Continuing Business Model Innovation:

Lessons Exemplified by Central Parking's Visionary Rise to Global Leadership

Donald Mitchell and Carol Coles

Donald W. Mitchell is chairman and CEO and Carol Bruckner Coles is president and COO of Mitchell and Company, a business model innovation and stock-price improvement firm they co-founded in 1977. They are co-authors of 'The Ultimate Competitive Advantage: Secrets of Continually Developing a More Profitable Business Model', 'The Irresistible Growth Enterprise: Breakthrough Gains from Unstoppable Change' (see excerpts at www.irresistibleforces.com), and 'The 2,000 Percent Solution: Free Your Organization from "Stalled" Thinking to Achieve Exponential Success' (see excerpts at www.2000percentsolution.com), and can be contacted through mitchell@mitchellandco.com. This essay is based on their book, The Ultimate Competitive Advantage. You can read related essays about continuing business model innovation that were published in Chief Executive Magazine from 1992-2001 at www.mitchellandco.com (click on the "leading" file folder to find the menu).

Preamble

Continuing business model innovation is a powerful new management discipline that has powered dozens of companies from being tiny competitors into becoming global industry leaders during the last decade. While we can all appreciate and admire the innovations that high technology companies make when they accomplish this feat, we may miss important lessons by assuming that the same choices do not exist in our, more mundane, business. Central Parking's history of growing from one conventional parking lot in Nashville, Tennessee into the parking services global leader should encourage even the most skeptical to appreciate the potential and power of continuing business model innovation. This management discipline requires setting business model innovation as a corporate priority, directing innovation in the context of a relevant and well-understood vision of what stakeholder benefits must be delivered more abundantly than competitors offer, becoming ever more specialized and expert than customers and competitors, selecting business models that prosper most from the unpredictable effects of influential irresistible forces, and creating and improving processes for continually designing and implementing better business models. From understanding the Central Parking case, executives can also improve their perspective in considering and appreciating business model innovation lessons from those operating in more rapidly growing and technologically influenced industries.

Introduction

What matters most now in making a company a perennial top performer in its industry? Many people have proposed potential answers. Our research has pointed to a new answer, the paramount power of frequent business model innovation that appeared in the last decade, a source of continuing competitive advantage that few companies are considering or pursuing.

In the following section, we discuss a combination of technology and nontechnology examples to explain the key lessons of that research.

What Are the Key Lessons To Be Learned from Continual Business Model Innovating Companies?

First, the effective CEO establishes an unchanging business model innovation vision that includes an expectation of regular business model replacements. Mr. H.K. Desai, CEO of QLogic, and his colleagues saw that their base business of providing disk drive controllers for personal computers was going to be a terribly fluctuating business. The company concluded it needed to diversify into better markets where it could create increasing competency advantages based on its understanding of communication between computer hosts and storage devices. No one knew where those markets were for sure, but experimental developments soon established a series of breakthrough products. Those successes created new knowledge and capability advantages. The company continues now to build on its industry lead by preemptively pursuing all areas of technology that areevolving into its knowledge focus. As a result, QLogic is now the only company to provide all of the needed communications components for many low-cost, high-performance mass storage applications. During the technology recession of 2001-2002, the company saw its revenues dip only briefly before resuming a rapid growth trajectory as its market share rapidly expanded. The dual vision of better, more stable markets and its desire to have a knowledge advantage reflected in its products keep the company focused on making the needed business model innovations as rapidly as they are economically feasible.

Cytyc has an unchanging business model innovation vision that has directed the company to more productive business models. Cytyc seeks ways to improve women's health through better testing. As a start-up, the firm pioneered a new form of Pap-smear testing that is more accurate than its predecessor. Since then, the firm has been developing automated ways to read the test that add further accuracy. This is important because if a woman has cervical cancer and the disease is discovered early, she can almost always be cured. Previously, many women received erroneous information about their risk of cervical cancer. Currently, Cytyc is also providing a new test for detecting breast cancer in its earliest stages. With both tests, the firm was a pioneer in getting insurers to break with past practices and pay more for new, improved tests. These precedents are important for broadly encouraging the development of improved early-detection tests for other life-threatening diseases.

