B&O neutered

Case

The Danish design icon, B&O, is in deep, deep trouble. The company was bleeding heavily before the crisis, and now they are looking to raise 400M DKK in new capital in order to weather the Covid-19 storm (or at least that’s the convenient excuse).

The problems at B&O run deep. Back in the day it was a luxury icon. You spent money on their nicely Jacob Jensen designed stereos, TVs and speakers just to show off to other people and send a message that you could afford it, and they – most likely – couldn’t.

Today Samsung, LG, Sonos and what have you is not only considered just as good but better. Because function and affordable cost has taken over from form and high cost (except pretty much for Apple, which I consider somewhat of an outlier that just proves the point).

After having taken professor Scott Galloways Strategy Sprint course on what characterizes companies that grows to be trillion dollar companies, I decided to do the reverse exercise:

Can the T-Algorithm help explain why some companies – in this case B&O – go in the opposite direction and is moving closer to bankruptcy than world domination?

Maybe. It is worth a try. So here goes:

Appeals to Human Instinct? Does B&O’s products appeal to the Brain, the Heart, the Gut and/or the Genitals?

You could argue that when it was a real ‘thing’, it appealed to the Genitals, ie “I’m a better off and more attractive and thus a better mate for you because I can afford spending an obscene amount of money on a stereo?”

But now? Not more. It has zero sex appeal left. Zero. It no longer sends a message of testosterone to own and display B&O. The brand has – so to say – been neutered. Ouch.

Mark? Failed.

Career Accelerant: Is B&O a place young talent goes to work to further their career?

Can they attract the best and brightest? B&O had a kind of a second coming with their Play spin-out brand for headphones on-the-go a couple of yours ago. The team behind was younger, bright, skilled and ambitious.

Success followed in a tough Red Ocean-market. And then for some inexplicable reason, B&O decided to ditch the Play brand and move it into the old brand fold to try to breathe new life into their comatose brand patient.

Guess what happened? Great people started to get new great opportunities. Elsewhere.

Mark? Narrow pass but trending towards Failed.

Growth & Margins: Has B&O been able to maintain a business with high growth and high margins?

On the face value of their last several earnings calls…eehhm…not so much. In fact quite the opposite. And that’s me being super generous.

Back in the day when their design appealed to mating (see Genitals above), they had a fighting chance. When customers figured out that the hardware was essentially the same as in much cheaper competitive products, and they didn’t want to overpay for a fancy wrapping, they kind of lost their mojo.

Mark? Failed, but more due to market circumstance than their own doing. Except for not really being able to keep up with the times in terms of great, valuable design.

Rundle: Does B&O have the opportunity to create an attractive bundle that can form the basis of a business relying on recurring revenues?

Absolutely. Not. In. A. Million. Years. Next question.

Mark? Failed due to No Show.

Vertical integration: Does B&O already have or are they able to create vertical integration through their supply chain?

Well, they have been sort of trying through their franchised brand stores. However, they have turned out to be more of an offloading dock for stock products sitting idle in warehouses, because no-one seemed really willing to buy them.

They were instead stashed away in stores and as a result the franchise owners ceremonially cried quarter after quarter about too much inventory in their stores leading to even more ceremonially write-downs by B&O.

Not exactly efficient, let alone profitable.

As for the supply chain backwards there is no room for vertical integration. Apart from a few inhouse components and technologies, the vast majority of components in B&O products are commodities you can source all over, and B&O has for a long time been way too little a player to really be able to exercise pressure on the supply chain.

Mark? Failed.

Benjamin Button Product: Does B&Os products become better with age and/or use?

Not really. It’s home electronics essentially, and they don’t age very well. Of course there is a secondary market for some of their design classics, but it would be a far, FAR cry to call that a Benjamin Button effect.

Mark? Failed.

Visionary Storytelling: Does B&O have a compelling story to tell?

Well, yes they actually do. They have a great story steeped in tradition, excellence in design and sound (primarily), and they are still pushing the exclusivity of the experience super hard.

The problem is that the size of the audience who is listening – and who even find the story interesting at all – is diminishing.

Every time a senior citizen dies, one more of those who remembered what B&O once was and think they still are goes away. Brutal but true.

It doesn’t help B&O that a lot of the narrative the past 10-20 years has been about the constant crisis of the company, the eternal struggle to survive and stay relevant, which brings me to the last point…

(Mark? Passed but with a mediocre grade).

Likeability: Does B&O have a management team that customers, partners and employees have confidence in?

In short: No! Why? Because it is super, f****** hard to be likeable, when you change your CEO once every year (OK, maybe not exactly that often but very often).

B&O have burned through several CEOs over the last 20 years, and the story has been anything but consistent; one minut it is a branding guy with no real message in charge, the next minute it is an engineer, who then gets replaced by someone who nobody knows who is, because – yes – he is THAT anonymous.

I mean, really?

B&O has essentially been left rudderless. There has been nobody to truly rally around, who could articulate that the company may be akin to a plane in flames flying on the last fumes, but we will all eventually get down safely and live to take another flight – with no flames.

The man at the helm has essentially been AVOL for years.

Mark? Utterly Failed. In an abysmal way.

Which ultimately reflects back on the parents of this particular student; the board.

