Do some business models perform better than others?

 

I will read through, hyperlink and briefly comment publications in this blog relating to business models and perhaps some of you will download, read, comment or discuss them with me. The first one is a study of the 1000 largest US firms, conducted at MIT Sloan in 2004.
Do some business models perform better than others? A study of the 1000 largest US firms (Weill et al. 2004)

The paper is a good academic exercise, and it is a difficult task the authors are trying to accomplish. The objectives are many:

1. Define four basic types of business models (Creators, Distributors, Landlords and Brokers)
2. Create 16 specialized variations of the above based on the type of asset involved (Financial, Physical, Intangible, or Human)
3. Classify 1000 companies' business models separately for each reported revenue stream
4. Draw conclusions on how each business model performs in terms of operating income, return on invested capital and return on assets.

Conclusions

The authors come to the conclusions that business models are better predictors of financial performance than industry classifications and that some business models do perform better than others. Specifically, selling the right to use assets is concluded to be more profitable and more highly valued by the market than selling ownership of assets.

As companies seldom explicitly report what business models they use, the authors did use financial reports and their own judgment to allocate revenue across different business models. This is not an easy task. I have worked with several companies using parallel business models where some have the objective to create a demand and increase the return for other business models. Think of companies selling low margin physical products to get customer lock-in for recurring high margin services, or companies providing consultancy services to enable technology and IP licensing.

It is an interesting article with an interesting conclusion. Several companies have over the last decade moved from business models based on transfer of ownership to right based or service based business models. One example is Rolls Royce that instead of selling the jet engine, it owns the engines and provide "power by the hour" by contract. Since its customers only make money when their engines are running, they only pay Rolls-Royce for that time. Rolls-Royce in turn promises to maintain it and replace it, if it breaks down.

https://cutt.ly/F2kDj8U

Six Types of Successful Business Entrepreneurs

Why do some succeed while others don’t? Whether it’s your personality, skill set, or drive, what determines your success as an entrepreneur is not always crystal clear.  The secret to be a succesful entrepreneurs is that there is no one-fits all secret. Often times, accomplishments is achieved by an accumulation of various factors that result in prosperity. If you’re unsure if you have what it takes to be successful entrepreneur, read our ebook, Entrepreneurs’ Guide to Success.

Becoming an entrepreneur is no easy task, so if you’re considering starting your own business, be ready for the endless amount of obstacles that will lie ahead. One way to help you grow into your role is by learning from to the most affluent entrepreneurs. Recently theFounder Institution did a research study testing more than 30,000 entrepreneurs. The study examine various personality and leadership traits among certain leaders to create their 6 types of entrepreneurs. Here are the six personality types that they identified:

1. The Hustler

This zealous salesperson is a real go-getter. The Hustler is extraordinarily confident and driven. Their ambition doesn’t let anything stand in the way of their goal. What makes these leaders stand out is their ability to change gears when necessary, will help them achieve their goals. Mary Kay Ash, is powerhouse of ambition and was able to build Mary Kay cosmetics, a multi-level marketing and direct sale business at the age of 45.

2. The Innovator

Open minded and ready for anything, the Innovator seeks to challenge conventions and develop new ideas. Reexamining our current infrastructure and they’re able to find new ways to improve and recreate these conventions.

3. The Machine

The Machine works consistently to get things done right the first time around.Their intelligence and innate ability to troubleshoot issues allows them to deliver quality results in no time. These individuals look at whole picture, and then pin-point to fix issues that delay the process altogether. Bill Gates, founder of one of the world’s most recognized technology company, Microsoft.

4. The Prodigy

Born with a natural business sense and keen instinct, the Prodigy has intelligence, along with a stoic demeanor. Their strong social skills strongly influence their success. Google Founder, Larry Page is an great example of this type of entrepreneurs with his vision for Google.

5. The Strategist

The strategic mind and creativity of the Strategist ensures that there will always be a solid plan of action. Their long-term vision contributes to their success. One of the most renowned strategist is Steve Jobs and his role in Apple.

6. The Visionary

A Visionary merges their talents with their passions, and the coupling of these two result in their ability to create a strong following. Oprah Winfrey is one example of a Visionary, being widely recognized for her work and executes authority over a mass audience that she’s created over the years.

Each of these six types of entrepreneurs has a unique style, however they’re able to achieve great success by relying on these qualities. Picking the right leadership style, which fits well with your business or industry is essential to your personal success. If you’re interested in viewing the full infographic, find it here.

Do you identify with any of these personality types and leadership styles?

Seizing the right business opportunity will help you tap into your entrepreneurial spirit.

If you are interested in starting your own business and entrepreneurship, consider reading our eBook, Entrepreneurs’ Success Guide.

by WSI 

How brands can take a lesson from literature

At the turn of the 20th century, the Swiss Psychiatrist Carl Jung studied the human condition and concluded that we all act the way we do because we map back to a series of shared experiences. He assigned these experiences to 12 categories. Today, branding experts have stretched archetypes to apply to companies that exhibits certain traits. Thinking about you and your competitors in terms of archetypes can help you find differentiation.

Chart 1 - Types of Archetypes

Chart 2 - Explanation of Archetypes

Chart 3 - Brands and Archetypes

-Kai D. Wright