While there are many forms of innovation that a company can develop – such as product, process, network and customer experience innovation – business model innovation is one of the most powerful strategies available to forward-looking business leaders. Business model innovation can provide a whole new way to explore business opportunities, potentially change the game in your industry and empower your firm with strategic competitive positioning and leadership.
Innosight, a leading strategy and innovation consultant, explains:
“Business model innovation is about fundamentally rethinking your business around a clear—though not always obvious—customer need, then realigning your key resources, processes and profit formula with this new value proposition. It’s not an easy approach and can take decision makers out of their comfort zones. But the results can be dramatic, providing a real competitive advantage.”
The single best way to build your capacity for business model innovation, as recommended by most experienced innovation consultants, is to open your mind to a wide-angle lens and expand your business perspective by learning from other industries and studying real-world “breakthroughs” and bold business ideas of all kinds. This activity builds an “Innovation from Everyone and Everywhere” mindset and sets up lessons that can come from very unexpected places and provide new paths in pursuing growth in your industry.
This innovative mindset keeps you questioning, exploring, & learning so you do not get blindsided by the rapid pace of change happening across all industries. While these cross-industry examples may not be directly applicable to your industry, they tend to provide new ideas and practices that you can creatively and selectively build from and blend into your firm and strategy. The truth is that it does not take brilliant foresight to think differently and find new opportunities your competitors cannot see. It can come from exploring alternative value creation approaches methodically and examining cross-industry business models.
To that end, the Institute for Innovation Development will be developing cross-industry business model innovation case studies and interviews for review by financial advisor business owners and financial services leaders. For our first cross-industry case study that illustrates radical business model innovation and strategic thinking, we were introduced to Bart Knellinger, President and CEO of Progressive Dental – a full-service dental marketing and coaching agency that transformed their traditional marketing firm business model AND the business model of the dental practices that they were marketing for. We asked questions to walk through the steps he took to develop these new business model strategies, reorganize traditional industry practices and create new industry positions for their client firms.
Hortz: As a marketing firm CEO, how did you get the idea to restructure your firm and business model to go beyond being a traditional marketing firm? Can you share what your thought process and motivation was in revisioning your firm?
Knellinger: Well, I did not see this vision for the firm when we first started. Many marketing companies are basically marketing companies for anybody. The problem in trying to be something to everybody is that you end up really being nothing specific to anybody.
So, the first thing was to decide what industry are we going to specialize in? For a number of reasons, I picked dentistry and I thought dentistry was going to be rather straightforward. I mean, they are dentists. They need new patients. They do not know how to get them. I get them new patients. They make more money. They are happy.
The problem is that’s not what happened. What happened is we would get them more patients and they would become more stressed out because of their small business owner/operator model and mindset. The problem with volume is that volume eats up all of your time. And what I learned is that dentists were completely reactive, completely.
The way their business models are built, it’s just all stress. Their mindset in wanting to do all these different services, saying they want to help and work with everybody, is counterproductive. They feel they are doing the best thing for their business and their clients by being extremely broad-based. Unfortunately, that is where they get stuck – having a broad-based, less strategic way of growing their business.
A patient will walk in the door, they look in their mouth, they find work or they do not, but they do not know what they are going to see. The only way forward for them is to plow through the volume and then they would run out of time. It simply is not profitable. So even though we were doing our job as a marketing company, getting the new patients, it was having a detrimental effect on not only the business – because most appointments were not high-margin procedures – but also on the psychology of the doctors. They were becoming more stressed because they had to work longer hours, more days, and see more patients, meaning more overhead. And that is where I said, Look, there’s a quality of life to this, too. Let’s help these guys get to the point where they will be able to cut their hours back and significantly increase their take home.
Hortz: What were the first steps you took to start restructuring and redirecting your firm’s purpose?
Knellinger: The first thing we did was to change our approach as a marketing firm. The point we realized was not just to grow topline. The point for us is to help these doctors become more profitable and grow EBITA while working the same or fewer hours in a day, which led us to the conclusion that we were never going to market for general dental cleanings ever again. We were going to take the most profitable cases that they do, and we were going to market for that, and not going to do anything else. We focused on $25,000 implant cases and up. So, we did it and that worked until it did not.
