(Business) TWENTY-TWO PROFIT MODELS
TWENTY-TWO PROFIT MODELS
Well, several months ago I was able to find and download a PDF of the chapter on profit models. I apologize that I cannot find the PDF now.
This chapter discusses 22 different profit models that can be a part of a new business or product strategy. I wish I knew about this a couple years ago when I was starting up a new business. I think I understood the idea conceptually but I was not able to articulate my business plan’s profit model as well as I could now.
I really wish I had the PDF so that I could give you the 22 graphics that describe each particular profit model. I will give you a couple examples of profit models and if you are interested in knowing more you can pick up the book at the library or from the bookstore.
1. Customer Solutions Profit
Invest to know the customer, create a solution, develop the relationship. This causes losses early in the relationship, and significant profits thereafter. Outstanding practitioners include GE (from hardware to services and solutions), USAA (financial services), and Nordstrom (retailing services).
9. Specialization Profit
In many industries, specialist are several times more profitable than generalists. The specialists’ superior profitability derives from a multitude of factors, including lower cost, higher quality, stronger reputation, shorter selling cycle, and better price realization.
15. Transaction Scale Profit
Certain industries are transaction-based. In many of these arenas, as the size of the transaction goes up, the cost to perform or deliver a transaction does not rise as quickly as the revenue received. All the profit is concentrated in the big deals. Examples include investment banking, real estate, and long-haul air travel.
Transaction scale businesses reward those who control the largest transactions. Customer selection – investing in those customers with the largest deals – is key.
If you are interested in knowing more, here is the book.
How Strategic Business Design Will Lead You to Tomorrow's Profits
By Adrian J. Slywotzky and David J. Morrison
Times Business/Random House, December 1997
The Profit Zone, named by Business Week as one of the ten best business books of 1998, describes how executives can redesign their businesses to capture their industry's profit zone-the place where customers will allow you to earn a return above the cost of capital. Through the stories of twelve "reinventors"-executives who have successfully steered their companies through multiple value creation cycles-the book argues for a dynamic, customer- and value-centric strategy development process centered around the discipline of business design. It also introduces twenty-two profit models companies have harnessed to capture their profit zones.
Well, several months ago I was able to find and download a PDF of the chapter on profit models. I apologize that I cannot find the PDF now.
This chapter discusses 22 different profit models that can be a part of a new business or product strategy. I wish I knew about this a couple years ago when I was starting up a new business. I think I understood the idea conceptually but I was not able to articulate my business plan’s profit model as well as I could now.
I really wish I had the PDF so that I could give you the 22 graphics that describe each particular profit model. I will give you a couple examples of profit models and if you are interested in knowing more you can pick up the book at the library or from the bookstore.
1. Customer Solutions Profit
Invest to know the customer, create a solution, develop the relationship. This causes losses early in the relationship, and significant profits thereafter. Outstanding practitioners include GE (from hardware to services and solutions), USAA (financial services), and Nordstrom (retailing services).
9. Specialization Profit
In many industries, specialist are several times more profitable than generalists. The specialists’ superior profitability derives from a multitude of factors, including lower cost, higher quality, stronger reputation, shorter selling cycle, and better price realization.
15. Transaction Scale Profit
Certain industries are transaction-based. In many of these arenas, as the size of the transaction goes up, the cost to perform or deliver a transaction does not rise as quickly as the revenue received. All the profit is concentrated in the big deals. Examples include investment banking, real estate, and long-haul air travel.
Transaction scale businesses reward those who control the largest transactions. Customer selection – investing in those customers with the largest deals – is key.
If you are interested in knowing more, here is the book.
How Strategic Business Design Will Lead You to Tomorrow's Profits
By Adrian J. Slywotzky and David J. Morrison
Times Business/Random House, December 1997
The Profit Zone, named by Business Week as one of the ten best business books of 1998, describes how executives can redesign their businesses to capture their industry's profit zone-the place where customers will allow you to earn a return above the cost of capital. Through the stories of twelve "reinventors"-executives who have successfully steered their companies through multiple value creation cycles-the book argues for a dynamic, customer- and value-centric strategy development process centered around the discipline of business design. It also introduces twenty-two profit models companies have harnessed to capture their profit zones.
