Business Models - Trade Magazines

Over the last few decades, the magazine industry has seen huge fragmentation as readers are looking for more specialized magazines. There was a time people read a sports magazine. Today, people want to read about snowboarding, or even snowboarding in the rockies. Trade magazines are caught between a market that is looking for very specialised information with low circulation but very valuable eyeballs, and a mass market with low resonance with readers. Magazines in general suffer from a business model where in the short run, they lose money as more copies are sold, as the printing cost exceeds the revenue from the individual copy. Advertising makes up much of the revenues. So as more specialized magazines spring up, the generalist (rather the not-so-specialist) is caught in a vicious circle of falling circulation leading to lower advertising rates leading to fewer journalists leading to weaker content. So how does one respond ?

Business Models - Industry Services

A well developed industry usually has a surrounding set of specialist organisations dedicated to providing services to members of the industry as a neutral provider. Some obvious examples are trade associations and trade magazines. The range of services that can be provided is rather large. While few of these will have the scale to go IPO or any such ambitious thing, if they are well run, they can provide significant profits to their owners, typically individuals. It is rather puzzling that many more of these kinds of organisations do not exist in India. Perhaps there is not enough appreciation of the business model or how to leverage off of it.

The Universal Identification Number

The UIN project is one of the elements of "Soft Infrastructure" that Governments all over the world provide. I will describe some other aspects of Soft Infrastructure in a later post. In this post, I'll concentrate on the not so obvious fall-outs of the UIN project. Firstly, the UIN will allow individuals to be tracked, and as an extension, make it easier to enforce contracts or penalize infringements of laws. This will make India a more law abiding nation. Secondly, the UIN may reverse the gradual process of dis-enfranchisement that has been taking place in India. And finally, the UIN may provide a model by which the upper & upper middle classes of India can engage in the process of Governance.

Active Learning

I have worked with a variety of people in many organizations. As consultant, I work with many more. It continues to amaze me how few people use the vast resources of the internet, books and trade magazines to identify their problems and possible solutions.

There is always a minority of individuals who are active seekers of problems and their solution. The vast majority seem to be happy struggling with their problems and experimenting from scratch. Almost as if they are completely unique. Its a big waste of time and resources to reinvent the wheel. In many cases, people are completely unaware that a better solution exists, and which is being actively advertised in the trade magazine.

Sweating the small stuff - an idea whose time has come

Take a look at this TED talk.

I remember at my last corporate job, as CFO, being frustrated with the User Interface of the applications we expected our employees to use. The stand-out example was the "Change Control System" - if you needed access to a website that was blocked, you needed to fill out a request. In that form, you had to fill in a field for something like "by when do you want this done?"

And there were these lovely drop-down lists. For date : 1-31; Month: 1-12; Year: 2000-2099; and I kid you not, Hours; Minutes; and Seconds as well had to be specified. And there were no defaults. So everyone who wanted access to a website, had to get into these six drop down lists and select the exact date and time to the second when he wanted this change to happen.

Get a Chief Detail Officer. Or as David Pogue recounts at another TED talk, get a "Tap Counter"

Business idea in Design

Do we need Design Commercialisation Houses ? As I look around the internet for sociall relevant designs (a great starting place is Inhabitat), I come across all kinds of innovative and brilliant products for problems people face in many parts of the world. Take this washing machine for example. Or look at Open Source Architecture. Or even the National Innovation Foundation. Yet I meet a lot of designers trying to create new solutions to the same issues, when existing radical improvements are available but not widespread. 

My sense is that there is a big business niche for people to take existing design and adapt it for a particular client or market situation, with the clear intent of making it successful (large market, profitable). There are a few firms that do this. Swiss firm Vestergaard Frandsen is one such firm. Surely the market needs many more firm of these firms. Maybe NID and IIMA should join hands to incubate these firms to help design and innovation get firmer commercial roots.

Are you asking the right question

Ask the right question to get the right answer. One of my professors really brought home the overriding importance of asking the right question. It was a course on simulating complex systems. We were discussing a simulation of lifts in a multistorey building ... people arrive at different times on different floors, needing to go to different floors. There was a lot of people waiting for a lift on the ground floor. How do you optimize this system (minimize wait times or total transit times) would be the obvious question, and detailed simulations of different configurations would help reduce the wait or transit times. However, someone else looking at the problem actually decided that the issue was boredom while waiting. Their solution was to put a TV in the lobby. 