The leads came in, but they were not used to selling big cases. They did not know how to do the presentation, how to pre-qualify, how to triage and how best to handle somebody who was not financially qualified. So, what would happen is the marketing would work and then prospects would cancel. And that is the biggest challenge that marketing companies have as a whole…your churn rate. And by churn rate, I mean what percentage of your monthly advertising revenue decreases or cancels over the course of that month.
That led us to the point where, again, you as a firm have to question your own identity and you cannot be afraid to reinvent yourself. I had a conversation with everybody here at the firm and I said, look, we need to change our whole business model. We are no longer a marketing company. We cannot identify ourselves as a marketing company. We became a company that specializes in practice growth and helps our clients wherever they need help. Our jobs are to serve our doctors and their patients. And that became our mission.
So, everything you see here today as to our new business model and what we have become for our clients, is because we ran into problems our clients were having and we had to create a solution to those problems. And most of the time marketing companies do not do that. They will say, hey, my job is to get you the leads. It is your job to close business. I am a marketing company.
Hortz: How did you design your new approach and business model?
Knellinger: The first key component of our new business model was to build the Closing Institute where we trained dental firms to help them understand how to handle large case leads, how to schedule the patients, how to make a presentation, create urgency, close big cases and do it consistently. And that changed our whole business right there because the sales training we offered was like our insurance for the marketing. We do not even market for dental practices that are not going through the Closing Institute because they just do so much better with that.
It was presenting them with a choice that they never even considered before. As owner/operators they are so busy working in their business that sometimes they can miss the most obvious things. Sometimes, someone can come in from the outside and show you a different point of view. It’s just that they are working so hard with their head down as a clinician that all the business stuff has to be secondary by nature. They just never looked at it that way before.
We further discussed how most successful attorneys do not just take anybody. They are highly focused specializing in mergers and acquisitions, personal injury, some specialty niche they have created for themselves that helps them transcend that time/money ratio problem.
The funny thing is that strategy is what I did for my own business to grow. It’s the same exact strategy I use for my clients. The way that I sell them is the way I teach them to sell to their patients. It is the same niche business model that I implemented. There is just teaching them what I did with the only difference being that I’m in marketing and they are in health care.
Hortz: How did you build the capacity to start a training institute for a profession other than your own?
Knellinger: It was pretty difficult to create an agenda. I had to do a lot of reflection. I had to watch a lot of videos of consultations, and it forced me to make a better sales process here for my firm. But having a niche practice made every sale virtually identical. What made this whole training process so different for dentists was that they were not even aware that they were supposed to sell as part of their business. Sales had a very negative connotation in dentistry. They used to say, well, hold on, we don’t sell anything. You know, we just educate. Baloney! If a client comes in and you provide a service, there is a transaction going on. Something was sold. What you want is that you do not want the patients to feel like you are selling them or pushing them.
That is what made building the Closing Institute so super difficult. They have no salespeople and no sales culture. First, there has to be a paradigm shift to where dental practitioners understand that if you are more focused on what you are doing and you become more sophisticated, good sales is the highest form of communication. It’s the highest level of customer service and the absolute best experience for your consumer or your patient. That is the first thing.
The second thing was to let them understand that they are not here to sell implants, they are not selling teeth, or a procedure. You are selling a clinical outcome that the patient has to define. Ask them How is your affliction affecting you on a day-to-day emotional level? Then show them a treatment plan that is going to take the patient from where they are to where they want to be. That is my sales process in a nutshell and it does not sell implants. It Is much more of a consultative methodology rather than a product-based sales. So, the sales process is not complicated, it is just extremely different and the industry had zero exposure to it.
Hortz: How did you design the Closing Institute and its training process?
Knellinger: Remember the Closing Institute was not invented to just make money as a product, or as a training seminar. It was invented so that our clients would get a return on their marketing investment and continue advertising with us. That was the purpose.
