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What do Business Models and Rock Stars have in common? | Register To Post |
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| sander.brandt | Posted on: 2007/12/11 5:10 |
Quite a regular   Joined: 2006/6/20 From: Systemic Logic Posts: 38 |
What do Business Models and Rock Stars have in common? I have made an interesting observation, borne from a comparison of contemporary business models and the music industry. In short, I think the music industry has had it right all along and that we are only now starting to see the light.
Firstly, let us recognise that the music industry has been operating globally for decennia’s, and secondly, that the windows of opportunity they experience are microscopic. Furthermore, this is also compounded by the fact that their results are riddled with failures and endless missed opportunities. Just think about it, for every successful rock star you see on an advertising billboard you have a host of unsuccessful rock stars waiting in their shadows. Among these unsuccessful musicians you have maestros and well-schooled performers. What went wrong, they failed to “connect” with the crowds. To be successful in the music business you must make a multitude of small investments in “opportunities” and trust that a handful will break free from the moulds because they “connect” with the crowds. Profitability translates into: - identifying talent in a complex, global sea of ambiguity (opportunity); - support these with small investments; - hope that a miniscule number turn out to be highly lucrative on the back of a social tipping point, and; - that you have built product stack and events calendar around their success. Ok, so let us turn our attention to conventional business models where I see the same trend developing. Some call it their Innovation Process, where we have seen a flurry of activity around implementing elaborate processes and mechanisms to identifying, nurturing and investing in small ideas. Some of these ideas become breakthrough products and services and we quickly build product stacks around them. Ideas were initially spawned internally/externally, then locally/internationally and finally virtually with innovators across the world. This ushered in Web 2.0 and here we see them adopting the same pattern. This time round you have investors backing a diversified portfolio of small start-ups. Some of these start-ups traverse infancy on the back of their appeal on the world-wide-web driven by a social tipping point. Once again, here investors rely on identifying talent in garages across the world and they have a small window of opportunity. To secure their piece of the pie they inject small investments in a large number of small opportunities and hope a percentage become exceedingly profitable. So if the music industry has been doing this for decades should we not be hiring wisdom from the music industry? Were they right all along and did it take us half a century to discover this? |
| Jurgens Pieterse | Posted on: 2008/1/18 4:54 |
Moderator   Joined: 2005/5/5 From: systemiclogic.com Posts: 156 |
Re: What do Business Models and Rock Stars have in common? Hi Sander,
I believe we can learn from all the different business models. As you point out here the music industry had evolved certain strengths in their business model to cope with their particular challenges. If we are to get any wisdom from a business model we need to understand all the factors regarding that business model. One aspect that interest me is that they are continually mass customizing their products to present preferences and culture. The process of selection from a vast pool of potential talent is not just trial and error. They employee knowledge workers that knows music and who stay in touch with changing expectations in the market. Sometimes these experts miss a trend but I am willing to bed that more talent is discovered by these guys than what has been missed. There innovation relies heavily on being in constant touch with their markets. Just look at how well they have segmented their markets on a global scale! I think the music industry can teach us a lot of how to be in touch with the psyche of their customers and how to stay on top of market trends. My guess is that innovation in the music industry is driven by knowing market trends more than relying on trial and error to spot new talent.
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