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How’s your business model doing?

Monday, 28 August 2017 18:14
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In his latest column for Inside Asian Gaming, Dr Brian To discusses some high profile cases in which huge corporate companies failed to adjust to new challenges.

By Professor Dr Brian To


Like a medical or financial check-up, the compelling question for businesses the world over is, “How is your business model stacking up against the competition?”

Consider the cases of Toshiba, Blockbuster, The Good Guys and perhaps most notably Nokia who have had their share of struggles in the marketplace. Blackberry, another former darling of the telecommunications world, has also faced product and innovation challenges.

Much like a new vehicle, nothing lasts forever when it comes to products and services but the application of new ideas and technology can force breakthroughs.

The same principal applies to human resource development. Let’s not forget that it is people that develop and refresh business, products and service models but rarely do we update and refresh our human resource models. Of course, it’s not just about your employees and colleagues, it’s also about yourself needing a refresher.

Updated entrepreneurial skills are a must for those in business and management. Understanding customer perspectives is paramount in today’s hypercompetitive environment yet less than 2% of mid-sized companies in Hong Kong surveyed recently have actively worked with their customers to understand their future needs.

All too often by the time products hit the market the supplying company’s returns provide a distressing collision with reality. Take for instance the recent disasters that have hit Hanjin Shipping Co Ltd in Korea, Cathay Pacific in Hong Kong and Hewlett-Packard in the US. JP Morgan, Goodyear, Panasonic and NEC are among the countless other companies having problems with products, people and productivity.

Business models today need to be adaptable to the environment and market conditions around them whilst anticipating competitor moves, changing tastes and customer demands.

A 2016 study by Timo Vuori, Assistant Professor in Strategic Management at Finland’s Aalto University, and Quy Huy, Professor of Strategic Management at INSEAD in Singapore, suggests that one of the major failures at Nokia was collective fear.

Why would you have fear within an organization that was once the darling of mobile phone companies around the world? The answer is one that will be taught in business schools for years to come. Nokia is a company that in fact has a successful tradition of reinventing itself and its business models since 1865 when it began in the timber industry. Its diverse business history includes chemicals, communications cabling and even footwear.

In 2007, almost 40% of all mobile phones globally were Nokia devices. Of course, it was June of 2007 that saw Apple introduce its iPhone which, combined with Google Android systems, forced Nokia’s market share from 40% to 15% in just four years – clearly a fall from grace.

The study illustrates a poor relationship between executive leaders and middle management, fuelled by extremely aggressive and hostile behavior and communications by its Chairman and CEO, Jorma Ollila, which contributed to a culture of fear. Ollila was temperamental and would shout loudly at his senior and junior vice presidents and senior management. Amid this culture, senior leadership rarely heard from junior staff about genuine constraints, limitations and unrealistic timeframes placed on its Symbian software platform.

Understandably, staff kept quiet for fear of reprisal from senior management. We are left with many questions and few answers as to whether a fear-based culture can be transformed. Just as fear has no place in the hospital operating room or in a flight cockpit, the study of fear’s impact on business, behaviourism and the bottom line needs to be embraced further.

So, how’s your business model doing?

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