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.

Crowdsourcing - Part IV - Recognizing Value

Part III - Educating Customers

Part II - Healthy Lifestyles

Part I - The Big Picture

How much an ounce of gold is worth is a function of supply and demand at any point in time. You can easily look up the going rate for gold from any financial information source. But what can you create with an ounce of gold? How many bracelets or earrings or electronic connections? Answering those questions is much more difficult unless you specialize in products that include gold.

When jewelers sell gold jewelry, they rarely sell it based on weight. They sell it based on quality or craftsmanship, and appeal to the desires of the wearer to look glamourous.

Crowdsourcing Question - In an industry that sell healthy values by a quantity measuring system, how would you go about changing the rules of the game to better highlight the value of the product to improve healthy lifestyles?

Crowdsourcing - Part III - Educating Customers

Part II - Healthy Lifestyles

Part I - The Big Picture

Some products, such as wine or art or luxury sports cars, require a sophisticated understanding to truly appreciate the differences between greatness and mass-market products providing somewhat similar utility. The time required to develop these levels of expertise or appreciation can often take years or decades, and require users with deep pockets to continue to fund their trials and experiments to learn the skills required to appreciate the greatness.

Crowdsourcing Question - Without diluting the product or the experience, how might you attempt to reduce the time cycle required to educate your customers about the uniqueness of the experience associated with your product?

Crowdsourcing - Part I - The Big Picture

Before I ask anyone for insight, it would probably help to give some idea of what the big picture is for this project. OK, here goes...

This group would like to bring a new product to market. The product(s) are all about creating a rich, healthy, thought-provoking lifestyle. The high-level belief is that the target customers will not only consume the product, but also adopt various aspect of the lifestyle to broaden the overall effects.

The market for these products exist today. It is an extremely competitive (overall) market, but certain niches of the broader product category have yet to be well developed or well marketed. They plan is to bring these new products to market within one of these under-developed niches.

The product(s) are imported. The importation process is relatively well-known (been done for several years), but it's filled with potential problems that could effect quality, frequency of delivery, fraud.

I'll leave it at that for now. Follow-on posts will dive into specific issues that I'd like to get input from the crowds.

Crowdsourcing a New Project

I've written about the power of crowdsourcing before, but other than a children's book that I'm trying to get created via Facebook friends, I've never really put this into practice. We do quite a bit of pseudo-crowdsourcing at work for minor ideas and feedback, but nothing that truly goes outside the walls of the existing organization.

One of the projects we have this semester involves some research into an aspect of international business that we could apply back into our existing business, or possibly use for a future business. My project involves potentially two real businesses, neither or which I am directly involved with, but at least one has several elements that would be core to something that I am very interested in starting in the near future.

The challenge of this project is that there are elements where I believe I can bring quite a bit of value and expertise, but other elements where I am really not confident that my instincts are on the right track. My gut tells me that I'm letting some (subconscious) preconceived expectations restrict my ability to see a bigger picture. So instead of making a mistake from lack of exposure, I thought I'd open this up to the Internet and see what comes back. I have no idea what sort of response I'll get back, but maybe 300-500 followers on Twitter, LinkedIn and Facebook can share a few ideas that will point me in directions I had never imagined before. Let's hope so.

The one caveat I have is that I'm under NDA for this project, so I'm going to need to be somewhat vague about certain specifics. I don't think this should be a problem, as most of my questions are broad and could apply to several markets or products. I'm hoping that this doesn't become too restrictive to creative ideas.

All ideas are welcome....

Business School is like Business Books - Useful in Snippets

Let me preface this by saying that some (or much) of this may not make sense to many people reading it. I have a strange way of processing information. I'm sure there is a psychological name for it, but I've never found it. It essentially goes like this.

• Read a lot, almost anything you can get your hands on, in all formats (newspapers, blogs, magazines, books, etc.). Sometimes read the entire piece, and sometimes scan it.
• Listen a lot, to people from many of different backgrounds and social levels.
• Ask questions that sound broad, but are typically only looking for a partial answer.
• Do not consciously coordinate the things you read or hear or ask.
• Periodically have a whole bunch of facts, ideas, concepts, quotes and other relevant pieces come together into ideas or pictures. Scratch your head wondering how they all came together.

This piecing together sometimes happens on purpose, like when it's time to finish a paper or analysis. And sometimes it just "clicks" in the middle of a sentence as I'm talking to someone. The latter are the ones that I can never quite figure out, but occasionally I let it flow and it sounds like a reasonably intelligent set of thoughts (note: that's not bragging...I honestly don't know how it pieces together).

