What’s Moving My Cheese

When the form of a service changes, so does the primary business model, which of course changes the function as well. Let’s take a look over a few products and services:

Mail —> email

Books —> ebooks

DVD —> YouTube/Netflix

1040 —> Online taxes

Visa —> Paypal

CD —> MP3

Voice call centers —> forums and online chat

Direct mail —> privilege marketing

In each one of these situations, the speed and marginal cost and ubiquity and a dozen other elements of digitalness changed the interaction itself, and  the function changed too.

This reminds me of  when we talk about “being in the rat race,” but this is probably unfair and actually demeaning to the rats. Rats won’t stay in a race when it’s obvious there’s no cheese. The popular little book, “Who Moved My Cheese” showed how even smart rats quickly look for new routes to follow when the cheese is gone. Humans, on the other hand, seem to often get themselves into traps from which they never escape. Rats, move on once they realize the cheese is gone or perhaps was never there.

Rats would probably be embarrassed to be labeled “being in the human race”. We keep doing ridiculous things like continuing to ask when new technology emerges: “How does this innovation help our business?” Well, that is precisely the wrong question to ask. The correct question to ask is: “how does this innovation challenge our current business model and requires us or enables us to build a new one?”

There are projects that are possible with ebooks or Kickstarter or email that could never have worked in an analog universe. Most of the money made in the stock market today is via trading approaches that didn’t even exist thirty seven years ago.

When a change in form comes to your industry, the first thing to discover is how it will change the function and whether the cheese is moving.