Posts Tagged ‘business model’

An Undefinable Relationship?

June 24, 2014 2 comments

Checkout this model of a one person business:

One Woman Show

The worker/manager/owner applies her tools, skills, and expertise to transform business ideas into outputs that a customer willingly pays for.

After composing the picture, it occurred to BD00 to attempt to explore the relationship ‘tween “Quality Of Output” (QOO) and time “Delay“. However, he drew a blank. He can’t proclaim that increasing delay generally increases QOO. Nor can he assert that decreasing delay generally decreases QOO. The only thing he can confidently state is: “since zero delay by definition means zero output, it also means zero QOO“. Well, duh!

QOO vs Delay

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Extended Business Model

In CEO Tony Hsieh’s new book:  “Delivering Happiness“, Tony describes the original business model as “drop-ship”. As the UML sequence diagram below shows, a customer would place an order at the website, Zappos would relay the order directly to the shoe manufacturer’s warehouse, and the order would be fulfilled and shipped directly from ground zero. It was a low cost model for Zappos, but it limited sales growth since many shoe manufacturers didn’t have the information systems in place to execute their end of the model. In addition, sales were limited to the inventory that warehouses held in storage, not necessarily what Zappos’ customers wanted.

During the initial stage of growth, was often short on cash (surprise!) and often just a month or two away from goin’ kaput (surprise, again!). The Zapponians needed to increase sales in order to increase cash flow. During a brainstorming session in a local bar (not in a committee of BMs, CCRATS, BOOGLs, consultants, and other self-important dudes) they came up with the idea of extending their existing business model.

Man creates by projection, nature creates by extension – Unknown

The sequence diagram below shows the extended business model that Tony “chez” et al decided to move toward. In a nutshell, Zappos would purchase or lease a warehouse and stock its own inventory based on trend information extracted from its website. As simple as it looks, the devil is in the details. Buy and read the book to learn how they pulled it off – despite being cash poor and close to going tits-up.

If changing our business model is what’s going to save us, then we need to embrace and drive change. – Tony Hsieh

How many times have you heard or spoken the “embrace change” words above but never experienced or executed any follow through?

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