Sirius and XM, the nation’s two largest satellite players, are set to merge later this year.

Many hope that the combined entity will finally figure out what neither has been able to do on its own: make money. In the process, a new set of challenges is brewing. Once again, reaffirming that unless you disrupt your own perceived value chain to consistently create value for various stakeholders, someone else will. In the satellite radio market, it is a case in point of an emerging technology poised to make that market look like CDs before there was an iPod.

BMW, in collaboration with the European Space Agency (ESA), has designed a prototype receiver and digital recorder that allows listeners in the car to preprogram, record, fast forward and rewind satellite radio programs, videos, games and other digital content. Their system dynamically converts the satellite signal into digital files and stores them on a hard drive, very similar to a Podcast. Software developed by BMW allows the driver to multitask: get real time weather or navigation instruction while the kids are watching streaming video in the backseat and the car is downloading the latest version of a software for its central computer. Talk about a bad time for a crash!

Consumer preferences are driving the product roadmap of communication engineers at ESA’s research and technology center and, by the way, since that digital content is stored on a hard drive, your radio or video won’t go out in bad weather, remote locations, or when you drive through a tunnel.

The new receivers also use signals from existing satellites so, instead of costing around $1 billion for dedicated satellites and a network of towers like those of XM and Sirius, the tab is estimated to be around $1.5 million to rent satellite transponders. Don’t get excited yet – even BMW estimates that it will be several years before the hardware, software and programming is in tune.

Questions for you:

1 – What quantifiable value are you delivering through your distribution channels today?

2 – Where are opportunities, not just for incrementalism, which says let’s do it better, but for true innovation, which mandates that you do it differently?

3 – If a private equity firm was to fund a brand new company – without all of your current systems, people, processes, and status quo mindset – how could they disrupt your value chain for a far greater value creation opportunity?

In short, reinvent yourself before you are forced to do so simply to survive.

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