HBR Case Study-Should You Adjust Your Business Model for a Major Customer?
Changing the business model can be a good consideration for the management. However, there are many factors creating an impact on the change process. Lumiscape, a prominent streetlight maker, has to consider all these factors to make the best decision in the end.
1-What is the Major Issue or Conflict in the Case?
Controversial Deal with Houston
The main issue in the case study is the controversial deal with Houston. Houston is offering $3 million for 500 streetlights. However, on the other hand, Lumiscape is looking to change the business model to depict the control of the product and enable sustainability. Thus, there are two options for the management of the company.
Different Options
One is to ignore the $3 million deal and initiate the subscription model. Another is to postpone the change and wait for a while to enjoy the deal. Streetlights are broken or impaired in different regions, and the company wants to depict proper control along with sustainability (Weiss). It seems the key issue of this given case.
2-What is the current/existing Strategy of the Firm?
Sustaining Sales Model to Increase Revenue
The current strategy of the business is to sustain the sales model to increase revenue streams. The current strategy depicts sales intentions of different key stakeholders except for Cameron. Traditional business or sales model is less risky for the management of the company. However, a stakeholder such as chief operating officer is looking to create the space for both models. The sales model is to be sustained by different stakeholders to keep revenues and profitability in the limelight. The current strategy of this company is a big barrier in product or business sustainability. It is also a good option for the company to deal with different customers in different manners to keep the interest of the company. However, the vision of Cameron is big (Weiss).
3-Where does the Firm currently choose to play? Does the Major Issue affect where the Firm chooses to Play? If so, how?
Playing Through Subscription Model
The firm is looking to play through the subscription model. Instead of selling streetlights to different cities, regions, or towns, the company wants to give these lights on rent. The company will receive monthly fees, including maintenance, installation, and software monitoring process. It is a fact that the company wants to sustain good relations with customers through the sustainability of products. Moreover, adding Wi-Fi devices in streetlights is a good approach to position better in the minds of customers. It can prevent streetlight damage and enhance customer satisfaction as well along with the best profitability.
Impact of Major Issue
Interestingly, the major issue seems a big barrier, as some stakeholders do not want to miss a $ 3 million opportunity. A change in the model is necessary for them, but the way to deal with each customer is different. For Cameron, it is a tough decision; he wants to play in the product sustainability, not for profit. The main problem affects where the firm selects to play. For Cameron, double standards can destroy the business.
4-How does the Firm currently try to win (Value Proposition)? Does the Major Issue affect How the Firm Tries to Win? If so, how?
Creating the Value for Customers
The organization tries to win by creating value for customers. Houston wants 500 LED lights to improve the situation in the town. Stakeholders want to win through the availability of products for the regular customer. However, Cameron wants to win by converting Houston. For Instance, he wants them to buy through the subscription model. If this client agrees to subscribe, it seems the business victory for Cameron. The main issue is creating the impact, as $ 3 million is the biggest opportunity of the year. Subscription model can create value for clients through product sustainability.
The Rationale of Sales Model
Sales models can also create value for the client. Houston has to spend the budget on streetlight, and they do not have options for the subscription model. It is the major impact of the issue. Cameron and his colleagues have to decide the winning situation for this company (Weiss).
5-Who are the Major Players and what are their Motivations?
Different Motivations
There are several players in the particular business process. From sales of the subscription model, different players have different reservations. For Instance, Cameron, Graham, Neil, Stacy, and manager of Houston are major players along with different considerations. It has been observed that many customers are not using streetlights effectively. It is the biggest motivation for Stacy and Cameron. They want to change the business model to streamline the better usability of products. Neil, on the other hand, always wants to increase the sales. He is an opportunist and wants to target customers to generate revenues. Being a sales head, he wanted to make this transaction and become a great contributor. He is motivated to fulfil orders and make the deal. Houston’s manager contains motivation as well, as he wants to meet the needs of the region through these lights (Weiss).
6-What are your Recommendations to solve the Major Issue or Conflict?
Using both Sales and Subscription
Well, in my opinion, the sudden change in the business model may hurt business operations. It seems tough for the company to convert from the sales model to the subscription model. There are many clients who may not have sufficient budget or intention to subscribe. The subscription may contradict the client’s business process as well. Thus, in my opinion, the company should deal with Houston with the sales model. Losing a client is bad for the business, and the company must sustain it for a long run. As far as the subscription model is concerned, a change in the internal process is required. Engineers are to be trained to make sustainable products. Except for Houston, the firm can initiate the subscription model. Interestingly, a $ 3 million deal may help the company make some internal changes. It looks the improvisation, which can lead to a steady change of company.
Yes, should Lumiscape sell the streetlights to Houston, as it is a great opportunity to streamline the financial resource and use it to better execute the subscription model in an effective and lucrative manner?
Work Cited
Weiss, Mitchell. Case Study: Should You Adjust Your Business Model for a Major Customer? 2016. 21 June 2018.
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