21st century business models

The M-word

When you ask children what they want to be when they are older, how many of them say they want to be a manager? I've certainly never met one who had such aspirations. In part this is because management is a pretty amorphous concept to a ten-year-old. But it's also because we adults aren't exactly singing the praises of the management profession either.  For example, in a 2008 Gallup poll on honesty and ethics among workers in 21 different professions, a mere 12 percent of respondents felt business executives had high/very high integrity--an all-time low. With a 37 percent low/very low rating, the executives came in behind lawyers, union leaders, real estate agents, building contractors, and bankers. » Read more

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I'm bored: The significance manifesto

A humble confession: I'm bored. As mind-implodingly, soul-suckingly, spirit-munchingly bored of business as Jason Voorhees probably is of Friday the 13th.

Let me explain why, via a tiny theory. Porter's five forces, the 5 "C"s of marketing? Forget it. I'd suggest that today, nothing characterizes industrial age business like the Five P's. Business is Pedestrian (in its vanishing smallness of ambition), Predictable (in its furious obsession with the trivial), Predatory (in it's hyperaggressive selfishness), Pompous (in its unvarnished self-importance), and Pointless (in its lack of usefulness to people and society). What it really excels at is pumping out inauthentic, unsustainable, illusory value--instead of the real thing. » Read more

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A better way to win: Profiting from purpose

"I would not give a fig for the simplicity on this side of complexity, but I would give my life for the simplicity on the other side of complexity." —Oliver Wendell Holmes

When it comes to managing their costs, most companies operate with a simple model. They start by trying to maximize their gross margins so that they have a high cushion for spending in areas where they feel they need to spend heavily in order to compete, such as advertising and promotions. But a growing number of high-performing companies are showing that there is a better way to manage spending and improve performance. These companies live and operate on the other side of complexity.

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Who's really innovative?

If you were compiling a list of the world's most innovative companies, which businesses would top your list? No one would be surprised if you picked Google, Apple, or Amazon, but what about Wal-Mart? (Huh?) Or PG&E (a utility, for crying out loud)? Surely there must be some mistake! Or how 'bout the Chinese data equipment maker Huawei (umm, who are they)? While a few of these companies might not have made it onto your top 10 list, all of them were featured in Fast Company's 2010 ranking of innovation all-stars.

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What is your management model?

One enduring change in the management lexicon brought about by the dotcom revolution was the term business model—how a firm makes money. The concept had been in existence for decades, but the competition between "old" and "new" economy firms, with very different business models, helped to demonstrate its importance as a way of thinking about the basic choices firms make when it comes to their sources of revenue, their cost structure, and their make-or-buy options.

In the post-dotcom era, firms have continued to experiment with new business models, with some success. But genuinely new business models are hard to come by, and they aren’t as easily defended as they once were. Firms are therefore on the lookout for new forms of competitive advantage—they are looking for sources of distinctiveness that are enduring and hard to copy.

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Results vs. recommendations: How an organization's expectations reveal its culture

Years back I worked as an editor for the now-defunct Red Hat Magazine. While our circulation numbers were respectable, the department head wanted to see a sizable increase. In most companies, I would have been asked to do some research and present a publishing plan or a report on how to improve the numbers. Perhaps a consultant would have assisted. The resultant ideas would have been discussed, vetted, approved, shot down, and at some point (in some form) (probably) implemented.

But at an open source company, things roll a bit differently. My team was given a simple task: Increase the number of readers. We were expected to come up with strategies to make that happen while remaining true to the editorial vision of the magazine, but the department head wasn't particularly interested in hearing about our plans. He just wanted to see the numbers. Every month.

Talk about pressure. We quickly realized that ideas and plans and reports are simple to generate; results are not. » Read more

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The democratization of comics

While the print comics industry has been slowly shriveling, an interesting new world of comics has emerged on the Internet. Known as webcomics, these new comics range from those professionally illustrated to those, well, not. Whether geek-inspired, or erotica (I'll let you Google that one), webcomics give us an idea of what an industry looks like when its content becomes democratized.

It's not all good, but it's not all bad, either. » Read more

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Cooperative success: Understanding the co-op business model

There are a few things you should know about democratically run “cooperative” businesses. First, they're not all that unusual. They're also respectably profitable. And working in one doesn't require you to be a Marxist or wear patchouli.

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Is the influence of social media overhyped?

So maybe I'm just getting old, but when just about every article about the Silly Bandz craze credits social media with the spread of the fad, I can't be the only one who thinks we're overvaluing the role of Twitter and Facebook.

Word of mouth marketing has always been the best type, and social networking and the Internet are really just amplified versions of it. But when I compare the progress of the Silly Bandz fad to a similar one of my youth (Millennials, I'm talking about slap bracelets), the colorful silicone bands don't actually seem to be spreading any faster or in a different manner. In fact, substitute the word “Silly Bandz” for “Slap Wraps” in this 1990 NY Times article, and you'd hardly know it's been twenty years since the bracelets made news headlines.

(I'll give my fellow Gen Xers a moment to pick themselves up off the floor.) » Read more

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Recipe for a successful business: One part openness, two parts trust

There's one major advantage to openness in business. Like the Billy Joel song says, it's just a matter of trust. 

Harvard Business Review's Peter Merholz recently highlighted several successful businesses modeled on trust—and, though he doesn't note it, openness. » Read more

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