In the next part of this essay, we discuss more technology and nontechnology examples to explain the key lessons of our business model innovation research.

If you enjoyed this part of the essay, please read the many related essays that precede and follow in the series. You can find a menu of these essays under "Activate Continual Business Model Innovation" at this Amazon address: http://www.amazon.com/exec/obidos/tg/cm/member-guides/-/A1K1JW1C5CUSUZ/102-9172841-8888942

At the same Amazon address, you can also find essays to learn about business model innovation by small businesses under "Advance Your Small Business" and operating model innovation by nonprofit organizations under "Accelerate Developing Non-Profit Leadership Talents."

If you would like to learn more about business model innovation, other books we recommend for having valuable information on aspects of this task include:

'Double-Digit Growth: How Great Companies Achieve It-No Matter What'; 'Becoming a Category of One: How Extraordinary Companies Transcend Commodity and Defy Comparison'; 'Lean Thinking : Banish Waste and Create Wealth in Your Corporation, Revised and Updated'; 'COMPETITIVE STRATEGY : TECHNIQUES FOR ANALYZING INDUSTRIES AND COMPETITORS'; 'Competitive Advantage : Creating and Sustaining Superior Performance'; 'The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (Management of Innovation and Change Series)'; 'The Innovator's Solution: Creating and Sustaining Successful Growth'; 'Losing My Virginity: How I'Ve Survived, Had Fun, and Made a Fortune Doing Business My Way'; 'Plain Talk : Lessons from a Business Maverick'; 'Purple Cow: Transform Your Business by Being Remarkable'; 'MANAGEMENT CHALLENGES for the 21st Century'; 'Re-imagine!'; 'The Pursuit of Wow!'; 'Seven Habits Of Highly Effective People'; 'Good to Great: Why Some Companies Make the Leap... and Others Don't'; 'The Tipping Point: How Little Things Can Make a Big Difference'; 'Positioning: The Battle for Your Mind'; 'Influence: Science and Practice (4th Edition)'; 'How Customers Think: Essential Insights into the Mind of the Market'; 'The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market'; 'Winning at New Products: Accelerating the Process from Idea to Launch'; 'Diffusion of Innovations, 5th Edition'; 'Gaining and Sustaining Competitive Advantage (2nd Edition)'; 'Creating Customer Evangelists: How Loyal Customers Become a Volunteer Sales Force'; 'Unleashing the Ideavirus'; 'Emotional Branding: The New Paradigm for Connecting Brands to People'; 'Lean Six Sigma for Service : How to Use Lean Speed and Six Sigma Quality to Improve Services and Transactions'; 'Topgrading: How Leading Companies Win by Hiring, Coaching and Keeping the Best People'; 'Leadership and the One Minute Manager : Increasing Effectiveness Through Situational Leadership'; 'Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value'; 'Primal Leadership: Realizing the Power of Emotional Intelligence'; 'The 22 Immutable Laws of Marketing : Exposed and Explained by the World's Two'; 'PRINCIPLE CENTERED LEADERSHIP'; 'Delivering Knock Your Socks Off Service'; 'Full Steam Ahead! Unleash the Power of Vision in Your Company and Your Life'; 'The 80/20 Principle: The Secret to Success by Achieving More with Less'; 'Love 'Em or Lose 'Em: Getting Good People to Stay'; 'Managers as Mentors 2 Ed: Building Partnerships for Learning'; 'How Breakthroughs Happen: The Surprising Truth About How Companies Innovate'; 'The Experience Economy'; 'Marketing Management'; 'The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making (3rd Edition)'; 'What Clients Love: A Field Guide to Growing Your Business'; and 'Built to Last : Successful Habits of Visionary Companies'.