So what's the point? So what? Hang on a second, I'm getting there.

As I mentioned before, I read quite bit. Since I pay my mortgage by doing things that are semi-business related, I often read books on business. I'm currently reading Made to Stick, Innovation that Fits, and Free. I'm also reading Serve the People and The Blue Sweater, not so much for their business content but rather as a way to gain some inside into foreign culture to help augment this semester. Each one of those books is sitting on my nightstand, and each one is somewhere between 10% and 60% finished. I rarely seem to finish the books, but I always find a few interesting snippets from one that relates to one of the others. It's my favorite part of reading these various types of books, when one snippet connects to another and seems to create something new. A new idea, or a bigger concept.

As we've moved farther into our MBA program, we're now at that stage when more and more snippets from various courses or experiences are piecing themselves together in my head. The broader concepts these create are becoming interesting, useful and fostering a bunch of ideas for new businesses.

I'm not sure if this is the case for many (or any) of my classmates, as I often get blank stares when I try and explain some of these conjoined snippets. I'm not sure if they don't see things the same way, or if I still needed to work on explaining the new concepts, or if I'm just off base. Many of them are incredibly knowledgeable about specific topics, so it's quite possible that it could be the latter.

Either way, more and more pieces are starting to connect with each other or are at least in each other's gravitational field. For me, this is when fun stuff happens. Now the challenge becomes not over-thinking things.

Interesting Business Models & Selling Techniques

While classroom studies are interesting, the real value comes in the translation to real world activities. I periodically go through my list of interesting business models or sales techniques to see how they leverage learnings from the classroom, or break the traditional rules to create new opportunities.

Here's a few that I recently found interesting:

Tats for Tees - Interesting approach to reducing the concerns that people have about spending too much on a "want" (not a need) in a challenging economy.

3/50 Project - Powerful concept; Shared concern for 1000s of people; Explained in a simple way that many people can understand and take action.

Threadless - Redefining how a basic product (T-Shirts) is designed, forecasted, and manufactured. Embracing community on a whole new level.

Etsy - Leveraging the long-tail of the market for hand-made goods. A simple way for companies to get access to a huge market, that previously would have been expensive and cluttered.

How does Twitter make money?

Following up on my previous post about Twitter basics, I thought I'd address another question from class that raised a number of concerns. "How does Twitter make money, and should I trust my information to someone that may not be here in XX months/years?"

Excellent question, and definitely something to be concerned about as you consider new business decisions. I wrote about several ways that Facebook could make money (in addition to advertising) several months ago, because I enjoy using the service and would like to see it continue. Or maybe I'm subconsciously auditioning to be a Product Manager at Facebook...who knows? Either way, it's interesting to look at how these Freemium companies can generate revenue and stay in business.

As of now, Twitter does not have a revenue model. In fact, this has been the center of much speculation amongst the technorati lately. So let's look at the basic ways that Twitter could make money, as well as some additional opportunities for companies to leverage Twitter to drive revenues for themselves.

1. Advertising - This is the simplest to understand. Just like Yahoo! or Google, Twitter could begin to monetize their traffic by placing targeted advertising along side the tweets. And considering the real-time nature of their traffic, this could create new advertising models for companies trying to reach certain demographics.
2. Additional Tweet Space - Tweets are currently confined to 140 characters, a throwback to the days when Tweets were mainly sent via SMS (Text) messaging. But some people and companies struggle to get their message out in this short format. Supporting larger character lengths may be a service that Twitter can monetize.
3. Auctions for "Suggested" listings - This came up recently, as new members often struggle with who to follow.
4. Integrated Services - An example might be something like this: Starbucks sets up a Twitter "watching" service that looks for people complaining about traffic-jams or any other delay. When they see this, they determine where the users are located. Then they send those people a Tweet offering a coupon to the local Starbucks. This is a very basic example, but there are thousands of possibilities for companies that want to come up with creative ways to reach their target audience. Twitter could offer a service for those companies that can't do this themselves (SMB's with limited IT knowledge), or companies that aren't sure of the right way to engage with social communities.
5. Broaden the Scope of the Platform - One of the key elements to any Social Media company or service is a willingness to broaden the usage of the platform. This means that not only could others create monetization opportunities, but you can leverage new opportunities because of the increased breadth. This could mean creating new partnerships to leverage the information in Twitter feeds, or allowing partners to insert themselves into the conversations in new ways.

That's just the tip of the iceberg of ways that Twitter could make money. I'm sure there are dozens more.

There is also the possibility that Twitter will get purchased by one of the major social networks, or by Google.