Marco Bertini - The Ends Game (Management on the Cutting Edge)

Most modern organizations strive to take good care of their customers. They deploy market research to gather insights that can help them develop meaningful products and services that stand out from those of competitors. They also think about their customers journeys to a purchase, trying to engineer experiences that are at once practical and engaging. Finally, todays organizations are constantly tweaking their internal structures and incentives systems to relate and respond better to the market.

All this effort is excellent. Yet, from where we stand, it is only half the battle.

While many businesses tout their innovative spirit and proudly claim to put customers at the heart of what they do, we seldom see the same determination and steadfast focus in the way they convert market potential into a financial return. If given the chance, customers would gladly pay for the solutions to their needs and wants, the ends they seek, rather than the means to achieve them. After all, they only buy products and services because they need or want something from them. Yet a combination of neglect, inertia, fear of change, and comfort with the status quo implies that most companies today still promise results but earn revenue on what comes off the factory floor, so to speak. In fact, in our experience, companies seldom challenge what they ask their customer to pay for (the revenue model question) and instead obsess over the secondary, far more tactical issue of how much customers should pay (the price question). It is as if the rules of the game in a market are inherited and immutable.

We came to write The Ends Game: How Smart Companies Stop Selling Products and Start Delivering Value because we are uncomfortable with this picture and want to shift the focus of the discussion. The rules of the game are far from immutable, and they certainly should not be taken for granted. This is increasingly true as modern digital technology delivers sharper insights into what products and services actually do to customers, empowering them to demand accountability. Business leaders and policy makers need a roadmap to develop and implement the right revenue model given this opportunity and before it becomes a threat.

At the same time, we wrote The Ends Game knowing that our student and executive audiences are interested in understanding the motivation for, and difference between, alternative modes of generating revenue. The radical and disruptive recent changes across many industries are rooted in a conscious, technology-enabled shift in revenue models. Accordingly, this interest at times stems from the realization that new technologies can help them shake things up in a market, while at other times it stems from an imminent and present threat of disruption by a bold and nimble entrant.

As academics, our first intuition was to turn to the literature for guidance, but here we found excellent treatments of individual business models such as subscriptions (the membership economy!) and collaborative consumption (the sharing economy!) rather than a general theory capable of explaining why these models exist and, importantly, how to think about them as a whole and decide what model is best deployed when.

In many ways, The Ends Game is about the future of commerce. We argue that accountability is fast becoming the critical currency of competitive advantage. This change is taking place in just about any industry we can think of, albeit at different speeds and to different extents. As such, while all the revenue models that we discuss exist, they are not equally represented. For example, while subscriptions are all the rage at the moment, in our view they are a stepping stone toward other, more customer-focused revenue models rather than the final point. The same applies to collaborative consumption. Accordingly, the book describes a continuum of plausible revenue models that allows organizations to locate their position in the broader scheme of things and identify the way forward. While we are confident about the direction of change, the pace of that change is less clear.