Posts Tagged business models
Podcast: good, bad, and ugly of partnerships
Show outline:
- Partnerships and business teams
- When is one required and when is it simply preference
- The “nays” on partnerships
- My preference and why
- Process to develop successful partnerships
- Finding partners that balance the team
- Win-win mindset
- The art of gauging dedication
- Have the arrangement in writing
Articles: Partnership tips here. Partnership don’ts here.
Key advantages of freemium
Posted by Billy in Business Theory & Strategy, Trends & Ideas on April 8, 2010
This video from bNet describes some key advantages of moving with a freemium model. Keep this in mind when developing your business model as this has completely made some businesses and allowed access to markets otherwise impossible to enter.
It is also important to understand the “seedy underbelly” of freemium. With the open, free model, you will also see an increase in abuse of your service. Check out this video on abuse of freemium:
Business Models Pt 2: The Center of your Business – The value proposition
Posted by Billy in Business Theory & Strategy on March 29, 2010
The value proposition lies at the center of your business model. Even with all the variations of what academia calls a “business model” it typically is the center piece and rightly so. The value proposition ties all the components of the model together. What is a value proposition? It is what your business offers that creates value for your customer by fulfilling some need or desire, whether initially recognized or not. This offering is the means by which your customers achieve their goal. It is rarely the value in and of itself but is the tool to achievement (e.g. Advertising is not value but the customers obtain, brand recognition, etc. are the value while ads were the tool).
There is another important aspect to the offering. It must also be the tool by which the business’ need is fulfilled. In this instance, the need of the organization ought to be defined in its core purpose, i.e. the mission, vision, and values. This is best served beyond simple monetary compensation. One “hot” area in business today that demonstrates this openly is the socially-conscious enterprise. For example, an organization trumpeting solar energy may have a goal to minimize pollution, save the planet, etc. So, in this case, the offer must be the tool by which the planet is saved through them. If it is not, it will not last within the model. A proposition that offers money alone is unsustainable. For long term business success, the business must define its core purpose and do so with some social goal in mind, something greater than themselves and their financial success.
The indirect benefits of doing so are substantial as well. These include customer loyalty and buy-in, powerful brand development, and product/service differentiation. Your cause or goal can become part of the value proposition. Again with our example, customers may buy not simply because your product solves their initial need for power or even sustainable power but they buy for your core purpose of saving the planet as well.
Start by identifying your business core purpose, then work with the possible offerings and customer needs to find those that best align. Which offers the most upside potential, scalability, etc. while meeting our standards within our purpose? Define the customer needs you are striving to fulfill. Now identify the characteristics of your offer that meets the criteria. This is the beginning of your business model.
Make or break it by your business model design
Posted by Billy in Business Theory & Strategy, Entrepreneurship on March 22, 2010
Many entrepreneurs I run into on a regular basis are extemely “fly by the seat of their pants” type business owners. They are “movers and shakers” and go from “zero to hero” rather quickly. These types tend to grow faster than most and also run into substantial problems faster than most. Growth is a “double-edge sword” if you are not ready for it… (wow, enough buzz phrases yet?). I work closely with one that has built up and nearly lost it all several times! Granted, the economy played some tricks on this person but how necessary was it? During the hot times, enough money was flying out of the business on hair-brained ideas to have likely floated the business through some rough waters if a more strategic approach had been taken. The challenge faced by most of the “entrepreneurial faith” is when to say no to an opportunity or the next “shiny object” that will apparently make business double in no time. I’ve taken this bait enough times to be bigger than Deloitte if it were true. We tend to spread ourselves, our organizations, and our budgets too thin.
So what is the secret?
Well, it is important to first setup your business’ set of core values, mission, and vision. These are meant to be guiding lights within the organization and decision making processes. Without real parameters, it is difficult to know when to say no. But these alone can be difficult to judge by as each scenario is different. Well, if they are built into a model-of-sorts that can almost decide for you, life gets much easier.
Enter the Business Model…
I would venture to guess that more than 9 out of 10 businesses have not put together a business model. Now, naturally you have one (however poor it may be) just by doing business. The fact remains that most entrepreneurs think through aspects of their business model but in a compartmentalized fashion, never putting all the pieces together in a more holistic approach. This model is meant to take most key aspects of your business and put them together to make sure they play well. It is also key to keep it relatively simple otherwise it becomes nothing but a fun, theoretical exercise in your final year of graduate school (fun being loosely defined). The process of thinking through it will definitely bring a certain level of clarity but having a model you can use will transform the way you do business and make decisions. It has also been said that a great entrepreneur with a mediocre model will fail while a mediocre entrepreneur with a great model will gain phenomenal success.
