Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption

by Thales S. Teixeira

As we’ve seen in this chapter, business models have grown more diverse and complex over time. This appears to be a general phenomenon: as markets develop and grow, the number of unique business models evident among competing companies increases, and the models themselves become increasingly refined, specific, and differentiated from one another. As an analogy, consider the humble lemonade stand that kids set up on their front lawn. The model is simple and age-old: obtain ingredients at subsidized prices (i.e., free from Mom and Dad), make lemonade, and sell it at a huge markup. Kids in neighborhoods across America have competed in this way. Today, in many industries, you no longer see the equivalent of simple lemonade stands winning out. Rather, you see lemonade entrepreneurs who give away lemonade for below-cost prices so they can get long lines of captive customers lingering around their yards, like Costco does. Then these entrepreneurs might entertain customers while they wait and, like Ryanair, sell them “add-ons” like snacks or bathroom privileges. That’s where the real profit now resides. Or lemonade entrepreneurs might engage a band to entertain their customers and require the band to pay them for the chance to promote themselves to their captive audience, like new media companies do. Or entrepreneurs might make money selling their captive customers insurance and warranty contracts that provide for “thirst quenching guaranteed,” like car dealers do. It all sounds ou...