Gennaro Cuofano's Blog, page 241

What Is An Organizational Structure And Why It Matters

An organizational structure allows companies to shape their business model according to several criteria (like products, segments, geography and so on) that would enable information to flow through the organizational layers for better decision-making, cultural development, and goals alignment across employees, managers, and executives.

Understanding the organizational structure of a company allows understanding how decisions are made. It is also a powerful tool for executives to shape their organization toward desired goals and long-term objectives. For that sake, designing a proper organizational structure also allows the execution of a company’s business model.

Based on the organizational structure the company will also have a different shape.

For instance, some organizations are typically hierarchic, which imply a top-down approach of information flow and definition of roles.

Theoretically, the organizational structure is critical for several reasons. Some of them might be:

Definition of roles within the organization, so that each employee knows its place and where she belongs
Goals alignment that makes groups of people work in coordination to achieve common business objectives
Culture development based on the shape of the organization
Productivity via a system meant to use the people part of the organization in the best possible way
Efficiency in the use and allocation of resources within the organization
Better decision-making process by allowing the flow of information within and across the several departments

Lacking an organizational structure might make it difficult for the organization to grow efficiently.

It might make it difficult for employees to understand their place in the organization. It might make it difficult for managers and executive to have a big picture of the company.

It might make it difficult for owners and shareholders to understand who’s accountable for what.

Traditionally, one of the critical differentiators of an organizational structure is about centralized vs. decentralized. Wherein a centralized organization the information flows from the top to the bottom of the organization linearly.

In a decentralized organization, companies try to remain more agile and flexible via a nonlinear information flows, where multiple touchpoints allow information to travel across the several parts of the organization.

Typically organizational structure can be categorized based on several parameters and priorities.

Based on the parameters and preferences the organization will take into account, it will also get shaped by these. More specifically an organizational structure can be organized in:

Functional: is a type of organization where people are grouped according to their area of professional competence and specialization. Typically this kind of organization is very bureaucratic and has a top-down approach. This implies that each department will have his manager or director. This kind of organization allows employees to specialize at best in specific functions. However, it will also limit their flexibility. While most traditional companies run this kind of organizational structure, many startups that need to make sure its small teams remain flexible and adaptable might opt for a different structure, where people are incentivized to form cross-functional teams
Divisional: is a type of organization where groups are organized according to the projects, or products the company focuses on. This structure is more flexible to the hierarchical organization, as each division will run almost as an independent business, that has independent control over resources and money spent. Each division working as an independent organization can be grouped by product line but also geography
Matrix: is a type of organization that blends elements of a functional and divisional structure. While it sounds appealing in theory, it might be hard to implement. As it might make people report to several bosses within the same organization and the communication flow might become too challenging as this might also generate confusion in the executive and management
Flatarchy: is a type of organization born from the startup way of acknowledging more independence and autonomy to employees, where they are closer to the chain of command, and the decision-making process. This type of organization still benefits from hierarchies, but it flattens them by generating an adaptable model for organizations. While this kind of approach might work well with small and medium size organizations, it might be difficult to implement for quite large organizations

Other types of organizational structure might also be based on several factors. For instance, in between the hierarchical and flatarchy, there might be several levels of organizations based on how loose are those hierarchies.

Also how far employees are from top management and how freely the information flows. Besides whether employees are involved in the decision-making process.

Choosing the kind of structure of your organization is very important, as based on that your company will be able to achieve a long-term objective, create a culture that fits those goals and it makes employees happy and efficient.

Other resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan
The Rise of the Subscription Economy
How to Build a Great Business Plan According to Peter Thiel
What Is The Most Profitable Business Model?
The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet
How To Create A Business Model
What Is Business Model Innovation And Why It Matters
What Is Blitzscaling And Why It Matters
Snapshot: One Year Of “Business Model” Searches On Google In Review
Business Model Vs Business Plan: When And How To Use Them
The Five Key Factors That Lead To Successful Tech Startups
Top 12 Business Ideas with Low Investment and High Profit
Business Model Tools for Small Businesses and Startups

How To Use A Freemium Business Model To Scale Up Your Business

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Published on December 29, 2018 16:46

A Decade-Long Evolution Of Apple Sales By Products

In this infographic, you can appreciate the evolution of Apple by looking at how its central products sales evolved in the decade 2008-18.

Taking a long-term perspective on how companies’ revenue streams evolve is interesting to understand also how their business strategy changes over time.

By taking a long-term look at the decade 2008-18 four main products (iPod, iPad, iPhone, Mac) and its other products, a few insights are coming up:

Over the years Mac remained a stable product. However, Apple, which started as a computer company had in the range of 10-15 years convert itself to become an entirely new company, powered up by a new business model and a whole new set of products. The Mac once the main product of the company, which made up most of its revenues. Over the years became a “niche” compared to the iPhone. In 2018 all the Mac products made up about 10% of the total net sales for Apple. While we can expect the Mac to still be relevant in the coming decade in the professional world, and its net sales might remain relatively stable over time. It might be possible that its sales share in comparison to other products might get smaller and smaller.

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The iPhone has been a massive success. Nothing new about it. Yet it is interesting to notice how the iPhone cannibalized the iPod. Where in conventional business strategy, cannibalization is something to avoid in most cases. In this particular scenario, the iPhone did cannibalize the iPod, yet it also opened up a much broader market. This blue ocean made Apple reach a completely different scale, by bringing it in the hands of mass consumers. Today the iPhone represents 63% of Apple’s net sales
From 2011-14 iPad and related product and services surpassed the Mac. This might have given the impression that the tablet market was ready to take over the portable computer market. Yet, that didn’t happen, or at least not as imagined. Starting 2015, the Mac picked up momentum and in 2018, the Mac still generated more sales than the iPad. Therefore, Mac and portable computer, in general, have shown a resilience that made it a relatively stable product for Apple
The iPod has been a massive success as Apple also introduced a new way of consuming music via the iTunes. But the iPod eventually has become more of a transitioning product that has ultimately led to the iPhone and iPad. Today the iPod sales are comprised of other products
The other products sales have in 2018 more than doubled compared to 2014. Other products comprise AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and other Apple-branded and third-party accessories. Some of those products might turn out to be hidden gems

References:

Apple 10K Forms from 2008-18

How Does Facebook Make Money? Facebook Hidden Revenue Business Model Explained

Other resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan
The Rise of the Subscription Economy
How to Build a Great Business Plan According to Peter Thiel
What Is The Most Profitable Business Model?
The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet
How To Create A Business Model
What Is Business Model Innovation And Why It Matters
What Is Blitzscaling And Why It Matters
Snapshot: One Year Of “Business Model” Searches On Google In Review
Business Model Vs Business Plan: When And How To Use Them
The Five Key Factors That Lead To Successful Tech Startups
Top 12 Business Ideas with Low Investment and High Profit
Business Model Tools for Small Businesses and Startups

How To Use A Freemium Business Model To Scale Up Your Business

The post A Decade-Long Evolution Of Apple Sales By Products appeared first on FourWeek MBA.