So, originally we started out with one boot camp that was basically a two-day seminar on sales for our clients. I noticed though that it was not making an impact. Meaning, they understood the contents conceptually, they agreed with it, and it even sounded simple. Unfortunately, the problem was they could not do it. We quickly realized that, as with anything new, you need to apply it immediately and it’s in the applying that you actually learn. So, besides the seminar, to get them to the next step, we elevated the Closing Institute into a consistent, ongoing mentorship program. The boot camp seminars became where they go to get their first exposure and then they can sign up for a mentorship.
The mentorship program includes doing power sessions every month. We do phone calls, call critiques, record video and audio of their consultations so that we can provide constructive criticism and feedback. Just like a sales trainer in other industries that go with new sales reps, ride with them, or are on phone calls with them, not saying anything, but monitoring interactions so they can coach them.
That is where we started making quantum leaps, when we went from a seminar to an ongoing mentorship program. That’s why we now have this large training facility in Clearwater and that is why we work with a month in and month out process and track our client’s closing percentages. And it’s real sales training with our firm being the only game in town that dentists can actually outsource their sales training to a company that will work with their people every month. It is not superfluous or generalized sales training but a specific sales process with a detailed blueprint to easily apply and ongoing mentorship/coaching execution support to provide extreme value for our client’s practices.
Hortz: Through this journey of yours, what have you learned about the importance of business model innovation?
Knellinger: if you’re going to innovate, you should look at your business model first and view it from a sales perspective and from what you do operationally. Ask yourself: Is your business structurally set up to do the biggest, most profitable activities consistently and not let anything get in the way of that? Can you scale to do nothing else than these activities? So, with an eye to sales and marketing, all of your business systems should be built and created to facilitate and take care of having the right customers walk through your door. That is where all of your innovation should come from.
That is my mindset and why, from a business innovation perspective, I said we were not going to deal with general dental practices that are not doing implants. I had to let that revenue go and ask who’s our ideal customer? And those were doctors that are doing advanced surgical procedures, specifically in the implant space. Once you have that idea formulated into your growth strategy, everything becomes so much more simplified. You do not have a million different systems that you need to put in place. So now scaling becomes much more straightforward. There are fewer moving parts.
That’s how we went from a $7 million marketing company with a lot of employees running around like crazy to over $40 million firm with fewer employees. That is another key factor in this question. But it really does take a specific business innovation mindset.
Hortz: Based on your experiences, what best suggestions can you share on how to make business innovation happen to propel a business forward?
Knellinger: Well, I think you have to have a clear goal on what you want to do with the business in terms of growth – I want to grow top line here and I want to grow EBITA here. It’s getting off the hamster wheel that any owner/operator type business can get on once you have some clarity. Then you are going to look at it and say, okay, what is the straightest line that I can possibly take to get from where I am to these goals?
Once you identify it, you revisit your sales and the marketing. It drives your entire business, whether you know it or not. It just does. If your sales and marketing are not highly focused, then all of your operations are going to be complicated. And then you ask yourself one question, do we have the team that it will require that is going to be able to close these types of cases or products or services consistently? If you do not, then that is your new number one goal to find the staffing needed once that happens. You start delivering the focused services, selling the same products, and it is highly profitable to your EBITA. Our EBITA went up double in terms of percentage as the revenue went up and our overhead actually went down when we did it.
I think that is the biggest thing that can happen, because if you are that specific, then your level of expertise is going to grow so quickly and you are going to be so good at what you do that none of your competitors have a shot. The client can tell the difference in 10 seconds between you and anybody else.
The result is amazing and has so much application with other industries because it’s so focused on core principles about strategy and implementation and business model. There are so many other industries as well that are smaller cottage industries that are owner/operators and all these issues come into play. This can apply for an accountant or a lawyer or a dentist or a plumber or a financial advisor.
The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We operate as a business innovation platform and educational resource with FinTech and financial services firm members to openly share their unique perspectives and activities. The goal is to build awareness and stimulate open thought leadership discussions on new or evolving industry approaches and thinking to facilitate next-generation growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors — Ultimus Fund Solutions, NASDAQ, FLX Networks, TIFIN, Advisorpedia, Pershing, Fidelity, Voya Financial, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
