Mark Johnson on the power of new Internet-driven business models

Seizing the White Space

In Seizing the White Space: Business Model Innovation for Growth and Renewal published by Harvard Business Press (2010), Mark Johnson discusses several new Internet-driven business models that have “brought many old-guard industries to their knees.” Here are three examples:

Encyclopedia Britannica, first challenged by Encarta by a combination of Wikipedia (contributed content) and Google (search engine to verify and improve quality of content).

The travel agency industry, disrupted by online competitors (e.g. Expedia and Travelocity), aggregators (e.g. Kayak and Travelzoo), and advice sites (e.g. Trip Advisor)

Most conspicuously, the newspaper industry, comprised of companies that saw the Internet as a threat rather than a source of opportunities for growth. “The devised no new customer value propositions. They conceived of no new revenue models (or other ways to change their profit formula). Instead, they merely took the look and feel of the newspaper and put it online, stretching thin the resources and processes of their existing model.” Newspaper companies have also been diminished by Google News, Drudge Report, and the Huffington Post (segmented and democratized news content and commentary) as well as by Craigslist and Recycler (classified ads) and Yelp and Chowhound (local food and entertainment expertise). Substantial numbers of readers and advertising dollars have been lost.

Here three of Johnson’s most important points:

1. A “white space” is “unchartered territory or an underserved market” in which new and different opportunities reveal themselves to those who recognize them.

2. Technology does not create profitable disruption; rather, profitable disruption is created by those who use technology most effectively.

3. Entering white spaces with new technologies requires a new business model, one that will facilitate, support, and sustain initiatives that are not defined or addressed by a company’s current business model.

In certain respects, Johnson offers development in greater depth and refinement with broader scope of W. Chan Kim and Renée Mauborgne’s “Blue Ocean Strategy,” introduced in an HBR article (October 2004) and then expanded in a book (2005).

Executive Insights: Bill Carter (Fuse)

Photo of Carter by Ozier Muhammad, NYT

Adam Bryant conducts interviews of senior-level executives that appear in his “Corner Office” column each week in the SundayBusiness section of The New York Times. Here are a few insights provided by Bill Carter, partner and co-founder of Fuse, a youth marketing agency.

Bryant: How has your leadership style evolved? What do you now do more of, or less of?

Carter: One of the things that I do more of now, and probably a better job of now than I did ten years ago, is being really present in our office when I’m there. I think many senior people, C.E.O.’s and presidents of companies, both small and large, obviously spend a lot of time outside of the office.

What I used to tend to do with the 50 percent of the time that I was in the office would be to go into my office and shut the door, literally or figuratively, and delve back into the responsibilities of that day or that week. I might as well have not been in the office. I wasn’t gauging anything that was going on in the staff, learning anything new or understanding the challenges that people were facing.

I’ve learned that when you’re in your office and you’re in that position, the best thing you can do is to spend at least 50 percent of your time in the office communicating with as many staff as you have time to communicate with. Holing yourself up is not the way to learn what’s happening. The information doesn’t flow up to you when you’re in a closed-door situation.

I think if you look at your core responsibilities a little less literally, you’d probably want to spend more time with your staff, because what are most C.E.O.’s really in charge of? Well, they are in charge of setting strategy, of creating the best work environment, of finding the best talent. How can you possibly do that by isolating yourself and only communicating with people from accounting or your outside legal counsel? If you don’t go down the hall and talk to people, you’re not going to know the real challenges.

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To read several of Bryant’s more recent interviews of other executives, please click here.

Book Review: The Art of Followership

The Art of Followership: How Great Followers Create Great Leaders and Organizations
Ronald E. Riggio, Ira Chaleff, and Jean Lipman-Blumen, Co-Editors
Jossey-Bass (2008)

This anthology brings together the essays of 31 contributors who participated in the Kravis-De Roulet Leadership Conference on February 24-25, 2006. The material has been co-edited by Ronald E. Riggio, Ira Chaleff, and Jean Lipman-Blumen; Chaleff and Lipman-Blumen are also among the contributors. To what does the title of this book refer? The material is carefully organized as follows: A brief Foreword by James MacGregor Burns and then an Introduction by Warren Bennis, followed by 23 “author chapters” that are divided within four Parts: “Defining and Redefining Followership” (Chapters 1-5), “Effective Followership” (Chapters 6-12), “The Pitfalls and Challenges” (Chapters 13-17), and “Followers and Leaders: Research and Practice, and the Future (Chapters 18-23).

In “Rethinking Followership,” Robert E. Kelley identifies and then discusses five basic styles of followership: The Sheep, The Yes-People, The Alienated, The Pragmatists, and The Star Followers. Others may quarrel with such descriptive but Kelley’s key points seem eminently sensible to me as he examines the field of followership in terms of seven topics: world events, culture, leader [ship], follower qualities, role of the follower, language of followership, and “courageous conscience.” Ernest L. Stech explains what he has identified as a “new leadership-followership paradigm.” Joseph Rost asserts that followership is “an outmoded concept and explains why. In an essay that I found especially thought-provoking and informative, Linda Hopper shares her thoughts about “courageous followers, servant-leaders, and organizational transformations.” On Page 118, she identifies five common barriers to engaging “disaffected, disgruntled, distrustful employees who appear reticent to make a commitment to and be accountable for work or decisions.” Courageous followership can help to lower (if not eliminate) these barriers. How? Hopper offers four suggestions: Seek ways to work for conjoint efforts toward common goals, see others as allies rather than enemies or even as opponents, see their own success as the goals of the organization become a reality, and recognize that their participation in successful change initiatives substantiates the belief that their efforts as well as collaborative efforts with others really can make a difference.

I am grateful to Hopper for providing an especially appropriate quotation at the conclusion of her essay. “Edith Wharton wrote, `There are two ways of spreading light – to be the candle or the mirror that reflects it.’ By being worthy servant-leaders and courageous followers, we bring light into our organization.” In the Introduction, Warren Bennis suggests that the day rapidly approaches when the terms “leader” and “follower” will be interchangeable because the most productive and most highly principled people will be both “candles” and “mirrors” when spreading the light that guides others. Wharton and Bennis correctly suggest an inherent paradox: we become great leaders by becoming great followers…and vice versa.