View more on Gennaro Cuofano's website »

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Published on December 29, 2018 13:43

A Look At Apple’s Business Strategy For The Coming Years

Back in 1985, Steve Jobs was ousted from Apple. The company would still benefit from a few years of continuing growth until it hit a roadblock and sales started to fall.

By 1996 Apple brought in a new CEO which was supposed to turn it over. But by 1997 things didn’t get better until Apple recalled Steve Jobs after acquiring its company NeXT. Steve Jobs came back, and in a few years it turned Apple over and made it become a tech giant again.

The rest is history.

Read the whole story: Revisiting The Apple-NeXT Deal And Why It Mattered

One of the biggest mistakes people make when looking at Apple business strategy is to look at it solely as it was a product company. That mistake happens because by time to time you see its revenue streams and something like that happens:

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As of 2018, iPhones represented about 63% of the company’s net revenues.

However, Apple is way more than that. The Mac and its following products without its OS operating system would not have been that successful.

The same applies to the iPod:

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One of the mistakes we all make when looking at a company’s success is to think that a single tactic or product determined its success. However, it’s never that simple.

In many cases, a combination of technology, product, and business modeling make it possible.

As reported by cultofmac.com:

April 28:Apple releases the third-generation iPod, which moves the control buttons to a new row of touch-sensitive buttons under the screen. This model introduces the USB dock connector for syncing. Apple also introduces iTunes Music Store, which opens with 200,000 songs available for 99 cents each. At a time when music piracy is rampant, the move is seen as ballsy. Who would pay for music when it is available for free? But Jobs argued that simplicity and ease of use would trump stealing. Most consumers wanted to do the right thing, he said.

In short, Steve Jobs bet on a new way of consuming music, which implied a whole new business model.

Where Music needed to be purchased and consumed on CD, with entire albums, Apple made it possible to buy any song for just 99 cents, and you didn’t need to buy the whole album.

This new business model for music allowed the iPod to take off (there were also critical aesthetic changes to the product itself).

By 2007, the iPod would bring to Apple over eight billion dollars in annual revenues!

In 2007 Apple launched the iPhone. It was a revolution in the way it conceived phones. More than a phone it was like having a mini-computer in the pocket.

It isn’t like the iPhone itself was what made Apple sales take off. Instead, once the Apple Store came out, that is when the iPhone came as a massive success!

As reported by apple.com:

CUPERTINO, California—July 14, 2008—Apple® today announced that iPhone and iPod® touch users have already downloaded more than 10 million applications from its groundbreaking new App Store since its launch late last week. Developers have created a wide array of innovative mobile applications ranging from games to location-based social networking to medical applications to enterprise productivity tools. Users can wirelessly download applications directly onto their iPhone or iPod touch* and start using them immediately. More than 800 native applications are now available on the App Store, with more than 200 offered for free and more than 90 percent priced at less than $10.

Once again, technology + beautifully crafted product + business model innovation = massive success.

As Steve Jobs reported back then “The App Store is a grand slam, with a staggering 10 million applications downloaded in just three days,” and he continued, “Developers have created some extraordinary applications, and the App Store can wirelessly deliver them to every iPhone and iPod touch user instantly.”

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Once again Steve Jobs and Apple changed the rules of the game. They created a platform where developers could monetize their expertise and put applications in the hands of mass consumers.

Apple also played smart and changed the rule of the game in terms of carrier agreements. Distribution is always a critical ingredient for any company’s success toward scalability.

Therefore, rather than just creating a cool product, Apple created an ecosystem made of several key players.

What’s next?

Let’s start with the current numbers.

A few Apple products make most of its revenues

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The iPad, Mac, and iPhone represent most of the company revenue. In 2018 84% of Apple net sales came from those products. The remaining part went toward service and other products.

Services represent the ecosystem that supports Apple sales

As reported on Apple annual report for 2018 the services side comprised:

1. Digital Content and Services

The iTunes Store, available for iOS devices, Mac and Windows personal computers and Apple TV, allows customers to purchase and download or stream music and TV shows, rent or purchase movies and download free podcasts. The App Store, available for iOS devices, allows customers to discover and download apps and purchase in-app content. The Mac App Store, available for Mac computers, allows customers to discover, download and install Mac applications. The TV App Store allows customers access to apps and games specifically for Apple TV. The Book Store, available for iOS devices and Mac computers, features ebooks from major and independent publishers. Apple Music offers users a curated listening experience with on-demand radio stations that evolve based on a user’s play or download activity and a subscription-based internet streaming service that also provides unlimited access to the Apple Music library.

Therefore the service side primarily contains digital content within:

iTunes Store
App Store
Mac App Store
Book Store
Apple Music

2. iCloud

The cloud service which stores music, photos, contacts, calendars, mail, documents and more, keeping them up-to-date and available across multiple iOS devices, Mac and Windows personal computers and Apple TV.

3. AppleCare

Assistance that is built into software products, electronic product manuals, online support including comprehensive product information as well as technical assistance.

4. Apple Pay

Cashless payment service that offers an easy, secure and private way to pay.

This service side of the business has been critical to allowing Apple products sales to take off.

Other products: the SmartSpeaker battle? Not an easy one!

Apple TV
Apple Watch
Other: AirPods, Beats products, HomePod, iPod touch and other Apple-branded and third-party accessories

As of 2018 the other products only represented 6.5% of Apple’s revenues. Yet what if the next gem is right there?

By following the pattern of how Apple products have been evolving, among the potentially successful products, the HomePod powered by Siri seems to be the most promising.

The battleground on voice devices is not an easy one. And Apple launched SiriKit to allow “iOS apps and watchOS apps to work with Siri, so users can get things done using just their voice. Your content and services can be used in new scenarios, including access from the lock screen and hands-free use.”

SiriKit is also critical to control the HomePod. As pointed out by Apple:

With the intelligence of Siri, users control HomePod through natural voice interaction and can conveniently access iOS apps that support SiriKit Messaging, Lists, and Notes. Siri recognizes SiriKit requests made on HomePod and sends those requests to the user’s iOS device for processing. To prepare your app, make sure that your SiriKit integration is up to date and that you’ve adopted all of the appropriate intents.

Thus SiriKit might be the attempt of Apple to build the same ecosystem it managed to create in the past for the OS, and App Store. Yet the playground for voice is a hard one, made of competitors like Google (Google Home) and Amazon (Alexa).

The SmartSpeaker battle is still on, and Apple didn’t seem to have found its homerun yet.

As reported by Bloomberg, according to Slice Intelligence, in the first quarter of 2018, the market share for SmartSpeakers was divided as it follows:

HomePod 10%
Amazon Echo 73%
Google Home 14%

Of course, it’s too early to say who’ll win the battle. But what if the next thing is around the corner?