So what is a Business Model?
Well, it is define as follows by Alexander Osterwalder, in his book “Business Model Generation“:
A business model describes the rationale of how an organization creates, delivers, and captures value.
Their are a few key elements to consider when putting together your model. I will list these here as they are the next step in your own design. Define these elements for your business.
- Value Proposition – what you offer to your customer, your product or service that creates value.
- Customer Profiles – ideal customer
- A revenue model – how you make money
- Distribution Methods – from value proposition to customer directly
- Fulfillment Process – from your business to value proposition
- Cost Structure
- Competition, competitive strategy
- Resource Management
- Value Network position – recognition of position in overall value network, i.e. from raw materials provider to partners to end users.
- Key Partnerships
- Core Purpose defined – mission, vision, and core values or principles.
I will elaborate on these points in future posts and unveil the construction of the model itself. For now, begin working through the above mentioned points, defining them for your own idea or business. Once you have a workable model, you will be able to forge ahead with more confidence and surety that you are making wise business decisions.
Fill your organization with Entrepreneurs!
Posted by Billy in Business Theory & Strategy, Entrepreneurship on March 8, 2010
The major key to sustained success is connected innovation. That is, continual innovations and improvements to products and practices based on research, feedback, and general connectedness with the serviced demographic. Innovation is a key characteristic of the entrepreneur. Every day, entrepreneurs start businesses, have success, and fail. One of the main factors in this lack of sustainability is not their entrepreneurial spirit but their inability to translate that into an organization. They either are completely unable to transition from small startup to larger organization or in that transition, lose what made them successful in the first place and allow inefficient, ineffective bureaucracy to infiltrate based on old assumptions of “the way to do it”. The transition to growth is crucial for sustained success just as the connected innovation that generated the business idea in the first place.
So how do you maintain that power within an organization of 10, 50, 100, 1000, or even 10,000? An effective organization will be made up of two types of people: Entrepreneurs and Intrapreneurs. You’re likely familiar with entrepreneurs but what is an intrapreneur? The popular Wikipedia includes this entry:
Intrapreneurship is the act of behaving like an entrepreneur, except within a larger organization… In 1992, The American Heritage Dictionary acknowledged the popular use of a new word, intrapreneur, to mean “A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation”. Intrapreneurship is now known as the practice of a corporate management style that integrates risk-taking and innovation approaches, as well as the reward and motivational techniques that are more traditionally thought of as being the province of entrepreneurship.
Entrepreneurs will be found at the head of the organization as owners, key executives, and department heads. Intrapreneurs will essentially make up the rest of the organization. The key to success, therefore, is instilling the responsibility, trust, respect, and expectations of entrepreneurship throughout the organization and within each position. Read the rest of this entry »
How to have a ‘social’ mission in your business
Posted by Billy in Business Theory & Strategy on December 18, 2009
Does your company or idea include a ‘social mission’? Many entrepreneurs today, especially from the Gen Y, are bringing some social agenda with their venture to the marketplace. The old notion that you work for 30 years, then begin doing charity work and pro bono services once you’ve “arrived” is dead. Lifestyle entrepreneurship is here and thriving. It is now time to look at work/life integration, not simply “balance”. What do you love personally? Is that your business? if no, why not? Would it or could it integrate with your business? These are some q
uestions we all ought to ask ourselves as entrepreneurs. Do I want my business to have a social mission? Well, that is obviously up to each individual and/or team. The key to recognize is that having a social mission carries additional benefit and not simply the value of the mission itself. In today’s more socially conscious marketplace, having an open social mission improves brand image, marketing, and loyalty. That is, if the mission is authentic and not fabricated for those purposes.
The modern consumer can smell inauthenticity from a few simple interactions with your organization. Fancy marketing hype and a good smile don’t get you quite as far as it used to. Especially in economic downturns, people are more skeptical of corporate bull and sales hype. If, however, your mission is authentic, you will reap the benefit. This is the beauty of the modern economy. We are rewarded for pursuing social agendas, allowing us to ‘have our cake and eat it to’! It is no longer simply a drain on for-profit resources but a boon. It is much more an investment than some ‘sacrifice’ and that is great! It allows us to continue on with the social mission as our business is bolstered by it, who doesn’t want that?
So the question is, what are some simply ways to develop your social mission? Here is a simple list of ideas to get started:
- brainstorm causes, concerns, and areas of interest that you have personally. It doesn’t have to be so cliche as ‘inoculate babies in Burma’ (although that is great if it authentically is a concern) but even hobbies can become great social causes. For example, I am an avid mountain biker. There are many concerns for trail preservation, natural forest maintenance and other related interests. Maybe I should distribute bikes to children in Burma! Simply create a list of ideas and interests.
