Why Ideals are the New Business Models

Take your pick: newspapers, autos, mobile, solar — across the zombieconomy, boardrooms are sweaty-browed with the task of business model redesign. It's the worst downturn for the better part of a century: business model redesign — lower costs, greater efficiency, choosing the most profitable customers and revenue streams — should be every boardroom's first priority, right?

Nothing could be more wrong. In fact, today's market leaders, from Google, to Apple, to Nintendo, are revolutionary for different reason altogether. Conversely, companies and investors focused on business models are simply applying yesterday's obsolete logic to today's novel problems.

Here's the score.

Business models aren't today's fundamental economic challenge. There's nothing wrong with simple, one-sided business models. In fact, the opposite is often true: business model innovation is exactly the wrong thing to focus on. Consider finance. Securitization was a breakthrough business model innovation for banks. Everything was remixed by everyone. Yet, toxic junk was mostly what was flowing through that new business model. Business model innovation amplified value destruction. Banks who didn't play the securitization game — and stuck to simple, one-sided deposit-taking business models — are today's survivors.

Creating something valuable in the first place is. Contrast banks with Threadless. Threadless has an age-old business model: selling T-shirts. The only minor-league innovation is compensating designers. Yet, Threadless is redrawing the boundaries of the possible in apparel. It is how production and consumption are organized — not merely how goods and services are bought and sold — that makes Threadless so radical.

When we can make valuable stuff, there are a plethora of business models to choose from, some old, some new, some untested, some tried and true. When we can't, no amount of business model innovation can save us from implosion.

"Monetizing" + "business models" = zombieconomy. The reason monetization is a dirty word is simple. It blinds us to value creation, at the expense of value capture. When we seek to monetize, we end up chasing the same old lame competitive advantage. I win, you (and you, and you) lose. Put another way: "monetizing" toxic junk — from CDOs, to Hummers, to McMansions, to Big Macs - is how we got into this mess.

It is by rediscovering how to make stuff that's not toxic junk in the first place that we'll get out of the mess lame, evil, brain-dead 20th century thinking has left us in. That's the challenge of a new generation of revolutionaries. And it's not about new business models: it's about reconceiving authentic, deep, value creation.

Forget business models. Focus on ideals. Reconceiving value creation depends on new ideals. Ideals shape what we wish to achieve in the first place: freedom, peace, fairness, justice — all are ideals vastly more powerful than mere business models. That's because they are what ensure the value we are creating is authentic, deep, meaningful value — not just the shabby, threadbare illusion of value.

Tomorrow's prosperity was stolen by yesterday's so-called leaders. In a world where people are becoming rapidly worse and worse off, there is nothing more revolutionary than an ideal. Here are five ideals that we think are changing business, economics, and the world.

So the next time you hear an old dude banging the business model drum, or worse, the sounding the "monetization" bullhorn, let him know the 20th century was yesterday. Today's challenge is building a better economy — not hawking the same old mass-produced, toxic, self-destructive junk slightly differently. Challenge him with this: you've got a business model. But do you have any ideals? Because without the latter, the former is worth about as much as Bear Stearns, Lehman Brothers, or Detroit.

By Umair Haque