What’s next for Apple? Apple’s iGlasses?

As reported by TechCrunch, in 2017, Apple bought Vrvana, a startup from Montreal, Canada, maker of the Totem headset, for around $30 million.

The purchase of Vrvana is not an isolated case. As Apple also might have acquired a year before SensoMotoric Instruments (SMI), an eye-tracking firm, as reported by TechCrunch.

Other acquisitions in the previous years comprised Flyby Media, Metaio, Emotient and Faceshift.

Are the Apple Smart Glasses an option?

Time will tell!

References:

Apple Annual Report 2004
Apple Annual Report 2009
Apple Annual Report 2018

How Does Facebook Make Money? Facebook Hidden Revenue Business Model Explained

Other resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan
The Rise of the Subscription Economy
How to Build a Great Business Plan According to Peter Thiel
What Is The Most Profitable Business Model?
The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet
How To Create A Business Model
What Is Business Model Innovation And Why It Matters
What Is Blitzscaling And Why It Matters
Snapshot: One Year Of “Business Model” Searches On Google In Review
Business Model Vs Business Plan: When And How To Use Them
The Five Key Factors That Lead To Successful Tech Startups
Top 12 Business Ideas with Low Investment and High Profit
Business Model Tools for Small Businesses and Startups

How To Use A Freemium Business Model To Scale Up Your Business

The post A Look At Apple’s Business Strategy For The Coming Years appeared first on FourWeek MBA.

View more on Gennaro Cuofano's website »

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Published on December 28, 2018 15:40

Revisiting The Apple-NeXT Deal And Why It Mattered

It was the year 1997. Apple was experiencing a sharp sales decline:

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Compared to 1996 the company net sales decreased by 28% and even more compared to just a couple of years before.

To understand the severity of the crisis, an article from NY Times dated March 28th, 1996 said:

Apple Computer said today that it expected to report a $700 million after-tax loss for its fiscal second quarter, a sign that the nation’s third-largest personal computer maker is in even deeper financial trouble than had previously been recognized.

The company said that more than half of the loss it was projecting for the quarter, which ends March 31, would come from write-downs against more than $1 billion in unsold products. An additional 25 percent would be related to restructuring costs, the company said, indicating that another wave of layoffs is imminent.

Unsold products were a cause of the decline. As pointed out in the 1997 Apple Annual Report:

Total Macintosh computer unit sales and peripheral unit sales decreased 27% and 33%, respectively, during 1997, compared with 1996, as a result of a decline in worldwide demand for most of the Company’s product families, which the Company believes was due principally to continued customer concerns regarding the Company’s strategic direction, financial condition and future prospects, and the viability of the Macintosh platform, and to competitive pressures in the marketplace

Also, Apple had lowered its prices on many of its products. So even though the aggregate average revenue didn’t change much it still contributed to the sales decline:

The average aggregate revenue per Macintosh unit decreased slightly in 1997 compared with 1996, primarily due to continued pricing actions, including increased rebates, across most product lines, substantially offset by a shift in product mix toward the Company’s newer and higher priced PowerBook products.

The company needed a turnaround, and to make it happen, it brought in as CEO, Gil Amelio, which was supposed to be a turnaround master.

Yet a year after, in 1997, the company was still in a downfall. Apple swiftly made a move and removed Amelio as CEO, and that is when Steve Jobs joined the company again, after being ousted in 1985.

This is how Steve Jobs and Bill Gates recounted the transition from Amelio back to Jobs:

What happened there?

Jobs was going back to Apple, and it wasn’t cheap for the company. As reported on the 1997 Annual Report:

In February 1997, the Company acquired NeXT. NeXT developed, marketed and supported software that enables customers to implement business applications on the Internet/World Wide Web, intranets and enterprise-wide client/server networks. The acquisition was accounted for as a purchase and, accordingly, the operating results pertaining to NeXT subsequent to the date of acquisition have been included in the Company’s consolidated operating results. The total purchase price, including the fair value of the net liabilities assumed, was $427 million of which $375 million was allocated to purchased in-process research and development and $52 million was allocated to goodwill and other intangible assets. The purchased in-process research and development was charged to operations upon acquisition, and the goodwill and other tangible assets are being amortized on a straight-line basis over two years.

Looking back at the Apple investment in NeXT and given its financial distress, it’s easy to understand that wasn’t an easy choice. What made Apple go for it?

When Steve Jobs left Apple in 1985, it wasn’t in good terms. As soon as Steve Jobs left the company, he also announced he was going to start a new company, which would become NeXT.

As soon as Jobs made that announcement, Apple followed up with a suit!

To understand the strategic importance of NeXT for Apple as appleinsider.com pointed out “today many of us are using macOS daily and unaware that features such as the Dock were born in NeXTSTEP. We’re definitely all on the web, and even among those who know Tim Berners-Lee created the World Wide Web, few know he did it on a NeXT cube.” and it continued “If you ever develop apps for macOS or iOS, too, you can still see evidence of NeXTSTEP’s DNA: there are foundational elements in Objective-C that were created for NeXTSTEP and whose names begin with NS.”

At the time Apple was experiencing a substantial flaw in its software. Many fail to understand that the business success of Apple wasn’t just its hardware and aesthetics, but the software side played a key role.

When Steve Jobs pitched to Apple its NeXTSTEP (the software that powered NeXT computers); he won his way back to Apple.

As pointed out on macworld.com:

ump back to 1996, when Apple was looking for a replacement OS. Steve Jobs heard of this search and pitched NeXTSTEP to Apple executives. They liked what they saw, and in December of 1996, Apple announced it was purchasing NeXT with the goal of using NeXTSTEP as the foundation of a new Macintosh OS. Along with the announcement came news that Steve Jobs would be taking an advisory role in the company. In a stunning turn of events, the founder was back.

The team from NeXT that Jobs brought to Apple right away tried to adapt the software side from NeXT to the Apple OS. The project took the name of Rhapsody.

Long story short, Adobe (at the time a critical third-party developer for Apple at the time) didn’t support this project until Apple changed its plans. Until in 1998, Apple started to develop a new graphical interface for Rhapsody, called “Aqua,” which as pointed out by macworld.com during that project “the philosophical shift from Rhapsody to OS X took place.”

The shift to Aqua was critical to winning over the consensus of developers, that were and are a key ingredient to Apple success.

When Steve Jobs presented Aqua, the audience was stunned as it showed many new elements of the graphical interface. Apple understood it needed to release it and put it in the hands of as many people as possible.

What did Apple do? As macworld.com pointed out:

Apple set the price of “Mac OS X Public Beta,” as it was called, at $29.95—low enough for anyone could get it if they wanted, but high enough to exclude folks who might not be constructive to the beta testing process. The beta sold through Apple’s online store; the company later offered a $30 discount on the first full release of OS X (v10.0) when it shipped in 2001.

