The Future Of Business - put simple series

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"The future of business. Put simple" offers a brief insight into impacts on business brought by changing economic environment as of 2009. The presentation is primarily targeted for people interested in starting new businesses, analyzing business opportunities and crating environment for wealth creation and economic growth.

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  • interesting panel discussion for the pro-manufacturing scenario: http://www.youtube.com/watch?v=RBEgnWKQD8U&feature=player_embedded
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The Future Of Business - put simple series

  1. 1. Background: flickr.com The next business How changing economic environment impacts wealth creation by Konstantyn, Atlanta, 2009 put simple
  2. 2. Put simple: The next business preview Background: www.cineboutique.fr Konstantyn Nov. 2009
  3. 3. Background: flickr.com
  4. 4. new wealth growth points Background: flickr.com
  5. 5. new rules and tools Background: flickr.com
  6. 6. Chapter #1 Who are Background: flickr.com
  7. 7. Background: Microsoft
  8. 8. Chapter #3 Legacy business instruments Background: flickr.com
  9. 9. What next? Chapter #4
  10. 10. Chapter #5 New business instruments Background: flickr.com
  11. 11. Put simple: The next business Economy: #1 players that matter Background: www.cineboutique.fr Konstantyn Aug. 2009
  12. 12. Simple model a few players The economy is as com- plex as our life. Though, big moves in economy are always reserved to big players. There are just a few big players. If big shifts happen, a simple model can des- cribe, help to under- stand and predict eco- nomic development. Simple models compris- ing of a few players and their interactions en- able strategic and proactive business planning.
  13. 13. 1. Consumer Background: flickr.com major market force Private domestic consumption, % of GDP, 2008 USA 71% Canada 60% Germany 54% South Korea 48% China 37% Source: Janamitra Devan, Micah Rowland, and Jonathan Woetzel McKinsey Global Institute
  14. 14. 2. Supplier serves to consumer’s needs, but follows its own interests The supplier’s foremost - Earnings interest is profit. There Costs are two methods to = improve profit. Increase PROFIT earnings or decrease costs. Focus on one target is essential while in a competitive race.
  15. 15. 2A. Manufacturing Background: flickr.com focus on the most efficient transformation of resources Manufacturing focuses on the costs. Costs Supplier reduction equals the costs most efficient resource transformation into a plurality of products. The core competences are production methods, labor utilization and natural science.
  16. 16. 2B. Marketing/Sales Background: flickr.com focus on pleasing the consumers Marketing focuses on the earnings. Earnings Supplier increase equals sales of the same mass earnings produced product to a plurality of individuals. The core competences are requirements management, custo- mization, advertise- ment, distribution.
  17. 17. 3. Market controller Background: flickr.com Federal Reserve Market controller regulates the process of goods exchange between consumers and suppliers. Particularly, it Financial controls the exchange system change medium = money. The amount of money supplied to the market impacts behavior of both consumer and goods supplier.
  18. 18. Put simple: The next business The recently dominant #2 business model Background: www.cineboutique.fr Co. & Konstantyn Aug. 2009
  19. 19. Background: flickr.com Financial system changed the way to drive wealth creation Financial system change America’s New Beginning: A Program for Economic Recovery, Feb 18, 1981 Last time the general business model was forced to modify thirty years ago. Since the year 1981 an access to The next business model opportunities – by Konstantyn Spsokukotskiy, Atlanta 2009 easy-to-get credit was x GDP US credit market assets granted. The volume of 4 money consumed by the economy nearly 3 doubled. The additionally released 2 credit money were not 1 necessarily matched by the goods. This became a source of 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2008 Source: Peter Stella, International Monetary Fund, The Federal Reserve System Balance excess money. Sheet What Happened and Why It Matters, 2009
  20. 20. Background: flickr.com Consumer’s bonanza as primary money upload model Financial Primary system upload change model The next business model opportunities – by Konstantyn Spsokukotskiy, Atlanta 2009 money flow Federal Reserve primarily pours money into consumer market. Consumers have more money for disposal than earned. There were certain reasons for doing this.
  21. 21. Background: flickr.com Industry shifts priorities Consumer is truly King/Quinn Financial Primary system upload change model The business target “get the money” results in The next business model opportunities – by Konstantyn Spsokukotskiy, Atlanta 2009 the hunt for the excess money. Being first in GDP sector percentages 70% line (here chasing after consumers) equals 50% service bigger pie. A big part of service is the process of 30% product customization. industry Customization helps to 10% sell mass produced products into plurality of 1952 1962 1972 1982 1992 2002 individuals. Source: Directorate-General of Budget, Accounting and Statistics
