Wednesday, March 10, 2010

Ideas from the business world that libraries need to think about

A while back, I started getting emails from Booz-Hamilton and their web publication Strategy + Business. I suppose I have always kept my finger a little pulse on this part of the world because of my graduate degree in business, and my start as a business specialist in public libraries.

There were two posts/articles recently that had me thinking about what they mean for the library world. That is why they are rating a whole separate post.

The first is about a topic near and dear to my heart, the health industry. Readers know that I have had my issues with health insurance carriers. And certainly there is the current national debate on health care. (Well, nominally it is about "health care" when in reality it is about how we will pay for health care.)

This article has much broader implications. First its title: When Disruptive Integration Comes to Health Care. In a way it is talking about how a "mature" industry changes and deals with changes. Besides the obvious (to me) links about how health care funding affects libraries (in our budgets if nowhere else), there is a much broader picture presented.

They talk about disruptive innovators. Let me paste the important paragraph which describes this concept and what is happening in health care.
Disruptive innovators are low-margin, experimental upstart entrepreneurs in an established market, who take advantage of untapped and emergent customer groups and other unfilled opportunities to build new types of business and ultimately reshape the industry. Established incumbents, tied to their existing customers and practices, have a great built-in incentive to overlook the potential impact of these new competitors. Therefore, they ignore them until the upstarts grow large and powerful enough to displace them. It has happened in a variety of industries, including computer components, steel, and media.
So what does this mean for libraries? Well is SkyRiver a disruptive innovator? I have seen a number of articles about how they are trying to provide a lower cost alternative to cataloging using OCLC.

Are there places out there which are offering alternative library services? What about the pay-to-get-an-answer-on-your-cell-phone service so poorly named KGB? (I talk about my opinion here.

As librarians we need to pay attention and to think outside the box.

The second article continues that line of thinking. It is Six Industries in Search of Survival. The industry which most sounded like a library to me was retail banking. I checked out the longer article (pdf) which was noted in the longer piece. Here are a couple of important quotes:
... the focus of banks will shift from acquiring new customers to building deeper relationships with existing ones. Banks must surgically identify and capture growth opportunities within their customer base. To do that, banks must significantly revamp their capabilities and evolve their organizations to: target the most attractive customer segments; harmonize the roles of segments, products, and channels; better align corporate strategy and risk; and pursue sustainable cost reduction, such as rationalizing the branch network.

By 2014, Gen Y will comprise the largest segment of the U.S. workforce and by 2025 will account for 60 percent to 70 percent of the employed population. Given its size, connecting with this generation is a must for banks. To do so, they will need to better integrate their channels and interact with customers through each customer’s channel of choice. More than any previous generation, Gen Y is shaped by the Internet and ubiquitous connectivity.

No matter which customer segment a bank targets, it must reorganize around that customer. ... Most banks remain siloed, with limited cross-product or cross-channel integration.

And then the big conclusion:
Booz & Company research shows that mass market customers prefer to conduct their banking at branches, accounting for 70 percent of traffic and resource consumption, yet they are half as profitable as mass affluent customers. The rise of Gen Y will only put further pressure on the traditional bank branch network, which banks may soon be unable to afford. Indeed, we expect that a major rationalization of the branch network will emphasize electronic channels and alternate formats. In the future, for example, branches may cater to specific customer segments, becoming “wealth” branches or “small business” branches, with fewer generic branches open to all.
Now, I don't see libraries ever failing to serve "all," I could conceive of a network of smaller branches spread across a community.

Some interesting thoughts.

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