The way the company launched its beta is quite impressive. Rather than release a free version, Apple released its beta with a low price point, yet high enough to exclude those that would not be constructive sufficient to the future development.

However, what mattered was that finally, Apple had won over the consensus of developers, which started to test and report bugs, which made the software grow and improve quickly.

To understand the importance of that development, Apple entire software ecosystem has been built on top of that. Not only desktops devices, but also iPhone and iPods devices.

Therefore, Steve Jobs entered again in Apple as Interim CEO never left the company again.

To have a bit of context of the impact that Jobs brought to Apple. In 1998 the company was profitable again. However, Apple would gain momentum in sales again in the 2000s when Apple laid out a strategy that saw the launch of new products that hooked the consumers.

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By 2004 the iPod would be a hit which fueled and got fueled by other music products consisting of iTunes Music Store sales, iPod-related services, and Apple-branded and third-party iPod-related accessories.

The rest is history!

Key takeaways

In 1985 Steve Jobs was ousted by Apple, and he started a new company called NeXT. In the next decade, Apple would fall in a negative spiral of declining sales.

Until 1996, it brought in a new CEO (Amelio) to turn it over. Yet, by 1997 as numbers weren’t getting better, and Apple was facing a few flaws in its software, Jobs pitched his NeXTSTEP to the management.

The Apple management was hooked, and Steve Jobs was back to Apple after the company bought NeXT. NeXT primary feature that helped Apple build the ecosystem that would be critical to its success was NeXTSTEP (its software side) which eventually turned in a graphical interface, called Aqua.

It finally won the consensus of developers that made it become OS, the software that would become the backbone of all the Apple devices. By 2004 Apple got back on track on its sales. And its first mass-market product, the iPod, fueled by iTunes was a massive success already.

What lessons, if any, can we learn?

hardware without software doesn’t go far, and vice-versa: When Apple finally got all the pieces in place with the right software in a beautifully crafted hardware, that is when the success came. The same applies to software companies that enter the hardware space. When Google has a plan for the hardware it isn’t like Google is trying to compete with Apple. Rather Google wants to gain access to data, which is the core asset of its business. Thus, instead of relying on data via a third distribution channel, Google completes its vertical integration by entering the hardware space and by putting its devices in the hands of as many people as possible
don’t leverage on pricing: instead of leveraging on its brand, Apple lowered its prices in a moment of declining sales. That made things even worse. Lowering prices in most cases (unless you’re building your whole business model on it) is not a winning strategy
the lack of a compelling value proposition: when Apple finally came up with Aqua, developers were hooked. In any company success, there is a side and key partner that will help the company grow quickly. You need to understand what motivates them and how to craft a compelling value proposition to bring them onboard
build ecosystems, not products: one of the mistakes we all make when we look at Apple success is about how its products were successful. However, the iPod took off in tandem with iTunes, and the iPhones took off in tandem with the Apple Store. It’s not the single product but the ecosystem you create that makes the company successful
network effects: a key element of any company’s success is its ability to tap into network effects. Which means that the more people use a product or service the better it gets for the next people joining it. The more people handled Apple devices, the more its ecosystem got stronger, better and more reliable. Thus, by making it even better for larger and larger audiences
don’t give it for free, not even in beta: it’s interesting to see how Apple launched a beta test, and instead of making it free, it made the developers really interested in it to purchase it. For a minimum price, yet they had to pay. In a world where most businesspeople believe that free is better, always. Seeing how Apple executed this beta test was quite compelling! Of course, Apple had already a large audience and a known brand. So if you’re starting from scratch that might not be realistic. However, the concept of launching a paid beta is interesting as it allows to work only with people that might be genuinely interested in it

References:

Apple Annual Report 1997
Apple Annual Report 2004

How Does Facebook Make Money? Facebook Hidden Revenue Business Model Explained

Other resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan
The Rise of the Subscription Economy
How to Build a Great Business Plan According to Peter Thiel
What Is The Most Profitable Business Model?
The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet
How To Create A Business Model
What Is Business Model Innovation And Why It Matters
What Is Blitzscaling And Why It Matters
Snapshot: One Year Of “Business Model” Searches On Google In Review
Business Model Vs Business Plan: When And How To Use Them
The Five Key Factors That Lead To Successful Tech Startups
Top 12 Business Ideas with Low Investment and High Profit
Business Model Tools for Small Businesses and Startups

How To Use A Freemium Business Model To Scale Up Your Business

The post Revisiting The Apple-NeXT Deal And Why It Mattered appeared first on FourWeek MBA.

View more on Gennaro Cuofano's website »

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Published on December 27, 2018 15:10

How Much Is Amazon Advertising Business Worth?

Amazon more than doubled its advertising revenues from the first nine months of 2017, compared to 2018. Indeed, the revenues went from $2.92 billion in 2018 to $6.72 billion in 2018.

Compared to Facebook $38.37 billion and Google $83.68 billion for the same period, Amazon is still a small player. However, if we take into account that Amazon runs a diversified business model, with several revenue streams, it also gives the company more space to experiment with advertising!

Entering the winner-take-all digital advertising business

In a digital advertising market dominated by Google and Facebook, there might be a third entrant. Conquering that place would a hard if a not impossible enterprise, for any company, except one: Amazon.

In a scenario, of winner-take-all effect, the duopoly Google-Facebook control the market.

Just to give you a bit of context, you can appreciate from the infographics below how the digital advertising business looks like between the two tech giants.

Below Facebook advertising money-making machine:

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And Google advertising business dissected:

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How does Amazon stand in comparison?

Amazon advertising business

I dived into Amazon financials and looked at an item called “Other revenues” which primarily comprises revenues from Amazon advertising business. And this is what I figured.

If we look at the third quarter of 2018:

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Amazon advertising revenues have grown from over a billion dollar in the third quarter of 2017, compared to almost two and a half billion dollars in the third quarter of 2018!

If we change perspective and look at the first nine months of 2017, compared to 2018:

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Year over year there was about a 230% increase. So the revenues that come from Amazon advertising business more than doubled (assuming that the advertising business of Amazon represents most of the “other” revenues).

How does Amazon compare to Google and Facebook?

Amazon vs. Google vs. Facebook: the advertising business compared

How does Amazon compare to Goole and Facebook?

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By looking at the size of the Amazon advertising business, that is still about six times smaller than Facebook and over twelve times smaller than Google.

However, if we look at Amazon overall business model you realize that (as of now) advertising is a small chunk of its revenue:

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It is also interesting to notice how Amazon is diversifying its revenues toward the physical store and how other parts of the business, like subscriptions and AWS, have a different logic compared to the core business.

Where online stores have a very low-profit margin yet operate with the logic of the cash machine.

Instead, Amazon Prime operates with the logic of a subscription business model. And AWS has still a different logic compared to other units of the business, yet it runs at high margins compared to the online stores.

Amazon would be what can be defined as a multimodal business model. Compared to Google which, as of 2017 still relies mostly on advertising:

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And Facebook that entirely relies on advertising:

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Amazon has more space to maneuver and experiment with new revenue sources.