- Identify interests that run congruent with or compliment your business. What is your business? Do any of the above ideas coincide with your business in any way?
- Identify a list of interesting charities and special-interest groups that compliment your own ideas and/or those of your business. Do any groups do anything listed above? Are there other ideas gleaned from this new list of charities and non-profits?
- Explore the ideas and concepts with your team to garner support and acceptance as well as to explore alternative perspectives to the new idea.
- Develop the ‘dot org’ side of your business. Start a website or blog and begin developing your social mission and agenda. You may use the platform to focus and hone your purpose, deciding on the key areas your social mission will include.
- Create a 6-month action plan to integrate and enact this new mission. Be wary of any dangers and shifts in current company culture to ensure preservation or positive transformation of it.
This is a simple list to get you started. Many companies are becoming economic powerhouses will changing the world (at the same time!) and your organization can do it to. You don’t need to wait until your “microsoft” is built to start a multi-billion dollar “Bill and Melinda Gates Foundation” of your own (which I think is totally awesome by the way, I just don’t have that pocket change laying around quite yet). Your social mission can begin WITH your company, not after it…
What other ideas are out there to help entrepreneurs in their social mission? What is your social mission?!
A great keynote on Free by Chris Anderson of WIRED mag
Posted by Billy in Business Theory & Strategy on October 28, 2009
This video is a keynote that Chris Anderson, Author of “Free:…” & editor at WIRED magazine, gave at the Revenue Bootcamp put on by Garage Ventures. He discusses Free and the “animal forces of digital economics” that I find fascinating.
A fragmented “stealth” brand can be good? For some, YES!
Posted by Billy in Business Theory & Strategy, Entrepreneurship on October 26, 2009
Entrepreneur Magazine’s November issue featured an article regarding a new-ish concept that Starbucks has embarked upon. Many companies carry a common goal, a desire for international brand recognition and dominance. Well, in some industries, that may not be the way to go. Starbucks, one of those international branding phenomena, is actually “hiding” their brand within a few new locations. What?! Yes, they are practically invisible as the the backer of a few new shops being opened. With a billion dollar namesake, why would you forsake it? Well, coffee happens to be an area where indie is in. Local, hip, one-of-kind, shoot-from-the-hip, is desirable. People like their coffee shop, not some international cookie-cutter. The new “15th Ave Coffee & Tea” is just that, local, hip, and still Starbucks (although you may not realize it). The new coffee house features many ideas and innovations typically found only in local establishments with a coffee connoisseur founder. That is in-part because of the liberty given to the new shop to run as such. Protocols are a little more liberal but carry the support and resources of a powerhouse company in Starbucks. Also, Starbucks is not the only one embarking on this trend. As the article points out, Great Harvest Bread Co. has done this since the beginning. Similar ideas are coming out of Marriott Hotels and others.
Higher Purpose Entrepreneurs, for-profit, for-betterment of mankind
Posted by Billy in Entrepreneurship, Trends & Ideas on October 7, 2009
(photo from Boston Globe Article)
I am passionate about entrepreneurship and individual empowerment, it is no secret. Part of my personal mission is just that, to empower individuals for societal advancement through value-based entrepreneurship. I believe profit is an important indicator of impactful ideas and a resource for continued development. I have written on the “selfless-ness of entrepreneurship” here.
I recently came across an article here about a man with a similar vision who is doing some fantastic work in moving the vision forward. His name is Iqbal Z. Quadir, founder of the The Legatum Center for Development and Entrepreneurship at MIT. Quadir founded Grameenphone in Bangladesh, a company valued at $3 billion that brings telephone service and prosperity through employment to millions who have not had it until now. He teamed up with the Grameen Bank to bring about the company. Grameen Bank was founded by Muhammad Yunus, a Nobel Prize recipient. A large part of the profits going to Grameen Bank help fund the powerful micro-credit business it helped popularize that brings additional prosperity by giving opportunity and expecting responsible action with micro-loans (I’m a fan of Grameen as well…). The Legatum Center’s purpose follows suit, to bring technology and development to impoverished countries through for-profit ventures. There are powerful advantages to private action such as this:
MIT Economics Professor Bengt Holmstrom, a member of the Legatum Center executive committee, said there is merit in Quadir’s view that pouring more aid money into Third World governments will simply feed and empower politicians and fuel corruption. Holmstrom said the center’s “focus on entrepreneurship and self-help, and its bottom-up approach, are really distinguishing features.’’…
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