NEXT JUMP was founded in 1994, when Charlie Kim was a college student. The company’s initial business was to insert coupons from local merchants into universities’ guide books for students. Since 1997, Next Jump has moved its business online, providing a platform for corporations’ employee discount programs, affinity organizations’ member discount programs and sellers’ customer loyalty program. This platform gathers data from companies, customers and credit-card issuers and uses those data for “microtargeting” advertizing – from carefully segmented consumer groups down to individuals, resulting in an astounding 60% click-through rates, compared with the industry’s top performance at 5% and a staggering transaction rates – 9%, in contrast to industry standard of 0.1%. Today, Next Jump’s services benefit 300+ Furtune 500 companies, more than 10 million customers and 28,000+ merchants. Powered by Next Jump, consumers get relevant information and great deals, merchants enjoy better returns on their marketing investments, corporations, affinity groups and marketers attain more loyal employees, members and customers. It is truly a platform where everyone wins.
The extraordinary achievement at Next Jump and other market leaders calls for reconsideration of conventional strategic thinking.
Match Your Vision with Market Opportunities What defines a dream future - vision - is surprisingly similar from company to company in essence, even though the descriptions are quite different. Executives want to achieve market leadership and higher-than-average return on investments. A common flaw in vision development is that the dream futures are not aligned well with market opportunities. Like everything else unfolding in front of us, opportunities come and go despite people's will; they follow nature's course - interacting with each other and leading one event to another. Successful executives identify emerging opportunities by closely observing the changes and trends taking place in the market and seize them as they become available. In his book “The Road Ahead,” Bill Gates described how he’d followed the trend of computer evolution, smaller in size, more capable in power, and less costly, anticipated the birth of personal computer and developed the vision for his PC operating systems business – a PC on every desk.
Map Stakeholders Needs to Stakeholders' Resources Once a vision is developed, executive needs to draw a roadmap to realize it. Executives often suffer from too many uncertainties in the path and not enough resources at their disposal to create value, which is the true power for growth in market place. This is like a rat drawing a circle on the ground to lock and starve himself to death in a full crop depot. As a matter of fact, resources are abundant in market place; they are in the hands of the market stakeholders - buyers, suppliers, distributors, partners and others and can be acquired through a value – resources exchange. Executives at Next Jump knows how to benefit from such an exchange – bring consumers to merchants using the great deals merchants offer and helping merchants create great deals for consumers by lowering their marketing costs through highly effective “microtargeting.” This is a revolution in corporate strategic thinking compared with what were described by Michael Porter and others. Businesses have been told to focus on developing bargaining power against individual forces - buyers, sellers, competitors and others. The value – resources exchange is the essence of the strategies at companies like Microsoft, Google, Oracle, Wal-Mart, Costco, Southwest Airlines and other market leaders. Given the fact that a market or industry usually consists of multiple stakeholders with complicated resources and needs for values, one needs to complete a puzzle by creating specific value for a stakeholder using resources acquired from others and, through value – resources exchange, obtain resources from this stakeholders to produce value for other stakeholder(s).
Develop Business Models to Ensure the Value - Resources Exchange Ultimately, the value - resources exchange takes place on one-to-one basis. Things can go wrong in various aspects, sometimes making executives wonder why the value – resources exchange does not work or is not effective well anymore. To name a few: traditional thinking among employees, greediness driven by short-term interests, and business policies that are not in line with the new strategic thinking. Costco’s business model in dealing with consumers is to provide good deals to its members by strictly containing its cost and price and to realize its profit growth by expanding its membership base, in addition to its outstanding membership services programs. Times and gain, the company has rejected notions from some of its suppliers that the it should raise purchasing and selling prices to achieve higher profitability for both of them, as long as its members tolerate the costs. Making each and every stakeholders happy in the value – resources exchange is critically important in completing the puzzle and achieving the critical mass. According to Bill Gates, his offerings were made so good to the stakeholders that stakeholders won’t look elsewhere.
Create a "Bandwagon Effect" One can hardly expect to attain market success - sustainable growth, high return on investments and making competition irrelevant–unless the stakeholders in the market embrace the business and influx of new participants accelerates. Prudent executives keep their eye on creating a "bandwagon effect," with all the efforts to achieve critical mass of stakeholders' participation. Microsoft, Google, Wal-Mart, Costco, Oracle and other successful companies all enjoyed the power of convergence in their ascendance.
As one looks back human history, the revolutionary strategic thinking seen in business world is, as a matter of fact, not new. In his book of “Tao” written 2,000+ years ago, Lao Zhi laid out the key elements of strategic framework: Tao (道)gives birth to all things; De(德) natures them; resources (物) shape them; the convergence of the power from all supporting factors (势) allows them to thrive.
OTHER BLOGS BY WINSTON
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Persuasion Story
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Thursday, December 31, 2009
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