Will Amazon become the next giant to dominate the digital advertising space?

References:

Amazon 10-Q Form
Google 10-Q Form
Facebook 10-Q Form

How Does Facebook Make Money? Facebook Hidden Revenue Business Model Explained

Other resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan
The Rise of the Subscription Economy
How to Build a Great Business Plan According to Peter Thiel
What Is The Most Profitable Business Model?
The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet
How To Create A Business Model
What Is Business Model Innovation And Why It Matters
What Is Blitzscaling And Why It Matters
Snapshot: One Year Of “Business Model” Searches On Google In Review
Business Model Vs Business Plan: When And How To Use Them
The Five Key Factors That Lead To Successful Tech Startups
Top 12 Business Ideas with Low Investment and High Profit
Business Model Tools for Small Businesses and Startups

How To Use A Freemium Business Model To Scale Up Your Business

The post How Much Is Amazon Advertising Business Worth? appeared first on FourWeek MBA.

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Published on December 27, 2018 06:34

What Is Bounded Rationality And Why It Matters

Bounded rationality is a concept attributed to Herbert Simon, an economist and political scientist interested in decision-making and how we make decisions in the real world. In fact, he believed that rather than optimizing (which was the mainstream view in the past decades) humans follow what he called satisficing: satisfy and suffice.

Many models, especially in economic theory and social sciences still rely on the unbounded rationality to make predictions about human behavior. Those models have proved wholly ineffective, and they do not reflect the real world.

In the last decade cognitive theories that look at humans as a bunch of flawed being that due to their biological limitations commit a series of errors (the so-called biases) has taken over. I supported this theory on this blog. However, what might seem biases, at a more in-depth look are in reality unconscious rationality (what we call gut feelings) that helps us survive in the real (uncertain) world.

Bounded rationality is a framework that proves way more robust – I argue than any other. That is why it makes sense to look at it to understand what bounded rationality really means.

Bounded rationality – more than a theory is a warning to economists and social scientists – that can be summarised as the study of how people make decisions in an uncertain world. As pointed out by Greg Gigerenzer, there are at least three meanings attributed to unbounded rationality:

optimization: there are constraints in the outside world that don’t allow us to get all the data available
biases and errors: there are constraints in our memory and cognitive limitations that limit our decision-making ability
bounded rationality: how do people make decisions when optimization is out of reach.

The first two don’t admit the existence of an uncertain world. Why? When you study decision making under risk, the assumption is that we live in a certain world, where given all the data available we can compute that risk. What economists like to call optimization under constraints. This is true only in a small world, where everything can be calculated.

The second assumes that due to our limited cognitive abilities we deviate from solving problems accurately, thus we fall into biases and cognitive errors. While the first emphasizes on rationality, the second focuses on irrationality.

The third concept, which is what bounded rationality really is about was elaborated by Herbert Simon. He asked the question, “how do people make decisions when optimization is out of reach?” In short, how do people make decisions in an uncertain world?

There are a few things to take into account when thinking about bounded rationality:

We don’t live in a small world

In a small world, given enough data, we can compute the consequence of many actions and behaviors.

In the real world, risk cannot be known

In many disciplines, especially economics and finance at the academic level, the assessment of risk is central. However, what we cal risk implies something that can be computed. In fact, in the financial toolbox, there are many measures of risks. However, those are often worthless, since they start from the assumption that given enough data you can put a precise number on the risk you’re undertaking. However, that is not the case. In the real world, there are hidden variables that can be never taken into account even if you have zillions of data

Optimization is not bounded rationality

Many confuse optimization for bounded rationality. They are opposite concepts. Optimization starts from the assumption that we live in a small world where you can compute risk. Bounded rationality starts from the assumption that we live in an uncertain world where we can’t assess risk. That is why we have a toolset of heuristics that work more accurately than complicated models in the real world

Biases are not errors but heuristics that work in most cases to make us avoid screw-ups

In short, heuristics rather than being shortcuts that are fast but inaccurate. Those are instead quick, effective and in most cases more accurate than other forms of decision making (in the real world)

Look at the one good reason

In an uncertain world in many cases ignore all the information and look at the one good reason to make a decision works best

Survival is rationality in the real world

Put in this form rationality is not a matter of beautiful mathematical models, but it is about survival. What survives might be then called rational

Bounded rationality explained

Books to read to enhance your bounded rationality

With technological advancements, there is more and more available information at a cheaper cost (actually information nowadays is free). Also, technology also gives us the impression that we live in a world that we can control. All it takes is enough information and we’ll be able to be successful in business. That is why you need to have the latest news, the newest gadget and follow the latest trend.

This kind of approach can live you astray! As you get access to more and more information, this also improves the noise exponentially. Thus, rather than getting better at making decisions you become way worst. With an even worse consequence: you’re not aware of that. The fact that you have a lot of data makes you believe that you know best.

Therefore, I believe there are three aspects to take into account in the modern, seemingly fast-changing world:

have at your disposal a simple yet effective toolset for decision-making in the real world
develop the ability to ignore information that isn’t needed
know when to trust your gut feelings rather than relying on complex models

In this respect, three books can help you with that. Two books are from Gerd Gigerenzer, a German psychologist who has studied bounded rationality and heuristics in decision making. The third is from Nicholas Nassim Taleb, author of The Black Swan and the Incerto Book Series.

Risk Savvy: How to Make Good Decisions

In the past century, the leap forward for humanity was to teach to most of us how to read and write. If that was enough in a modern world where information was still scarce. Nowadays with the advent of social media and the increasing speed of the internet, there is another tool that anyone has to master to survive: statistical thinking. Risk Savvy helps you build the toolbox to become a better statistical thinker. Or to ask better questions that allow you to navigate through the noise of the modern world:

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Gut Feelings: The Intelligence of the Unconscious

This book is an excellent introduction to the concept of bounded rationality and heuristics. It is also a fresh perspective on decision-making. Where current prevailing cognitive psychological theories focus on our biases and cognitive errors, this books focuses on why instead those heuristics make a lot of sense. In fact, gut feelings which are seen quite skeptically in the world of academia and corporations where big words are looked with more respect. This book shows you why gut feeling matters in business as in life:

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Skin in the Game: Hidden Asymmetries in Daily Life

Skin in the Game is the bible for understanding how to get along in a world that is plenty of hidden asymmetries:

Skin in the Game: How Nassim Nicholas Taleb Can Change Your View of the World

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Other resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained

20 business model types dissected:

Amazon Business Model
Netflix Business Model
Starbucks Business Model
LinkedIn Business Model
Google Business Model
Nike Business Model
DuckDuckGo Business Model
ALDI Business Model
Apple Business Model
TOMS Business Model
Walmart Business Model
Snapchat Business Model
Paypal Business Model
Alibaba Business Model
Salesforce Business Model
Microsoft Business Model
Baidu Business Model
Facebook Business Model
YouTube Business Model
Spotify Business Model

The post What Is Bounded Rationality And Why It Matters appeared first on FourWeek MBA.

