in the past. I see a reactive company. The mindset, the technologies, the fleet of out-dated aircrafts, the layers of management believing they should earn the same salary as the CEO of Statoil.

What I don’t see is a mindset for innovation. A proactive mindset to create the future. To be bold. To invent new business models. What I don’t see is a flexible organizational structure and organizational culture that is reinventing themselves and the industry. What I don’t see is a company crying out “we want to become the world’s greatest airline; and our strategy as revolution mindset will make that happen”.

“Forget everything you know about long distance flying. Welcome to the long distance revolution”. That’s this week’s ad campaign, signed by Norwegian. It could have been SAS. It’s not.

Why SAS will go bankrupt (most probably)