The new bottom line
Book
Most modern businesses work according to a "value from our operations" model. They invest significant amounts of money, skill, energy and time in technical know-how and economies of scale in productive assets, such as factories, bank branches, pipelines or retail outlets – which they use to grow and create value. They then sell this value on to customers.
'Value from our operations' wealth creation is driven by the need to maximize the productivity of the firm's core productive assets and to maximize the realizable value of these assets' output in the marketplace. The imperatives of 'value from our operations' create a business logic, which we call 'the old bottom line'. What these companies do not address is the value individuals create and experience in their own lives. Helping individuals maximize such 'value in my life' is the job of the new bottom line business. For consumer-facing companies, this heralds a radical shift in the focus of value creation, as for each individual, the ‘business’ in question is 'my life'. And the challenge is how to make 'my life' more efficient, effective and profitable.
This requires the invention of new types of businesses – businesses which focus their efforts on generating a return on individuals' personal assets, such as my operations (energy or work), my passion, my time, my information, my money and my attention. Potentially, they offer much broader, richer value than traditional old bottom line businesses. While the old bottom line business is producer-centric and seller-centric, the 'value in my life' focus of new bottom line organizations makes them person-centric and buyer-centric.
New business models
New bottom line business models offer new approaches to create value and growth. In the future, they are set to transform the way all consumer-facing industries work, whether in consumer products, services such as retailing or banking, utilities, and media. They represent a leap to new levels of value.
Three main forms of new bottom line business are emerging: trading agents, solution assemblers, and passion partners. Trading agends help individuals maximize the value of the products and services they buy and to minimize the total cost of buying, including the time and hassle involved. Solution assemblers help individuals maximize the efficiency and productivity of their personal operations. And passion partners aid their customers in maximizing the value of their life 'outputs' in terms of meaning and emotional fulfilment.
One of the core economic roles of new bottom line functions is more efficient matching and connecting. New bottom liners use their trusted position 'in my life' (including access to information from individuals) to fundamentally reengineer the processes necessary to match supply to demand, enriching their content while dramatically cutting their costs. This creates powerful new win-wins with traditional suppliers, for whom new bottom liners represent a more efficient route to market.
The new bottom line has a social dimension, too. The pressure for 'value in my life', which is now transforming relationships between consumers and producers is also transforming relationships between employee and employer and between citizen and public institution. Companies and governments are under pressure to become organizations that 'work for me'. Companies need to reflect and promote values in areas such as corporate social responsibility and ethics, as well as offer economic value.
Finding the new bottom line for old bottom line business
Traditional 'value from our operations' companies are finding it hard to keep pace with the pressure for new bottom line value. The question for today's manufacturers, retailers, financial services firms, media companies or utilities is whether to resist or ignore the pressure for greater value in my life, to work with new bottom liners to 're-engineer' the forms of value they offer, or to migrate their core business towards a new bottom line business model.
The book shows old bottom line businesses how to find a viable solution suited to their individual circumstances.