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Published on December 25, 2018 13:06

Top Business Podcasts To Listen In 2019

In the last years, the Podcast industry has boomed.

From San Diego to Shanghai we saw the rise of hundreds of podcasters.

In the US alone from 2008 to 2016 the podcast consumption grew at a double-digit rate, and it does not seem to stop.

What makes the podcast industry so amazing? Let’s dive into it!

What is a podcast?

Simply put, a podcast is the on-demand version of the radio. In short, during the 80s you had to rush to listen to your favorite DJ speaking through the radio; nowadays you can listen to your favorite show at any time, anywhere, with a single finger’s tap.

Is it worth your time listening to a podcast?

The most significant aspect of podcasting is the fact that you can listen to your favorite show while you are doing other things. On the other hand, you have to be careful how you use this fantastic tool.

Although I do not recommend you multitask. There are certain situations in which, listening to a podcast while doing something else may enhance your productivity.

In short, specific activities do not get along with podcasting, while others do. The fundamental principle is to avoid those activities that use the same part of the brain than listening to a podcast requires.

In other words, it is essential to prevent those activities that require deep or full attention (such as reading). Therefore, the more action comes automatic, the better that is suited for listening podcasts.

Some examples?

walking
washing dishes
commuting
cleaning
at the gym (while on the treadmill)

If you need inspiration on when is a good time to listen to a podcast check out what other podcast lovers say on Quora.

On the other hand, I suggest a balance. Even though, those activities are “mindless” it is essential to use them to be practice mindfulness. Therefore, the 50/50 rule applies.

Thus, entirely focus on the mindless things you are doing for half the time. Use the other half of your time to listen to your favorite podcasts.

Now that we defined the best way to use this fantastic tool let’s see what the business podcasting world offers to you.

Our Top Selection

We are going to recommend a few podcasts that can enhance your business acumen. Also, for each show, we are going to suggest some good episodes. By the end of this article, you will have a list of podcasts you can listen thru for the whole year.

Masters of Scale

Hosted by Reid Hoffman, co-founder of LinkedIn, former PayPal Mafia and author of Blitzscaling (I also put together the Blitzscaling business model innovation canvas) Masters of Scale is a resource you can’t miss.

Plenty of useful interviews to entrepreneurs masters of scaling business, this podcast is incredible!

Below some of the episodes we liked the most:

WHEN TO IGNORE CONVENTIONAL WISDOM
HOW TO BUILD TRUST FAST
HOW TO KEEP IT SIMPLE WHILE SCALING BIG
HOW TO KILL YOUR BAD IDEAS
HOW TO BUILD YOUR COMPANY TO LAST

Marketing School

Hosted by Neil Patel and Eric Siu, this podcast assembles a few essential pills for marketers. The format if quite interesting as in a short episode encapsulates the experiments those two marketers have been going on.

It’s is the most hands-down and practical podcast, which helps you to have actionable insights to grow your digital business.

Below some episodes we suggest:

Here’s What I Did When My Google Traffic Tanked

A Simple Little Hack to Generate More Visitors (Without Spending on Ads)

How Books Can Make You More Money (Even if You Don’t Read Them)

7 Quick Hacks to Boost Your Click-Through-Rate

How to Do Internal Linking The Right Way

Product Hunt Radio

Hosted by the homonym platform for growth marketers, entrepreneurs, and startuppers. It is another of those podcasts you can’t miss.

As this entered The Four-Week MBA podcast list recently, we’re suggesting you get on their page and start listening as many episodes to judge yourself what are the most relevant.

The Startup Chat

Hosted by two serial entrepreneurs, this is another podcast that can help you during both hard times and times where you need to find a solution for your business. A few episodes we liked the most:

Tips to Generate Customer Insights
How to Stay Mentally Healthy in a Startup
How to Create Vision & Mission Statements
Growing from $1MM to $10MM
Consistency In Execution

Freakonomics

Stephen Dubner, the co-author (with economist Steven Levitt) of the most original economics book, Freakonomics, is also the author of the homonym podcast.

The uniqueness of this podcast stands in Dubner’s ability to address a major issue in the most entertaining way possible. Also, in many episodes, Dubner brings the economic theories to test them in the real world.

If you want to develop a real understanding of economics, away from the sterile world of academia, this podcast must be added to your library!

Below some episodes we highly recommend,

How to Be More Productive
How to Make a Bad Decision
How to Become Great at Just About Anything
How to Create Suspense
Should We Behave Like Economists Say We Do?

The Smart Passive Income

In Business Mastery | Five Must-Read Business Books in 2017 Pat Flynn’s book, Will it Fly was recommended as one of the best business books to read in 2017.

In addition to that, Pat Flynn’s podcast, The Smart Passive Income is an endless stream of invaluable resources that can help you boost your business and bring it to the next level!

Below some episodes we highly recommend,

How to Create Your Life Vision Plan
Tips and Tricks for Getting the Most Out of the Conferences You Attend
What I Wish I’d Known Before Starting My Own Business
Money and Legal Considerations for Starting Out
Mentors and Masterminds with Ellory Wells

EOFire

John Lee Dumas, the founder & host of EOFire (Entrepreneur On Fire), is among, the most successful podcasters in the world.

Among his most successful enterprises, there is The Freedom Journal, a tool that helps you to set, implement and achieve any goal within 100 days!

With a total gross income of almost $2.5mln for 2016, you can understand the level of success that John Lee Dumas reached in only a few years.

As you can imagine, he attributes part of his success to his ability to set, implement, and track his goals.

Dumas’ podcast is the manna for aspiring businesspeople.

Below some episodes we highly recommend,

How to become a niche marketing and sales systemization powerhouse with Matthew Pollard
Leverage your income and impact by turning your knowledge into an online course with Troy Dean
How to innovate and launch ideas that stand out in a crowded marketplace with Tamara Kleinberg
Escaping the nine to five with Amy Mewborn
Social media tactics to go viral worldwide with Rachel Pedersen

The James Altucher Show

When I first started to write, I needed someone that I could use as the source of inspiration. Although reading the classics helped me a lot, there is one person that I believe has an amazing story-telling ability, and that is James Altucher.

Not only I find his writing skills superb; this man also put together a podcast series, where he interviews many incredible people.

What sets James Altucher (pronounced as he specifies “James I’ll touch her” but very fast) apart is the ability to talk about his life’s failures like none in the business world.

Saying that his life has been a mess is a euphemism (he made and lost millions several times), yet he tells it outspokenly, and he is now more successful than ever!

