Tuesday, March 16, 2010

Business Models, New Blog and Missing Links

It's been a few weeks since I've posted any updates here, but for good reason. I'll tackle the title of this post in reverse order, so bear with me on where this is going.

Missing Links - For a while, I was using Fridays to post a set of links that I thought pointed to interesting topics that had relevance back to topics we covered in the MBA program, or pointed out future trends I thought my classmates would benefit from.  I've gotten behind on the weekly posts for a couple of reasons: [1] work has kept me busier than normal (not a good excuse, everyone is busy), [2] I'm finding that between Twitter and RSS feeds (mostly blogs) that I am starting to read and consume content in much different ways than just a few months ago and it's not as convenient to aggregate links. Too many concepts and ideas build off the other. I'll do my best to keep the links coming at least bi-weekly.

New Blog - While courses like Organizational Behavior and Leading Change were some of my least favorites during the program because they felt very theory-centric and terminology-centric, I'm finding their applicability to be some of the most important in my current business.  For example, in the IT industry there is a significant interest in a new paradigm called "Cloud Computing". Cloud Computing allows companies to continue to utilize computing and application resources to service their business needs, but it offers the ability to migrate IT from a CAPEX burden to a OPEX cost model that better aligns usage with needs. While most of the IT industry is debating the technologies to enable Cloud Computing, very few people are diving into the organizational changes that will be required to make this model a reality. So for that reason, I've decided to start a new blog called "Clouds of Change" to focus on the people and organizational elements required to make Cloud Computing successful for businesses. If you're interested in the discussion, or how it may impact your business, I invite you to visit the site.

Business Models - As I've mentioned before, one of my entrepreneurial projects is a new business called Gracely Girl Designs.  This is a business that my wife leads, focused on fun, unique, handmade clothing for children aged 1-10 years. The business is still only 6 months old and is a hybrid between an online eCommerce store and a physical store.  30 years from now, after I've retired, I will remember two distinct things from B-School: (1) In the long-run, it's very difficult to sustainably make $1 in profit (or any amount), (2) There is a HUGE difference between creating a great product and creating (and executing) a great business model.

The reason I bring this up is that we tend to get three types of comments from people at shows we attend. From shoppers we get lots of, "those are so cute, we love your designs". We also get plenty of, "do you think you could make me a ?"  From other vendors we often get, "hmm, do you make those yourself?" (wondering if they could make similar items).  We love the compliments and do create custom orders for unique sizes and color combinations, but we often find ourselves having to refer customers to other sources (eg. Etsy) for items that are outside of our target market. Those orders don't fit into our business model (for various reasons). And for other vendors we simply say "yes". Being a hybrid (online/physical) may or may not be the optimum business model in the long run, but we're using it today to allow us to build up the customer base in our local market. Our customers are often mother's of small children, a social network that lives to make recommendations to friends and accept new ideas. We also hope to leverage that to expand our footprint over time, which should drive the online portion of our business. We'll see, it may or may not work out as planned, but the size of the business allows us to rapidly experiment and adjust the model as customer demand changes.
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