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Business Models — Upside Down

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My friend Kay Plantes (see www.Plantescompany.com/blog) and I are working on a new workshop focused on understanding and using business models as a way to grow your business. One of the aspects of any business model is the underlying Profit Model and how it is used to drive strategy. Consider the following:

  • Harley Davidson: do they sell a bike or a life style?
  • Healthcare: They profit when people are sick. What if they profitted from healthy people?
  • Twitter: I know what they do, but what are they selling?
  • Panasonic Factory Automation: What if they sold “productivity” instead of equipment?
  • Higher Education: They are built on “hours consumed.” What if they billed according to “knowledge in-use?”

Kay and I are interested in your “profit conundrums.” Please add to our list.

Date: May 25th, 2009 @ 18:35

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Categories: Business Model, Case Study, Uncategorized

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Brad ShorrNo Gravatar

in May 26th, 2009 @ 06:06

Bill, What a great idea for a workshop. Thinking about your business in terms of a model is not easy to do without help. Twitter is an interesting example – the medium is so hot right now they really don’t have to sell anything. People are swarming to it without always knowing why. It’s like a Pet Rock on steroids.

Financial institutions fascinate me. They seem to be selling a free spending lifestyle (even now). What if they sold security? Or put another way, what if they sold saving instead of debt?

Brad Shorr’s last blog post..The Benefits of Talking about Features

Bill WelterNo Gravatar

in May 26th, 2009 @ 08:00

Brad,
Interesting idea about selling security. It’s not something most of us worried about until this last downturn. By the way, check out today’s Trib for an article about social media and the also look into the current issue of Business Week for it’s lead article about the value of social networks.

Fred H SchlegelNo Gravatar

in May 26th, 2009 @ 08:55

Hi Bill, Great topic for understanding what your underlying competitive advantages and weaknesses may be. I believe this can really open up the thought process for a designer or engineer who suddenly starts comparing their widget against a wider array of ‘solutions’ to a customer problem rather than other similar widgets in the category. –Airlines selling relationships?

My son’s ortho claims to sell smiles, but I’m not sure his patients believe him.

Fred H Schlegel’s last blog post..3 Kinds Of Companies Trying To Survive and Thrive.

Bill WelterNo Gravatar

in May 26th, 2009 @ 09:12

Fred,
Your example of your son’s ortho is interesting — he says he’s selling smiles; what do his patients (customers) think they are buying? Likewise, airlines would love to really have a relationship with frequent fliers — do the fliers want a relationship or are they trapped by “the miles?”

kay plantesNo Gravatar

in May 26th, 2009 @ 16:10

Of course I like the post Bill :) The thing to remember is that there is no profit if there is no value for a group of customers. But value for a group of customers need not create profits (as we see in Twitter). Leaders need to think both externally and internally.

My concern for today: How can government do more for its citizens (value) using less taxes (more profits for the tax payer)?

Is there a way to sign up for your blog? I don’t see it on the blog site. Have a good day. Kay

kay plantes’s last blog post..Value Promise and Profit Potential, Part Two

Bill WelterNo Gravatar

in May 26th, 2009 @ 16:57

Kay,
Click on the RSS feed symbol in the upper right corner of the blog page. It will take you to a sign-up page.

Wow! Do more with less tax money! Let’s figure out this business model and become American heroes.
Bill

AndrewNo Gravatar

in June 1st, 2009 @ 07:26

Hi Bill,

It sounds as though Kaye and yourself are in for a very interesting workshop.

I don’t have a great deal to add, but for what it’s worth, I would point to coffee shops. They do not so much sell coffee – they sell caffeine, comfort and relaxation.

Some coffee lovers may disagree with me on this, but for me, when I go to a coffee shop, the most important thing in my mind is not so much the quality of the coffee itself (although that is important) but rather the opportunity to relax and either chat with friends or read the paper, depending on whether I am alone or with company.

For me as a consumer, a quality experience of relaxation is the top priority, and the taste of the coffee itself is of secondary importance.

Andrew’s last blog post..Will good intentions wither in tough times?

Wilson PonNo Gravatar

in June 2nd, 2009 @ 12:37

Bill, in this case, you’re really put us in the deep thinking situation… Honestly, some of the site owners themselves didn’t even decide to sell anything at the very beginning…

Let’s take an example. Facebook’s owner, Mark Zuckerberg hasn’t decide to sell anything from his social network site in the early stage. However, he started to sell out some of the stakes recently! The question is, would Zuckerberg able to sell out any Facebook’s stake, if his site isn’t that popular? Hence, in some cases, the website’s popularity always playing the main role of determining the value of the website!

Bill WelterNo Gravatar

in June 7th, 2009 @ 12:30

Andrew,
Thanks for sharing your point of view. I agree, it’s mor than the coffee (but the coffee has to be mor ethan brown water.) Sorry for the delay in responding. I took a bit of a (well deserved??) vacation and went camping.
Bill

Bill WelterNo Gravatar

in June 7th, 2009 @ 12:34

Wilson,
Sorry for the delay in getting back to you. I was on a camping trip.
You raise an excellent point regarding popularity. It will be interesting to see how this plays out as social media becomes an “over capacity industry.” In that case, the only sites to win will be the early entry / big populatiry sites.
Bill

Zackary BrueggerNo Gravatar

in November 19th, 2011 @ 16:26

Malcolm X~ The future belongs to those who prepare for it today.