Below some episodes we highly recommend,

Scott Adams – How to Use Mass Persuasion Techniques to Become President of The United States
Seth Godin – Change Your Mind, Choose Your World & More Genius Advice
Chip Conley – How To Find Your Calling (what I learned by accident because of AirBnB)
Robert Cialdini – The 7 Techniques To Influence Anyone Of Anything
Jordan Harbinger: The Mindset We All Want

The Tim Ferris Show

In this blog, the name “Tim Ferris” showed up in many articles (from Solopreneurship 101: Finding Your Muse a La Tim Ferris (How to Find Your Business Muse in Three Easy Steps) to MBA or Start-Up? The three variables to take into account).

Therefore, Ferris does not need any presentation. His show is among the most useful in the world for a few reasons.

First, Tim Ferris tests everything he does. In other words, when he gives you the advice; you can expect it to be real.

Second, his podcasts span across several disciplines; from business to dieting, there is a broad range of resources that Tim Ferris makes available to his audience.

Third, there are few people in the world with his ability to deconstruct world-class performers’ routines, and habits and make them available to you! It is a podcast you must have in your library!

Below some episodes we highly recommend,

Becoming the Best Version of You Matt Mullenweg:
Characteristics and Practices of Successful Entrepreneurs
Tony Robbins on Morning Routines, Peak Performance, and Mastering Money
The Tim Ferriss Podcast is Live! Here Are Episodes 1 and 2 (Kevin Rose and Joshua Waitzkin)
Tim Ferriss Interviews Arnold Schwarzenegger on Psychological Warfare (And Much More)

The resources you need to get started with your business model:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan
The Rise of the Subscription Economy
How to Build a Great Business Plan According to Peter Thiel
What Is The Most Profitable Business Model?
The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet
How To Create A Business Model
What Is Business Model Innovation And Why It Matters
What Is Blitzscaling And Why It Matters
Snapshot: One Year Of “Business Model” Searches On Google In Review
Business Model Vs Business Plan: When And How To Use Them
The Five Key Factors That Lead To Successful Tech Startups
Top 12 Business Ideas with Low Investment and High Profit
Business Model Tools for Small Businesses and Startups

How To Use A Freemium Business Model To Scale Up Your Business

Popular case studies from the blog:

The Power of Google Business Model in a Nutshell
How Does Google Make Money? It’s Not Just Advertising!
How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
How Amazon Makes Money: Amazon Business Model in a Nutshell
How Does Netflix Make Money? Netflix Business Model Explained
How Does Spotify Make Money? Spotify Business Model In A Nutshell
The Trillion Dollar Company: Apple Business Model In A Nutshell
DuckDuckGo: The [Former] Solopreneur That Is Beating Google at Its Game

The post Top Business Podcasts To Listen In 2019 appeared first on FourWeek MBA.

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Published on December 25, 2018 07:00

5 Business Models Books You Should Be Reading In 2019

When you purchase an iPhone, you’re not buying a piece of hardware, you’re buying an ecosystem and an innovative business model, all packaged together.

You might not be realizing that as companies that create a lasting advantage also innovated their business model. But when Apple is selling you an iPhone at a very high-profit margin, it’s using a reverse razor and blade business model strategy.

Where the content you can download on iTunes and the countless number of Apps you can find on the Apple Store, is given to you either for free or for a low price and no friction.

While its piece of hardware is getting sold to you at a high price, in this scenario, understanding how business models work is critical.

Thus, I’m suggesting five books that helped me navigating in the topic by combining theory and practice. I’m not earning any affiliations from those books (you might notice there is no link to them).

Those are books I believe you must read if you want to develop un-understanding of the discipline, quickly.

The Business Model Navigator

The business model navigator is a book that comes out from the research of Oliver Gassmann, Karolin Frankenberger, and Michaela Csik. There are a few aspects I liked the most about these books.

First, as I remembered several times on this blog, there isn’t a single definition of business modeling. And according to the definition given to the subject, it also changes the methodology and tools you can use and apply to gain insights over your business.

Often a good analysis might be coming from balancing the several tools available. The business model navigator has a straightforward way to understand and define business models.

Also, the authors have done massive and exciting research into 55 and over business model patterns that have shaped our times. It is an excellent source of inspiration.

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Blitzscaling

The amount of insights and knowledge distilled in the book is massive. Reid Hoffman, founder of LinkedIn together with Chris Yen, go through a methodology they called Blitzscaling.

Look at it as growth hacking on steroids. Where growth hacking tries to define a process to find growth, quickly.

Blitzscaling focuses on 10x growth, especially in situations where the business might be threatened by competition and either survive or die in the short term.

It’s about going all in. As Reid Hoffman puts it “an entrepreneur is someone who will jump off a cliff and assemble an airplane on the way down.” With Blitzscaling is almost like building the world’s largest aircraft on the way down.

Blitzscaling also offers an alternative way to look at business model innovation, which can be summarized in the infographic below:

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And the canvas below:

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You might want to read this!

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Reinvent Your Business Model

Having a set of tools for your business means being able to understand what tool might work best in specific scenarios.

In the case of a mature company that is well established in a business model, but suddenly needs to reinvent itself to keep being successful in the long run, this is the best reading.

Indeed, this book helps you understand where is the white space for your business and how to go after it. In that respect is also offers you an alternative way to look at your business model:

[image error]

Business Model Generation

This is a classic in the business modeling literature. It will introduce you to the concept of the business model canvas, which focuses on a few key elements such as:

Key partners
Key activities
Value proposition
Customer relationship
Customer segment
Key resource
Distribution channel
Cost structure
Revenue stream

An example of a business model canvas from Google below:

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This is a must-read:

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Platform Scale

In the era of digital business models, platforms have become the most emerging and influential tech companies. The authors do a fantastic job ad deconstructing the way those platforms work and the tactics they have used to scale up:

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What other book have you found it worked for you to understand business modeling?

The resources you need to get started with your business model:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan
The Rise of the Subscription Economy
How to Build a Great Business Plan According to Peter Thiel
What Is The Most Profitable Business Model?
The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet
How To Create A Business Model
What Is Business Model Innovation And Why It Matters
What Is Blitzscaling And Why It Matters
Snapshot: One Year Of “Business Model” Searches On Google In Review
Business Model Vs Business Plan: When And How To Use Them
The Five Key Factors That Lead To Successful Tech Startups
Top 12 Business Ideas with Low Investment and High Profit
Business Model Tools for Small Businesses and Startups

How To Use A Freemium Business Model To Scale Up Your Business

Popular case studies from the blog:

The Power of Google Business Model in a Nutshell
How Does Google Make Money? It’s Not Just Advertising!
How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
How Amazon Makes Money: Amazon Business Model in a Nutshell
How Does Netflix Make Money? Netflix Business Model Explained
How Does Spotify Make Money? Spotify Business Model In A Nutshell
The Trillion Dollar Company: Apple Business Model In A Nutshell
DuckDuckGo: The [Former] Solopreneur That Is Beating Google at Its Game

The post 5 Business Models Books You Should Be Reading In 2019 appeared first on FourWeek MBA.