Pure Genius - Application of Theory

Antanas Mockus, the Mayor of Bogota from 1993 - 2003 did some amazing things. He was earlier Dean of the National University of Colombia. Here's a nice article on him.

Business Models ...

Business models are an under-appreciated part of being a start-up (and a larger company too !) Far too little time is spent on coming up with the appropriate business model. Often, I find that people revert to "its the way its always done" mindset (which has a place in a maturing industry). The other common mindset is to struggle to do everything yourself and outsource only what absolutely cannot be done in house. Business models are very important at the start-up stage as a number of decisions made then get embedded into the company's processes and culture and become hard to reverse later.

To give an example, many product ideas in the IT space need to decide who their market is (retail, corporate, government, size of target customer, etc), how to approach the market (direct or through systems integrators, or distributors / wholesale / retail, or SaaS), how to develop (in-house, outsourced, mixed), etc. Poor choice of business model can rapidly lead to disaster even with a good product. On the other hand, its great to watch Facebook and Apple navigate the complexities of their business model to ensure that they are open but maintain control over critical pieces of the value chain, and work to reinforce those particular strengths. Think Facebook Connect or Share; think iTunes as the gatekeeper to get music and apps onto the iPod/iPad/iPhone/iTouch or programming apps for the iPhone is possible only on the Mac !

Some of the best books I've read on business models include Co-Opetition, Wikinomics and the Innovator's Dilemma & Solution series. The Dhandho Investor I put in the same category though it deals with a particular type of situation, which is running a business on low capital and low risk.

Some interesting websites on the subject are The Business Model Database, Business Model Designer and Business Innovation Factory. And this is Wikipedia on Business models.

I don't see too many courses though on designing business models. It seems to be buried in the strategy courses in business schools. This should change.

Government Ideas

Interesting model. A variant of this came to me during a visit to Badami where I found the Archeological Society was doing a great job, but its pamphlets and brochures could be improved. The idea was to have a website where people could post things in government that can be improved (in this case, the brochure about Badami). If I had particular solutions for the problem, which will happen reasonably often (I recognised the problem because I have a bent towards improving communication through design), then there is an option to suggest the solution. The organisation ("Improve Your Life") behind the website tries to figure out who in which Government department needs to be contacted to deal with this information. Ideally, Improve Your Life also works out a strategy by which the idea gets implements. In this particular case, it could be working out a sponsorship deal with a FMCG company to sponsor the printing of this material. This could then be provided free to the Government Department. Ideally, the designer with the solution can be part of the eventual graphic production and get credit, and even paid. 

I just came across Sunlight Labs, which had a contest "Design for America". Very interesting concept - Open contest for design which makes Government more understandable. Can we do one for India ? Will the Government accept the designs ?

Ideas ...

I just read that good ideas are not so hard to come by, but entrepreneurs to execute on a good idea are much harder to find. Unfortunately, I'm in the same bind, so I'll be sharing various business ideas I come across or have on the blog too. I hope entreprenuers who are searching for ideas execute some of these.

Better Governance - Living Life

Following up on the idea of a Government focussed on customer service, I'd like to look at the "Doing Business" series of reports that the World Bank has set out. These reports have helped trigger reforms in the business environment in numerous countries. This is really a sort of standard corporate benchmarking exercise executed well. I believe that the time has come for a similar series of "Living Life" reports that compare sovereign governments, and within countries, comparison of sub-regions right down to municipality or village wards.

Note : This part of the post was added later. The original post is available after the jump. 

Better Governance

I will be doing a series of posts on the quality of our Governance and what can be done to make it better. Its a source of great frustration for me, and for most fellow Indians, to have to interact with those that govern us.  We go to great lengths to avoid the interaction. Many of the issues of governance are really customer service issues and would be resolved in a matter of years in a competitive environment - think telecoms before and after private players. Or banking. So this series of posts will investigate this issue and hopefully throw some light.