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Turn Business Model Leadership into Industry Leadership

May 11, 2008
Most companies see acquisitions as the primary path to industry leadership. Yet seldom are such acquiring companies innovative with business models.

Will acquiring continue to be the best, fastest and cheapest path to competitive insulation? If acquiring survives as a path to industry leadership, how will it change?

Goldcorp makes an interesting study example. The company turned the gold mining industry upside down by holding a global contest to find more gold in its gold mine. The result was to add an enormous amount of gold reserves at very little cost. What's next?

No one can say for sure what will happen with Goldcorp in the future. Let's consider some possible results though to help understand the implications of new business models.

If Goldcorp can continue to innovate to find low-cost, high-grade minerals faster and cheaper than anyone else, the company's size and position in its industry should rapidly expand. The company will be able to mine more minerals and earn more profits than ever before.

If its stock price follows its mining successes, the company will be able to use stock to inexpensively acquire the resources it needs to do even more mining. With further business model innovation, the company may choose to outsource mining itself so it can concentrate on finding reserves.

By combining more business model innovations together, the company could find itself growing more rapidly with higher margins than many high tech firms do in what is normally considered a low-growth industry.

At the broadest level, be sure to notice that Goldcorp's business model innovation process can be repeated successfully in almost any aspect of any industry. It is built on the simple notion that one company can rapidly apply whatever most of the best thinkers in the world know to its business at a nominal cost compared to the benefits.

To do so, you have to share information about your situation and make it easy and inexpensive for others to use that information. In a sense, this is little different from hiring product and technology development to done on a contingent fee basis (something that patent holders have been doing for years to earn licensing revenues).

The triad of being able to rapidly develop and implement new business models, the improved business results that immediately follow this innovation, and access to the lowest-cost capital as investors realize the advantages of adding improved business models combine to be unstoppable in creating industry leadership.

Many companies have gained industry leadership through new business models. These industries include among others electronic data storage, advertising media, employee record keeping, financial investments, parking lots, and gravel. And the best business model improvements are yet to come!

Are you ready to build your superior business model today?
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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