View more on Gennaro Cuofano's website »

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Published on December 24, 2018 14:50

How Will Google Business Look Like In Ten Years?

This is an extremely complicated answer to give. On the many possible ways, it might evolve let’s start from two macro trends: AI/machine learning and voice. What I’m referring here is not Google as Alphabet (the overall company). But Google as the search engine and where it might be headed next.

Over the last two decades of its life, Google as a search engine has grown exponentially until it made of the search experience as the main feature of the web.

When it launched many existing giants, like AOL, saw search as a secondary feature, until the market gave its feedback, by giving Google massive success and wiping out – at the time – current web giants (just a few weeks ago Verizon wrote off from its balance sheets Yahoo and AOL).

Thus, we went from a web made of portals, to an internet made of search. Until social media kicked in and it created a different kind of experience.

Since social media has become the main competitor to search (Google and Facebook have a duopoly in digital advertising), Google realized it needed to also bet on it. It did that with Google Plus, which this year is shutting down!

This left Google with its main search engine, which is now transitioning to become more and more like a portal.

Where Google aimed at generating as many clicks toward sites listed on its engine, this number is decreasing from desktop and even more on mobile. Indeed, many marketers are assisting to the rise of the so-called zero-click searches.

In this scenario, where users are consuming more and more content from mobile, and voice is approaching, creating a lock-in experience has become – I argue – a priority for Google.

In short, wherein the past Google could afford to give us an answer to users’ queries pages and pages of content. Now if it wants to survive to the next wave of the web, it will need to give one answer. And it better be good!

From a first analysis performed by Loup Ventures:

Google Assistant seems to be performing quite good compared to other assistants on several kinds of queries:

Source : Loup Ventures

As Google AI is becoming smarter and smarter, think of Google Duplex, another element to look at will be content generation and automation.

Where Google has to still rely on a large network of publishers to enrich its organic listing, what if its AI would be finally able to generate and product good organic content, at least appealing on commercial queries in the future?

Just like Uber is betting on autonomous driving, Google bet on AI for content generation might cut one of the most expensive channels for content acquisition altogether and improve dramatically its cost structure, which is as of today looks like that:

Google ten years from now

Assuming Google will have survived and thrived the era of voice, AI/Machine learning and IOT (it might be too early for blockchain domination).

We’ll have an answer engine embedded in any tool that surrounds us. Rather than a search mechanism where users look for something. That engine will have become so good at predicting what we want that it will be more of a discovery mechanism.

Thus, more and more Google will use its database to make us discover what we would like to see. No more keywords, but just a fluid communication between the human and the machine, just like a human would talk to another human.

Rather than consuming content on desktop or mobile (desktop might still be the preferred way for professional use, yet the market compared to entertainment and leisure might become a niche), we’ll be moving our hands, talking to our devices and having them make us discover things, rather than search for them.

The resources you need to get started with your business model:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan
The Rise of the Subscription Economy
How to Build a Great Business Plan According to Peter Thiel
What Is The Most Profitable Business Model?
The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet
How To Create A Business Model
What Is Business Model Innovation And Why It Matters
What Is Blitzscaling And Why It Matters
Snapshot: One Year Of “Business Model” Searches On Google In Review
Business Model Vs Business Plan: When And How To Use Them
The Five Key Factors That Lead To Successful Tech Startups
Top 12 Business Ideas with Low Investment and High Profit
Business Model Tools for Small Businesses and Startups

How To Use A Freemium Business Model To Scale Up Your Business

Popular case studies from the blog:

The Power of Google Business Model in a Nutshell
How Does Google Make Money? It’s Not Just Advertising!
How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
How Amazon Makes Money: Amazon Business Model in a Nutshell
How Does Netflix Make Money? Netflix Business Model Explained
How Does Spotify Make Money? Spotify Business Model In A Nutshell
The Trillion Dollar Company: Apple Business Model In A Nutshell
DuckDuckGo: The [Former] Solopreneur That Is Beating Google at Its Game

The post How Will Google Business Look Like In Ten Years? appeared first on FourWeek MBA.

View more on Gennaro Cuofano's website »

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Published on December 23, 2018 07:37

Push Vs. Pull Marketing And Why You Need Both

Let’s define pull and push marketing from the perspective of the target audience or customers. In push marketing as the name suggests you’re promoting a product so that consumers can see it.

In a pull strategy, consumers might be looking for your product or service drawn by its brand.

Push marketing in a nutshell

Push marketing in the retail world stands for tactics that aim at bringing products to customers. This means a focus in enhancing the visibility of your offering so that consumers can decide to purchase it more easily.

For instance, in the manufacturing world, this might mean a better display on a shelf. The critical element of a push strategy, therefore, is the ability of the product to reach consumers.

Examples of Push Marketing

In a way, push marketing generates demand with a top-down approach. The customer is not looking for your brand or your product.

Rather you’re pushing it through them. This might imply a set of tactics which are interruptive in nature.

Things like a mass media campaign or an advertising campaign of social media or any other tactic that make the consumers see your brand while they’re doing something else.

Other examples of push campaigns where you get your message to consumers in an interruptive way are:

direct selling
face to face
sales canvassing
point of sales displays
social media marketing

Pull marketing in a nutshell

Pull main marketing aim is to have consumers see you when they are already looking for something similar to the product or service you offer. Or they are looking for your brand.

The primary objective is to create loyalty toward a brand so that those same people will get back without you having to push your product or service to them with interruptive strategies.

Examples of Pull Marketing

In a way, pull marketing generate demand at a bottom-up level. Indeed, while in a push marketing strategy a brand interrupts a consumer by delivering a message independently from the consumer looking for it. Pull marketing shows the product or brand when consumers are seeking it.

The advantage of a pull campaign is that consumers might recognize your brand and therefore ask for it. This also helps the company build a better distribution strategy.

A pull marketing campaign might require substantial investments, yet it might be more cost effective in the long run compared to push marketing as it might imply better loyalty and conversion.

Push and Pull marketing and why they both matter in the digital era

With digitalization, the difference between push and pull has become less important. Indeed, what was defined rules in the past have become blurred now.

For instance, when in the past a company needed to spend millions in mass media campaigns to push their product to consumers, just to build brand loyalty.

Nowadays with targeted ads or with organic campaigns via search engines, it’s possible to reach a large number of people that are actually seeking for a product or service.

Both push and pull strategies seek to generate demand.

In some cases, a push strategy might be hard to distinguish from a pull strategy. For instance, when Google closed the deal with AOL, in its early years, that meant a short-term boost and strong push strategy.

However, the association of the Google brand with AOL (at the time among the most recognized web companies) also created a brand recognition. This in a way is the B2B2C business model strategy in action.

This difference is harder in practice. Brand and conversion are tied in the real world. A more recognized brand might imply better conversion. Therefore, tapping into both push and pull is critical for any organization!

The resources you need to get started with your business model: