Moonshot Business Models & Technologies (Exponential Growth)
Business Models of the Future
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1. Platform Based :
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For a technology to be “exponential,” the power and/or speed doubles each year, and/or the cost drops by half.
As humans, we tend to overestimate what can be achieved in the short term but vastly underestimate what can be achieved in the long term. Humans are not equipped to process exponential growth. Our intuition is to use our assessment of how much change we’ve seen in the past to predict how much change we’ll see going forward. We tend to assume a constant rate of change (thinking linearly rather than exponentially). Thinking exponentially, though, is key to discovering potential new opportunities and building innovative solutions.
The Law of Accelerating Returns and Moore’s Law are both central concepts to understanding exponential growth.
We help entrepreneurs and startups that take moonshots. To learn more about moonshots click here.
Some companies focus on improving existing solutions. Incremental changes can lead to a 10% improvement, but in this case, no one is challenging commonly-held assumptions or applying new tools to create a totally new solution. Those that aim to make something 10 times better end up challenging the status quo, and typically end up taking a completely new path. This type of innovation requires bold, courageous thinking.
- Business models:
- The platform business model is the business model used by practically all sharing platforms. But not all who use a platform business model are considered a sharing platform (e.g. Expedia, TripAdvisor, Google, Facebook, etc).
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The impacts:
- Can sharing platforms self-regulate? An important question that will have significant impact on the trajectory of sharing platforms (especially the major ones): if they can’t participate in the discussion constructively chances are they will be hit with heavy-handed regulations
- Utopia or Dystopia? The social impacts, risks and opportunities are what drives the necessity for regulation. Understanding this fundamental layer will help .
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Examples:
- A wide array of for-profit and non-profit sharing platform examples
- Uber business model canvas
- Airbnb business model canvas
- Business model comparison: Uber vs Zipcar
The platform business model is *the* business model that practically all sharing platforms use.
The sharing platform business value chain summarises it all in one infographic:
TIPPING POINT - What Is Your Limiting Factor : The Collaborative Commons That Shall Disrupt Your Industry
If we look back at the brilliant journey through the economic history of the western world, last century turns out to b a revolutionary century that impacted the American standard of living more than any period before or after.
Our standard of living is typically viewed as the ratio of total production of goods and services (real GDP) per member of the population.
But this measure fails to truly capture enhancements to our well-being. Human well-being is influenced by advances in the areas of food, clothing, shelter, energy, transport, education, health, work, information, entertainment, and communications.
The special century (1870-1970) that followed the Civil War was made possible by a unique clustering of the great inventions.
How these innovations and their components possibly impact human lives in the coming years. Clearly as the visual below depicts the great inventions of the second industrial revolution significantly improved our well-being:
The 1870-1970 century was unique in that many of the great inventions could only happen once. By 1970 the basic elements of our modern standard of living were already achieved along the dimensions identified in the visual.
The forecast from 1970 for the next 25 years saw limited growth, as several headwinds reduced growth in median real disposable income during the beginning of DOTCOM era.
We dismiss the views of the many techno-optimists that see a return to productivity and enhanced well-being, as automation drives labor productivity and scarcity gives way to abundance.
We have viewed this debate through the lens of future scenarios, their likely path, and their potential to enhance our well-being .
To explore this topic further, we have overlaid these scenarios and their various innovation components on top of our visual . This framework allows us to explore these scenarios and their potential to improve (or diminish) our well-being across the dimensions described earlier.
Can we replicate or exceed the great inventions of the special century?
Can we effectively manage the headwinds described above ?
We have explored these future scenarios by crowd sourcing the visual above.
What are the future scenarios, innovation components, or science and technology advancements that have the potential to enhance our well-being across these following dimensions:
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We have factored the following as the backbone of the next GREAT century .
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These are the Future Developments which are tabulated as the Future Evolution :
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Scenarios :
Towards the Zero Marginal Cost Society : Entering the ERA of Combinatorial Innovation. Emerging Internet of Things is speeding us to an era of nearly free goods and services, precipitating the meteoric rise of a global Collaborative Commons and the eclipse of capitalism.
A paradox at the heart of capitalism that has propelled it to greatness but is now taking it to its death―the inherent entrepreneurial dynamism of competitive markets that drives productivity up and marginal costs down, enabling businesses to reduce the price of their goods and services in order to win over consumers and market share. (Marginal cost is the cost of producing additional units of a good or service, if fixed costs are not counted.) While economists have always welcomed a reduction in marginal cost, they never anticipated the possibility of a technological revolution that might bring marginal costs to near zero, making goods and services priceless, nearly free, and abundant, and no longer subject to market forces.
Now, a formidable new technology infrastructure―the Internet of things (IoT)―is emerging with the potential of pushing large segments of economic life to near zero marginal cost in the years ahead. Communication Internet is converging with a nascent Energy Internet and Logistics Internet to create a new technology platform that connects everything and everyone. Billions of sensors are being attached to natural resources, production lines, the electricity grid, logistics networks, recycling flows, and implanted in homes, offices, stores, vehicles, and even human beings, feeding Big Data into an IoT global neural network. Prosumers can connect to the network and use Big Data, analytics, and algorithms to accelerate efficiency, dramatically increase productivity, and lower the marginal cost of producing and sharing a wide range of products and services to near zero, just like they now do with information goods.
