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What Went Wrong at Peloton – Mismanaging the Good Times

Manny Teran, Adam Hartung
management teams, Value Delivery System, Value Proposition, supply chain, Moonshots division, White Space, AI, cloud services, resource allocation

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Peloton went from a crowdsourced start up to a billion dollar Unicorn in 6 years.  6 years later and the company is teetering on failure.  How could management have blown it so badly?

This podcast overviews how most management teams during good times focus far too much energy on improving their single Value Delivery System.  They over-invest, and then aren’t prepared when sales slow.  When times are good they should be clearly defining their Value Proposition, and investing in alternative Value Delivery Systems to promote long-term growth.  Peloton had stationary bikes. The pandemic pulled forward demand, and management got stuck trying to enhance its supply chain and get more product out the door.  Instead they should have raised prices, and invested in other avenues for growth.

Google has long had its Moonshots division, which invested in White Space projects to become the next big thing.  Most were misses, but now AI is showing up to be a big deal for Alphabet and its shareholders.  Amazon went from selling books to selling general merchandise – to selling cloud services.  Even Facebook invested in Instagram and WhatsApp in order to keep growing, which supported the initial investment in the Metaverse.  But too few companies follow this best practice, instead over-investing in existing customers and the existing Value Delivery Systems when times are good, and are unprepared when times falter.

Thinking points:

  • Do you know your real customer Value Proposition?
  • Are you developing new Value Delivery Systems to expand your sales?
  • Do you have a list of new projects ready to go, and a method for managing them, so you can move when you have the money?
  • Do you have a resource allocation system that challenges investments in the existing Value Delivery System so you don’t over-invest?