The most successful business models in the world, secrets revealed.
Updated: Sep 5, 2022
In 2010, I read an excellent book by Jeff Jarvis titled “What Would Google Do?” The book was and still is an eye-opener on Google's innovative business model. Jeff Jarvis argues that only a few people understood Google’s business model, and that could be true until today. Indeed, creating a platform, offering it for free, and then generating revenue through the ecosystem was and still is very innovative. With Google, it is not the user who pays for the service, but instead, the user is the product sold. Technology lies at the heart of such a model.
Two severe limitations are associated with Google's hidden business model. The first one is that the model requires substantial funding from the beginning until its maturity. Second, the model needs many years to mature and trying to monetize the model before maturity will damage it and cause it to fail.
The success of the above drove entrepreneurs and investors to replicate the model or create similar ones. Many examples do exist, such as a technology-based solution like an app offering a platform for exchanging services, loyalty, shopping, etc. As some initiatives can be promising, however, the majority fail.
What is the secret behind the best business models?
I have spent more than 15 years practicing and studying organization design, business modeling, and digital transformation. I am sharing with you some of what I have learned for free, and I hope you will benefit from it in your business or if one day you use it to create a new business. Business models are quite difficult to understand, so, I will list five questions to help you learn how to identify and validate successful business models.
The essential design assumption is simple to grasp. We want a model where the more we sell, the bigger the market potential becomes, and we need resilience towards the variations in the external business environments. So, what are the five criteria that meet that listed from C1 to C5?
C1: More selling generates increased demand and does not decrease it, the case with most businesses.
C2: Customers should always need the services/products offered, and if they skip them for any reason, there should be a negative impact on the customer driving them to come back.
C3: Our offering positively aligns with the social and moral norms such as values or religion.
C4: We should have good business when the economy is either up or down.
C5: Technology adds value to the business over time and does not make it redundant.
As it may look too good to be true, the question is, are there business opportunities satisfying all the above criteria? The answer is definitely yes. There is a fact that shows, in just 13 years between 1970 and 1983, one-third of fortune 500 companies just varnished (went out of business). The analysis shows that the average life of established organizations is 40 years.
What makes some companies succeed and live hundreds of years?
The answer is simple. Organizations meet the above five criteria. To illustrate the above model, I will use one case to test the model and then give you a bonus example.
If you have one day wondered why the big four auditing organizations are still doing well, it is because they correctly match the above model. Assurance/auditing business: Let’s test the model:
C1 is satisfied: The more customers they gain, the more their business becomes reputed and requested by more customers. The audit reports they sell are a must for shareholders, regulators, and financing.
C2 is satisfied: Financial auditing is an ongoing process and must be formally completed at least once a year.
C3 is satisfied: An audited company is perceived as a company free of corruption and attracts investors.
C4 is satisfied: When the economy is up, auditing is a must for IPOs, expansion, and mergers, … when the economy is down, no loans or company selling could happen without auditing.
C5 is satisfied: Technology makes auditing easier but does not seems to replace it.
The above was one scenario. In my studies, I spotted many other opportunities. to name a few more, I can say any business related to assessments, certifications, inspection, programs, quality, and so forth is a good fit in the above model.
One of many business ideas that take advantage of the above model can be the "food certifications business." The core business will be to inspect and issue certification labels to food companies based on a specific quality matrix. Take a few minutes to test the model and decide yourself on the potential :). Do not forget that any business needs proper strategic planning and execution.
To enquire about the author’s consulting services, visit his website, www.imadchoucair.com, and fill out the contact us form.
About the Author:
Imad Choucair has an impressive track record as a business practitioner, leader, and doctorate-level researcher. Imad held vital positions in reputed organizations such as Microsoft Corporation and the CIO of Dubai Holding. Imad is a doctoral researcher focusing on organization design and performance. Apart from his doctorate, Imad holds an MBA from Liverpool University and BS in Computer Science from AUB.
During the past 30 years, Imad helped more than a thousand companies and engaged with hundreds of top senior business leaders all over the region.
To learn more, visit the website, www.imadchoucair.com.
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