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. 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.

Central Parking Makes Parking Less of a Hassle

One of the most interesting cases we located from our Value Line search involved automobile parking services. Founded as a single parking lot in the late 1950s, Central Parking enjoyed enviable success in the process of reaching global industry leadership in 1999. Along the way, the company helped create many of today's most desired parking innovations, and in doing so paved the way for its own remarkable progress. For more information on Central Parking, visit www.parking.com.

Parking lots were simple affairs in the 1950s, usually being a small plot of asphalt near the city center with a small kiosk from which the single, sloppily dressed attendant collected payments and cared for ignition keys. Today, parking facilities at airports and sporting facilities may accommodate tens of thousands of vehicles while offering a variety of services for parkers virtually unheard of in the 1950s: valet parking; car servicing; car washes; and having cars prewarmed or precooled before pickup. In mixed-use retail, office building and commercial locations, you may also be able to drop-off and pick-up your dry cleaning, be escorted to and from your car, and leave your shoes to be repaired.

How did the industry make such a dramatic transformation? The answer is significantly connected to visionary leadership by Central Parking. Looking out over that first parking lot in Nashville, few, however, would have seen the opportunity to provide today's services. How did Central Parking lead the industry into today's progressive practices?

The company's chairman and CEO for most of those years was Mr. Monroe J. Carell, Jr. He was educated at Vanderbilt University as an electrical engineer and practiced that profession for seven years before being persuaded by his father to join the family's small parking business. Because he had been trained and had practiced as a professional, Mr. Carell was quick to notice that there was no professionalism in the parking industry at the time. He set out to change that, and over time began recruiting college graduates to work as managers and training them to operate in a professional way. No one else was upgrading their staff in this way.

The firm's original business model was predominately to manage parking facilities for others who owned the property. There was little competition for such accounts because the profits per location are small. Larger competitors would often not even bid on the jobs, feeling that the potential profit wasn't worth the effort. These competitors preferred situations where they could own the property or get a long-term lease at a fixed rate. Central Parking's facility owner-customer usually paid the firm a percentage of revenues, and provided further incentives for higher profitability. Central Parking, in turn, also paid incentives to its managers to encourage them to find ways to make the facilities more profitable. With limited investment capital, Central Parking had little choice but to pursue this niche business. For 15 years, the firm focused on doing the best job it could in managing parking lots of the traditional sort for others. With little investment required, however, Central Parking was able to grow rapidly with this business model.

In the next part of this essay, we continue with the Central Parking example 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'.