We are currently witnessing a remarkable era of business model innovation, as disruptive models are revolutionizing various industries. Examples of such innovations include subscription newsletters like Medium or Substack challenging traditional news media, in-home streaming overshadowing cinema theaters, door-to-door delivery services catering to fine-dining patrons, and Zoom replacing traditional academic institutions while also displacing education on the go with short courses.
These innovations are not just effective but also result from a profound restructuring of business models, rather than solely from technological advancements. Even professional sports, impacted by Covid-19 and the loss of match revenues, have had to adopt new business models to survive. However, not all business model innovations have been successful, as seen with JP Morgan Chase and twelve of Europe’s top football teams’ short-lived attempts at innovation, which demonstrated both poor business model design and inadequate industry leadership.
The proposal was to establish a new pan-European football league with permanent members, including Arsenal, Liverpool, Manchester City, Manchester United, Chelsea, Tottenham, Real Madrid, Football Club Barcelona, Atlético Madrid, Juventus, Internazionale, and A.C. Milan. JP Morgan Chase would provide $4.2 billion as seed money to be shared among the teams.
The league aimed to create a football equivalent of the NBA or NFL, and would outdo the current Champions League competition. The Super League’s teams would receive four times more than the Champions League winner, and there would be no need for qualification. However, other teams would suffer collateral losses, including a decrease in visibility, finances, and prestige.
Despite all of this, it is not what is in the business model, however, that is so interesting, but what is not:
Business Models Should Be Outside-in
Business models, and almost every other type of innovative activity, these days, succeed by being explicitly and determinedly, outside-in. Instead, almost everything about the Super League business model is explicitly inside-out. Likely, this display of industry arrogance was based upon the extraordinary brand values of the twelve teams comprising the first entrants into this venture, but one would have expected some type of leadership vision to involve the customers if no one else. Alas, nothing close to this was in evidence in the launch announcement, which was made just before midnight (CET) on Sunday, April 18th, in concert with the filing of a preemptive motion “to ensure the seamless establishment and operation of the competition in accordance with applicable laws,” and accompanied by seemingly choreographed resignations of team officials from varying governance boards of European football. You can’t get much more inside-out than this in either content or delivery, yet no industry leader called out for a broader sensitivity to the interests of external stakeholders.
Value Propositions Are To Be Articulated In The Customer’s Voice
Clayton Christensen argued persuasively that business model value propositions, the very motor which powers coherent business model logic, should be stated as “jobs to be filled” in the customer’s lives. Granted, this is the most difficult part of creating an effective business model, because we are all hard-wired to tell the customer how good we are, and believe that that’s a decent value proposition, but one would have expected at least some challenge to an implicit lead value proposition which can only be interpreted as “let’s make the owners even richer”?
Value Propositions Should Match The Customer Segment In Mind
The firestorm of reaction to the proposed Super League suggests that this is a business model that almost every customer segment detests. As difficult an achievement as that may seem, the reaction was real, large, immediate, and visceral. You would be hard-pressed to identify any customer segment that resonates with “make the owners even richer”, unless you include the owners, themselves, as a possible needy customer demographic. Was there no ownership voice in the wilderness asking “What customers are we serving?” and “Why are they asking for this?”
Good Business Models Create A Life-long Love Affair With The Experience Provided
Few business model designers, and certainly not anyone in a professional sports league, is interested in creating a business model for a one-time event when they can just as easily build a long-term revenue stream out of fan loyalties. Indeed, as NBC soccer commentator Roger Bennet observed, “The clubs are built into their cities, they are not afterthoughts, they are not customers, they are not content.” Fans are people who live and die with the fortunes of their teams and willingly move a portion of their own fortunes to these teams. Long-term goodwill, if not passion, is the very fabric of fandom, and yet the architects of this Super League scheme never saw it. To quote Bennet, again, “Their very own fans turning against them, it clearly never crossed their minds.” Football fans, like their baseball and cricket brethren, treasure history and tradition almost as much as they do the games themselves. To remove competition for a chance to play in the biggest matches of the year, or the need to keep on producing in order to avoid relegation to a lower league is not just a violation of the team’s social contract with its fans, it is heresy. Brooklyn fans still remember O’Malley’s treason, in 1957, when he made the decision to move the beloved Dodger baseball team to America’s West Coast; why would European football fans be any less devastated by a proposed movement of their favorites out of the yearly national championships? In addition, their absence would, by default, diminish everyone else’s accomplishments. Did no leader see this? Did no one speak out?
The Ecosystem of Partners To Be Relied Upon To Deliver The Goods Must Be Sound
Apple’s iTunes music owners, Netflix’s movie producers, and even Nespresso’s machine brand-name holders are all essential partners in making these well-known business models so successful; without them, these business models cannot work. The same is true for the television networks that would carry these games, and the luxury goods producers who would sponsor these events, but none were to be seen when the Super League was announced. Incoherent business models are their own early warning signal to a possible fiasco ahead. Yet, where were the sponsors, and media? Did no leader note their absence?
What To Make Of This?
It is not surprising that some business models, flawed as they might be, are still so intoxicating to their principals that they are launched despite omissions. Assumptions are made, numbers are totaled up, and riches appear suddenly, as if out of the air, but it is hard to recall such a flawed business model appearing on the worldwide stage for a long time. Can it be simply attributed to oversight? Or, maybe to greed? Perhaps both, but flawed business models and inadequate leadership tend to go hand-in-hand, and in this case, they each outdid the worst we might have feared from the other. Perhaps European football has been saved for the moment, by the sudden failure of this proposition, but it will never look exactly the same again.