Content provided by Scott Kubie, CLS Chief Strategist

Lately I’ve read a bevy of articles regarding businesses and organizations whose business models are “at risk.” These organizations have been under pressure for years, but making changes has been very hard to do. One of the biggest challenges is to realize that the pace of change is no longer incremental, but transformational.

For example, the Thunderbird School of Global Management, a highly respected international business school,  was forced into a strategic relationship with a for-profit education operator. The way education is being delivered is undergoing a large transformation as technology allows courses to be shared more widely. Thunderbird has also seen lower donor contributions and increased competition in the international arena. The past three administrations had made changes, but couldn’t get ahead of the pace of change.

The U.S. Postal Service is in similar straits. It has lost $41 billion since 2006. It does a healthy volume of business, delivering nearly 70 billion pieces of first class mail in 2012. But it is structured to deliver the 100 billion pieces it delivered a decade earlier and the losses keep mounting up. Its owners and stakeholders, represented by the Congress and President Obama, won’t allow reforms like ending Saturday mail delivery, cutting healthcare contributions, and reducing the number of post offices. Even these changes probably aren’t enough.

The example that strikes closest to home is the decline of the bookstore. I hate shopping, but I love to buy books. Barnes & Noble’s situation is so bad it was the subject of a Wall Street Journal article titled, “How to Rescue Barnes & Noble? Here Are Ideas from Five Experts.” E-books, online book stores, and discount retailers have all pressured B&N. Some changes have been made, but no one seems to like them very much.

How do we avoid a similar fate?

I have a few suggestions:

• Watch the edges of your business as well as your close competitors – most industry transformations come from outside your immediate competitors
• Pay special attention to marginal customers who cancel  – this includes e-mail, Amazon, and online courses or content
• Have an identity and a brand – allow potential customers to easily identify your expertise
• Serve the customers you wish to attract – make sure your service offerings match how your target customers want to use you
• Choose to be bad at something –  in the book “Uncommon Service”, Frances Frei and Anne Morriss encourage firms to be excellent at the services that matter to core customers and terrible at the ones that don’t

Technology is enabling new business models in lots of industries, including the financial industry. Make sure you’re one of the survivors.

If you have thoughts on the potential threats to financial planners or asset managers, leave us a comment below.

1699-CLS-08/20/2013