The plummeting of marginal costs is spawning a hybrid economy―part capitalist market and part Collaborative Commons―with far reaching implications for society, . Hundreds of millions of people are already transferring parts of their economic lives to the global Collaborative Commons. Prosumers are plugging into the fledgling IoT and making and sharing their own information, entertainment, green energy, and 3D-printed products at near zero marginal cost. They are also sharing cars, homes, clothes and other items via social media sites, rentals, redistribution clubs, and cooperatives at low or near zero marginal cost. Students are enrolling in free massive open online courses (MOOCs) that operate at near zero marginal cost. Social entrepreneurs are even bypassing the banking establishment and using crowdfunding to finance startup businesses as well as creating alternative currencies in the fledgling sharing economy. In this new world, social capital is as important as financial capital, access trumps ownership, sustainability supersedes consumerism, cooperation ousts competition, and "exchange value" in the capitalist marketplace is increasingly replaced by "sharable value" on the Collaborative Commons.
Capitalism will remain with us, albeit in an increasingly streamlined role, primarily as an aggregator of network services and solutions, allowing it to flourish as a powerful niche player in the coming era. We are, however, entering a world beyond markets where we are learning how to live together in an increasingly interdependent global Collaborative Commons.
Average Year Each Tipping Point is Expected to Occur :
Major Shifts in History :
Our Emerging Growth Future :
3. Mass Customization : Technology & The Long Tail
Technology has played a major role in facilitating this shift. Marketers are now able to micro-target specific groups, engage customers with more frequency and intimacy, and customize to consumer specs. Moreover, technology has enabled consumers with the tools to seek out suppliers that offer just the thing they want.
A number of brands and marketers have embraced niche marketing. Names like Target, Crocs, Red Bull and American Girl. The all have the same objectives as any other marketer, but they have sensed the disruption and have responded by finding a new way of going to market.
Narrow, not Small
The other thing that has changed is what niche marketing really means in today’s environment. It’s still “the targeting of a more narrowly defined customer group seeking a distinctive mix of benefits”, but niche markets are not the “marginal opportunity” that they were once viewed to be. Today, niches are viewed much more positively.
In today’s marketplace, niches are flourishing. Some niche brands are generating hundreds of millions in sales. Sometimes, narrow niches, fueled by mavens and connectors, become the next big, disruptive thing. The big point of the article is that niches should not be equated with small. Instead, think of narrow. Then target very specific groups who will relate to and find differentiation in your offering. At this point, you are no longer a commodity and you can increase your margins by charging a premium. Do this over and over with different products and services, and you can generate volume and growth that makes up for your narrow targets.
Smaller targets, larger focus
Ten years ago, the medium was still the message. Few years ago, we could still think of the 4P’s — product, pricing, place, promotion — as essentially independent strategies. Five years ago, everyone started to buzz about customer-relationship marketing. About two years ago, we got really excited about digital-marketing tactics and started to apply them without any real strategic purpose. All this has changed.
So what’s really new about the new niche marketing? It’s realizing that while our targets have to narrow, our definition of marketing communications has to broaden. Today, everything communicates what a brand stands for, all the time.
It’s like the old saying: If you are on the wrong train to begin with, every stop along the way is the wrong stop.
10 principle to harness the power of niche marketing:
- Position your brand as narrowly as is economically possible.
- Become the specialist that anticipates the needs of your target.
- Rapidly work with the target niche to co-innovate.
- Set as your goal such consumer centricity that the target niche will want to co-brand their identity with yours.
- Live by a higher standard of ethics.
- Embrace a business model and metrics that grow the most valuable assets of the new niched economy.
- Reap first-mover advantage by learning how to identify a niche of opportunity.
- Re-imagine your role as that of entrepreneurial founder of a special interest group.
- Forget push marketing; excel at pull marketing.
- Realize your brand is now “media” competing against all other media
4. Frugal : The Frugal Way to Grow. Pioneering companies in mature economies are learning from emerging market companies a new way to expand their businesses.
5. Modern Barter : Modern barter provides a more flexible way to barterusing a plastic card and a unique currency called trade pounds. Benefits of Barter: There are many benefits available to businesses who exchange their goods and services with one another via a bartertrading platform.
6. Pay What You Want : Pay what you want (or PWYW) is a pricing strategy where buyers pay their desired amount for a given commodity, sometimes including zero. In some cases, a minimum (floor) price may be set, and/or a suggested price may be indicated as guidance for the buyer.
7. Mega-Hyperlocal : In a layman’s terms, a startup in the hyperlocal space is a platform to enable local offline services from anywhere, anytime. It’s simple enough to explain, but executing the model can be an uphill task.
A good use case is cataloguing all local grocery and mom-and-pop stores products in a mobile app and choosing channelised workforce to deliver products in the shortest possible time.
Another popular hyperlocal service includes ordering food from a local fine dining restaurant which otherwise won't deliver at home.
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