"Business models with identified sources of income were not always the norm" - Mitch Thrower

This has been a trying week for me as I interacted with a couple of organizations with whom I frequently do business.  I have not had what I would call "customer-centric" experiences.  In fact, I have become convinced that the two examples I am about to lay out should scream for some fresh "business model innovation" thinking.

Putting my rants aside for a moment, let's first start out with what "business model innovation" means.  I really like the definition on Wikipedia, "Business Model Innovation refers to the creation, or reinvention, of a business itself.  Whereas innovation is more typically seen in the form of a new product or service offering, a business model innovation results in an entirely different type of company that competes not only on the value proposition of its offerings, but aligns its profit formula, resources and processes to enhance that value proposition, capture new market segments and alienate competitors."

Okay...rant mode back on...

Business Model Innovation Need #1 - Delta Airlines

• I am a Silver Elite flyer on Northwest/Delta Airlines.  Not too impressive, but still...I fly more often than the majority of the general public and most business people.  After accumlating a hefty amount of frequent flyer miles through actual flights (Delta profit), using the airline sponsored credit card (Delta profit) and shopping online using the airline sponsored site (Delta profit), I booked an award flight for my trip to the PDMA Annual International Conference this Fall.  The conference is at Disneyland, so of course my wife and daughter eventually wore me down with "Can we come? Can we come? Can we come?"  I call the SkyMiles reservation line to see if I can move from First Class back to Coach so I can sit with my family on the flight out to Anaheim.  The nice lady says, "Sure, we can cancel your existing reservation in First Class and book a new reservation in Coach but you will need to pay a $100 cancellation fee.?  Huh?!?!?  Why couldn't they just allow me to pick a seat from anywhere on the flight?  No can do apparently.  Left the flight as is...and now I am going to feel like a jerk sitting in First Class while my wife and daughter sit in the back.
• Delta (and they aren't alone in this so its not entirely fair to single them out) is using a business model that counts on making profit off of customer misfortune and/or need to change plans.  My moving seats on the same airplane would have cost Delta absolutely nothing. 
• This is why Southwest Airlines is one of the few growing and profitable airlines.  They don't charge fees for changing itineraries.  They don't charge for luggage.  Their business model is focused on making life as easy as possible for customers at the lowest possible rate. 
• It seems like some fresh thinking here could improve even upon the model Southwest uses

Business Model Innovation Need #2 - Associated Bank

• Associated Bank is a Midwest regional bank headquartered in Green Bay.  It is currently my bank of record, but not for long...and here's why.  I frequently reconcile what is in my checking account by viewing my online statement, which is refreshed daily and provides a pretty good snapshot of my recent transactions.  In my last review, I noticed a $20 Overdraft Protection Fee.  Strange...I have plenty of balance in my account...didn't even come close at any point in the year in fact.  So I call a banking representative to inquire about the cause of the fee hitting my account.  She explains, very politely, that this $20 fee is an annual fee to simply have the Overdraft Protection Line of Credit made available to me.  Wow!  I am one of those people that banks can count on to keep my account in the black, pay bills early and generally be a good credit risk.  I didn't need or use the services of the Overdraft Protection Account in the last year.  But let's say that I did need to utilize the line of credit...that "privilege" would have come with a hefty annual percentage rate charge.  But NOT using it still costs me $20 per year.   Well...not anymore.
• Again, this is a business model that capitalizes and profits from customer misfortune and/or convenience.  Add to this specific example other fees that are common...ATM convenience fees, online banking convenience fees and the myriad of other "convenience" fees.
• I have decided to go with a local credit union that utilizes a business model that doesn't include nickel and dime'ing me with fees for things I find "convenient."
• The banking/financial services field is ripe for business model innovation opportunities

In some fantastic work done by Clayton Christenson, Mark Johnson and Henning Kagermann in a December 2008 Harvard Business Review article titled, "Reinventing Your Business Model," the authors list some key areas where innovation and business models intersect:

1. Customer Value Proposition
2. Profit Formula
3. Key Resources
4. Key Processes

This is where major or breakthrough or radical innovations are born.  Solving customer pain points, instead of capitalizing on them, leads to competitive separation.   Sometimes these innovations occur at the product and/or service level.  Sometimes these innovations occur at the business model level.  Delta's and Associated's business model choices have forced me, the customer, to seek solutions and business models provided by others...their competitors. 

What are the product, service and/or business model choices YOU are making that may be making YOUR CUSTOMERS (and potential customers) to look somewhere else?  Find them now!  Fix them first!