51 Business Profit Patterns for Startups and Established Companies

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How to Create Sustainable Competitive Advantage in the Rapid Imitation Economy
Whether you are a startup or an established business, if you are only thinking about product innovation, then your days are numbered in today’s Rapid Imitation Economy. No matter how innovative or cool your product is, you are likely to see a copycat with a similar version of that product in less than a year. So, what do startups and established businesses, which have got innovative or unique products, got to do? How can startups and established businesses achieve sustainable competitive advantage in today’s Rapid Imitation Economy (RIE)? If not sustainable competitive advantage, how can organizations at least achieve transient competitive advantage?

The answer lies in business model strategy and innovation. To quickly achieve sustainable or transient competitive advantage, an organization must continually focus and innovate on its value sharing (profit) model, which is one of the three sub-models of a business model. Although businesses may appear different within and across industries, the “skeletal structure” or DNA-template of every business is the same. The template of every business model or living system has 3 sub-models: Value Creation Model; Value Proposition Model; Value Sharing (Profit) Model; see http://goo.gl/FVqKER

Each sub-model may be further divided into “building blocks.” For instance, a profit model consists of a “cost” building block, a “revenue” building block and a “profit” building block. To achieve transient or sustainable competitive advantage, the network of the 3 main parts of a business model must grow and be aligned with present and future environments. A robust business model is internally as well as externally stable, flexible, and adaptive. But, how specifically can a startup or an established business simply innovate on its business model while achieving competitive advantage?

An innovator has 3 main categories of options for Business Model Disruption: Value Creation Disruption, Value Proposition Disruption, and Value Sharing (Profit) Disruption. Although in theory, one could start innovating using any of these sub-models, my suggestion is to start with the Value Sharing (Profit) Model. Thereafter, the Value Proposition Model and Value Creation Model can be derived and field-tested for alignment with the Profit Model as well as Industry and Global Environments. This view is consistent with tenets of Rita McGrath’s Discovery-Driven Growth. The rationale is that profit is the oxygen of a business: Without profit (or capital injection), a business dies. And as Stephen Covey would have said, “Begin with the end in mind.” Nevertheless, I have presented 51 Business Profit Patterns that cover the 3 sub-models and facilitate the process of business model innovation; see http://goo.gl/FVqKER

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  • Rod, This is an amazing tool.that provides a lucid illustration of the paths to profitability.
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  • Ali, It's not often that our blood, sweat, and tears are reflected in our work. Yes, the Catalog of 51 Business Profit Patterns involves a lot of blood, sweat, and tears in preparation time. The aim is to provide a simple visual reference for business profit innovators. Hopefully, the 51 Business Profit Patterns, which may also be regarded as an index of business models, would help product innovators come to quickly come up with defensible business models. The search for a profitable model for Google took about two years. I wonder what time Google's search for a business profit model would have taken if they had access to the index of 51 Business Profit Patterns. I'm not sure what exact time the search for a business profit model would have taken. But, I'd bet it would have taken far less time than 2 years. In today's world of the Rapid Imitation Economy, where copycats are looking for the next great product (idea), we need tools that accelerate business model innovation and in particular, business model disruption.
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  • Rod, I remember reading somebody saying 'If you want me to lecture for one hour then give me three days to prepare for the lecture. If the lecture is for 30 minutes then give me a week to prepare. If only I have 10 minutes to lecture then give me two weeks'. I wonder how much time you needed to squeeze 51 ideas in two visual pages. This presentation crowns months of hard work, the least to say. The outcome is admirable. We have a compass to direct us.
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  • 1.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h:p://businessmodels.ning.com  &  h:p://twi:er.com/RodKuhnKing   VALUE  CREATION   MODEL   VALUE  PROPOSITION   MODEL   Inputs/Partners           Internal  Resources           Processes/AcMviMes           Product/Value  ProposiMon           Channels  &  RelaMonships           Customer/Job-­‐To-­‐Get-­‐Done           Cost  (Pain)           Revenue  (Delight)           PROFIT  (VALUE)           3-­‐ACT  BUSINESS  MODEL   (Business  Profit  StoryTree  Template)   PROFIT   MODEL   Business  Profit  Storytelling:   First,  Visualize  the  Desired   Profitability  of  Your  Business  Model  
  • 2.   #VPGen.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h:p://businessmodels.ning.com  &  h:p://twi:er.com/RodKuhnKing   VALUE  CREATION  MODEL:   COST  REDUCTION   VALUE  PROPOSITION  MODEL:   REVENUE  INCREASE   Inputs/Partners   q Co-­‐crea?on;  Social  Media   q Open  Source  Collabora?on   q Crowd-­‐funding/sourcing   q Frac?onaliza?on/Co-­‐owner   q Investor/Sponsor/Donor   q Mergers  &  Acquisi?ons   Internal  Resources   (Physical/Intellectual/EmoKonal/ Spiritual  Resources)   q Creator;  Broker;  Landlord   q Peer-­‐to-­‐Peer  PlaPorm   q Facilitated  Network   q Patents  (“Fences”;  Barriers)     Processes/AcMviMes   q Opera?onal  Excellence;  JIT   q Automa?on  (Self-­‐service/DIY)   q Gamifica?on;  Digitaliza?on   q Ecosystem  Management   q Problem  Solving;  Consul?ng   q Compe??ve  Strategies   Product/Value  ProposiMon   q Asset  Sale/Direct  Sale   q Product  Leadership/Extension   q Used/2nd  Hand  Product;  Bargain   q Customiza?on  (Value  Factors)   q Bundling/Unbundling   q Product/Soware  as  a  Service   Channels  &  RelaMonships   q Offline/Online;  (In)direct  Sale   q Franchise;  Licensing;  Affiliates   q Distributor;  Disintermediator   q Ad  Network;  Brand  Mul?plier   q Aggrega?on/Disaggrega?on   q Auc?on/Reverse  Auc?on   Customer/Job-­‐To-­‐Get-­‐Done   q Customer  In?macy/Loyalty   q B2B;  B2C   q Long  Tail;  Community  (Hub)   q Two-­‐sided  Market  (Segments)   q Mul?-­‐sided  Market  (PlaPorm)   q Luxury/Mass  Market/Niche   Cost  (Pain)   q Outsourcing;  Specializa?on   q Group  Deals   q Lending/Ren?ng/Leasing   q Cross-­‐subsidiza?on   q Frac?onaliza?on/Co-­‐owner     Revenue  (Delight)   q Pre-­‐payment;  Amor?za?on   q Discount;  Dynamic  Pricing   q Razor  Blade  (“Bait  &  Switch”)   q Usage  Fee;  Subscrip?on  Fee   q Tiered  Payment;  Freemium   q Dona?on;  Free   PROFIT  (VALUE)   q Shared  Value  (Profit)   q Transient  Compe??ve  Adv.   q Sustainable  Compe??ve  Adv.   q Red  Ocean;  Low  Cost/Margin   q Blue  Ocean;  Luxury  Spot   q Disrup?on/Lean  Spot   PROFIT  MODEL:   PROFIT  INCREASE   Business  Profit   Management  (PaLerns/TacKcs)     51  BUSINESS  PROFIT  PATTERNS   (Business  Profit  InnovaKon  for  CompeKKve  Advantage)