Monday, April 11, 2011

“Business models” are dynamic

Business models like plans are dynamic? Yet dynamism itself is informed by the mindset? It’s not surprising that as a nation we may be in a transition mode given the new direction of the Aquino administration – to push an investment-led economic growth agenda? We may have done BOT or PPP projects before, but the administration’s efforts appear different. For example, “pocket open skies” is a bold new direction – bolder without “pocket”? And it is to be expected that we’re in a dilemma – compounded by the issue of reciprocity that ought to be ironed out?

In Middle America immigration is perceived as froth with danger. Yet the likes of Bill Gates and Mayor Bloomberg are championing immigration. ‘We are dynamic-thinking Americans but we don’t like immigration?’ We buy open skies – or do we see it as froth with danger?

Kennedy knew he was treading ‘unchartered territory’: “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth. No single space project in this period will be more impressive . . . and none will be so difficult or expensive to accomplish. But in a very real sense, it will not be one man going to the moon--if we make this judgment affirmatively, it will be an entire nation. For all of us must work to put him there.” And earlier, when Eisenhower pushed the US highway system – to replicate the German autobahn – it planted the seed of development. Both leaders had visions, and mindsets clearly ahead of their times.

"The first generation starts a business. The second generation runs it. And the third generation ruins it." Fairly or unfairly, there is a perception about family businesses – that the revenue stream may not be rigorously tested for sustainability, and the business model is constrained by the mindset especially when it is successful? McDonalds, Dunkin Donut, Starbucks, Apple, IBM, among others, realized that success would not be sustainable if the business model is not dynamic? But then again, a new one demands greater investments in technology and innovation, and in talent, product and market development? For instance, Cisco, once a tech darling, concedes it needs to “fix its portfolio – we have lost our focus, discipline and . . . operational execution, and are slow to make decisions”.

So we have done our version of the US highway system with the open skies policy – what to do next, beyond ironing out the reciprocity issue, and the requisite infrastructures like airports, roads, bridges, etc.? We have to pursue investors, local and foreign, that would “populate that highway system”? What would be the equivalent of McDonalds or Hilton Hotel or Dairy Queen or A&W or Exxon-Mobil or Levis in terms of an open skies policy?

Sam Walton comes to mind: the business model of his General Store, retailing, dates back to the Wild Wild West, founded on the 3Msmen (employees), materials (merchandise) and money (investment). And he clearly moved up the value chain, incorporating logistics into his business model, and adopted the more expansive 5Ms – adding machine and method, investing heavily in ICT. Retailing is a low-margin business and thus must leverage economies of scale, i.e., exploit ICT in order to optimize efficiencies and margins – while satisfying the rigors of the 4Ps or marketing mix: the right product portfolio, competitive pricing, placement (i.e., a chain operation) and promotion. (It’s a great example of lateral as opposed to linear thinking – which innovation in an enterprise or undertaking requires!)

To assume “materiales fuertes” (or products, business models or plans) are perpetual . . . would sentence us to economic laggards? It is translated in our tendency to monopolize – and thus not surprising is the acquisition by PLDT of Sun-Digitel? Haven’t we seen it before – in sugar, coconut, etc? Now we’re saying that coconut farmers, for example, need not be poor – i.e., it was asserted that the farmers were the beneficiaries? In fairness, PLDT-Sun is not quite the same – but we ought to guard against old mindsets and business models that bring about self-inflicted wounds? It is important to recognize that competition is innovation – not monopoly? And monopoly in our culture is oligarchy – the control of the economy? And unwittingly – proud of our patriotism – we protect the “Brahmans” from foreign competition . . . and expect the 10 million-strong OFWs to fend for themselves and compete in the global marketplace? They’re no pariahs – we call them heroes?

No comments:

Post a Comment