Having said all that and the above using the T-Algorithm, it should thus come as no surprise, why it is that B&O is closer to being a Zero Dollar Company soon than ever a Trillion Dollar Company in the future.

(Photo: Pixabay.com)

Pick up the learnings

Case, Work

A while ago we applied for the summer 2020 batch of Y Combinator with our FIXDIT project. Alas, we didn’t make the cut from the thousands of startups that applied.

While that of course is a total bummer, the whole process did allow us to revisit the whole project, look at it with fresh eyes and come up with some new perspectives and ideas, which I think has generally strenghtened the project. It also allowed us to try a few new things and approaches that will serve us very well going forward from here.

This is just to say that when you put yourself into play, even if you hit the wall, there is an opportunity to reflect and learn that will ultimately get you to the other side in a better and stronger shape.

(Photo: Pixabay.com)

If I owned a newspaper…

Case

Over the years I have worked in and written extensively about news media. Sometimes I have felt the love, and sometimes that love has been of the tougher kind with people (wrongly) suggesting I must feel a burning hatred towards old media (which I BTW don’t at all). So with that said I don’t know why on Earth, I should be writing the following.

But after a ton of discussion over the past weeks, months and even years on Twitter, I thought I wanted to do a thought experiment to myself:

“Mads, what would you do, if you woke up tomorrow and owned a newspaper?”

Myself asking myself a question

Well, here goes (after a deep, deep sigh). I would:

  1. Get out of the ‘Breaking News’ clickbait business (if I was in it) NOW! and leave it to pretty much anybody else and his dog(s). There is absolutely nothing to be won in that space from both a business and end user value perspective, and it is detrimental to long term viability of the newspaper as such. In sum: It is an easy call to make, and it would be made within the first couple of hours after taking charge.
  2. Resist the temptation to try to continue the uphill struggle of wanting to be ‘something for everybody’ and go for ‘crucial for somebody’ instead. And then start working out what the heck that means in terms of the end user profile, the editorial profile and services, I could offer in the context of the readers and users, the newspaper should truly serve in the very litteral sense of the word.
  3. Reduce print to a weekend thing at the very maximum and perhaps (in time) more towards a monthly publication (if at all), make the necessary cutbacks to the cost base, and then go for offering our content via the distribution methods and in the scenarios where my readers and users are and can find time (or free some up) for actually engaging with the content and getting the value add to their daily lives.
  4. Draw inspiration from the point above to start figuring out if there were areas to branch out to. Ex. if sound/podcasting seem to be the way forward (as witnessed in inspirational ways here), I would ask: “Are there other areas, where sound/podcasting has a unique strenght, where we could make a play that makes viable sense for the business?”
  5. Use the insights to get to a position where we were the best and brightest in terms of understanding what drives perceived value of media within our chosen niche or geo. After having figured that out then use that knowledge to create an algorithm for a new digital subscription model that rewards subject matter expertise, facts and supporting the daily lives of our readers and users. I would rather be “Mr 10 Percent of Something” with a flexible crew of killer freelance contributors than “Mr 100 Percent of Nothing” with a big fixed cost editorial staff.
  6. Build out a super strong, compelling digital subscription offering. Get rid of traditionel advertising and focus only on value adding partnerships with the emphasis always being on the pay-ability of the core offering in the eyes of readers and users.
  7. Make an absolute effort – again and again – in getting the best and brightest contributors onto the platform and do whatever needed to be their new best friend. Quality pays – and can command payment. (And probably shed some potential deadwood from the editorial staff in the process).
  8. Get a better understanding of the whole value chain of the things from above that proved to generate the most value for readers and end users and then investigate if there were other places in the same value chain other than the very end, where I could actively engage to play in a bid to drive new revenues and diversify the business without blowing it up.

What would you do?

(Photo: Pixabay.com)

Crossing our fingers

Case, Work

A couple of weeks ago we applied (late) for Y Combinator with FIXDIT, our take on making the market work for homeowners and contractors again.

I participated in Y Combinators Startup School this winter, and upon graduation, I got an email saying that since we were among the 10% participants in the school that continually got the most positive feedback from our peers, they recommended that we apply for the real program even though the deadline for submissions had officially passed.

So we did. It was a hectic weekend with the team, but we submitted, and now we’re crossing our fingers that we will make the cut for this summers programme, even if it is going to be a bit different (probably mostly remote) than normally. There is no time like crisis time to give fresh ideas on known problems a decent spin.

(Photo: Twitter-screenshot)

Ready to iQnite

Case, News

Yesterday we closed the submissions for our “iQnite Case Competition on Climate Change” with close to 60 dedicated and passionate challengers signed up for the task of trying to create new innovative solutions to tackle climate change.

I am blown away by the richness of ideas and the profiles of the people participating. It took a lot of effort and hard work to get the word out, and we have definitely learned a lot in the process. But it was totally worth it. On the other hand, I am slightly baffled that for all the talk about the need to do something more related to climate change, there weren’t more who were willing and/or able to step up to the plate and actually make an effort.

Next up is planning for the first of two bootcamps. It will take place on November 15-16, and it will be a real challenge to do a programme that fits with the diversity of ideas, industries and backgrounds of the participants. But it is all part of the fun and the experience. So bring it on!

(Photo: Screenshot)