  22. 22. The next business model opportunities – by Konstantyn Spsokukotskiy, Atlanta 2009 Background: flickr.com Industry neglects costs some core competences vanish Financial Primary Neglect system upload cost change model factors Lack of local competence: Number of foreign affiliates 1999- 2005 8.5k Earnings-side (delivering Industrial efforts in the past two decades manufacturing immediate value for sale and trade 7.5k 4.5k consumers) factors were 4k taken under magnifying 3k glass. Costs-side pro- professional services fire duction factors had less 2k administrative services managerial attention. 1k agree, mining, energy They were frown out of education construction recreation & hospitality the list of core compe- health care 0 120k 240k 360k 480k tences. Malfinancing, Efforts: employee equivalent/company 1991- 2005 Source: McKinsey Global Institute, 2009 off-shoring.
  23. 23. Background: flickr.com How long will it work? The upload scheme Financial Primary Neglect works until credit is Focus on system upload sales cost becoming cheaper over change model factors time. It allows to refinance previous debts Excess costs covered by refinancing and cover inefficiencies. The next business model opportunities – by Konstantyn Spsokukotskiy, Atlanta 2009 Refinance for lower interest and win. Interest(2000) – interest(2004) = profit. The leading interest rate driver is Federal Reserve Rate. It approached it’s bottom limit (the rate is effectively zero) in 2008. No further refinancing is available unless you 1981 1984 1989 1994 1999 2004 2009 endanger the wealth.
  24. 24. Background: Microsoft Consumer goods Game over the business model of the last three decades is effectively done Source: Federal Reserve statistical release, G.17, 2009 annual revision
  25. 25. Put simple: The next business Legacy business instrument #3 examples Background: www.cineboutique.fr Konstantyn Aug. 2009
  26. 26. 1 diversity proliferation “Any-One” economy Any flavor, any time, any place delivery. One device, one function, one time use design. The next business model opportunities – by Konstantyn Spsokukotskiy, Atlanta 2009 Background: flickr.com
  27. 27. The next business model opportunities – by Konstantyn Spsokukotskiy, Atlanta 2009 2 production offshoring Service-oriented economy More focus on marketing and consumer design, less on production and tools Background: flickr.com
  28. 28. The next business model opportunities – by Konstantyn Spsokukotskiy, Atlanta 2009 3 aggressive sales Push-over-pull , age of abundance Unsophisticated consumer has more money to disposal than time to decide what to buy. Marketing being business unit at the money stream begot business. Background: flickr.com
  29. 29. Put simple: The next business #4 What comes next? Background: www.cineboutique.fr Konstantyn Aug. 2009
  30. 30. Background: Microsoft Optimism check up opportunities
  31. 31. The next business model opportunities – by Konstantyn Spsokukotskiy, Atlanta 2009 Help Industry In this scenario industry upload scenario 1 has no real incentives to please the customers any more. It slows the Financial Primary Focus on Neglect necessary changes system upload cost change model sales factors down. More show than go. Stricter governmental regu- lations are essential to keep industry in check. There are incentives to sell complex products. Production of those products is problematic. Hallmarks: Result: bad product sophisticated consumer, quality and no warran- sneaky supplier delivers old shoe with new label, ties. Stale mate eco- minute wealth increase if at all, values shift nomy. Restricted con- sumption.
  32. 32. The next business model opportunities – by Konstantyn Spsokukotskiy, Atlanta 2009 Build Infrastructure upload scenario 2 Also supported by Financial Primary Obama administration. Focus on system change upload model sales Examples: investment in transport infrastruc- tures, health-care IT infrastructures, etc. The probability of more stress on this scenario is low. It requires new (forgotten) competenc- es. Typical results: back- Hallmarks: shoring, in-house pro- sophisticated consumer, duction, more students marketing-centered businesses die-off, in engineering. Better wealth increases slower than used to be control over long-term product/service quality.
  33. 33. The next business model opportunities – by Konstantyn Spsokukotskiy, Atlanta 2009 Scary the crowd upload scenario 3 The scenario utilizes the effects of world-wide Financial Primary Neglect system upload Focus on cost deflation and/or mass sales change model factors hysterics. That is people as well as businesses save and stack money in unusual quantities bas- ed on gains in deflation economy or scared by the wave of failing (in their perception) insti- Hallmarks: tutions and danger of business as usual, coming challenges. expensive banking regulations , Banks decrease people are scared to death by any available reason leverages. It isn’t pro- life scenario and thus not sustainable.
  34. 34. Put simple: The next business New business #5 instruments to win Background: www.cineboutique.fr Konstantyn Aug. 2009
  35. 35. 1 Complex products “All-in-One” economy Consumer has no access to easy money. Hard won money will be spent wisely. Multi-functional products with low TCO per function will be preferred.
  36. 36. Jack Trout’s simple and obvious products going to be extinct Background: flickr.com
  37. 37. 2 Back to basics The stress on particular instrument is not clear until a dominant scenario evolves
  38. 38. 3 personal participative sales Pull-over-push, age of scarcity Sophisticated consumer has more time than money to event marketing direct spend. sales direct guerilla marketing marketing tele- marketing mass promotion public relations advertising push participatory Source: Pinko Marketing
  39. 39. picture: www.ravenwerks.com Advertisers establish/use trust
  40. 40. Put simple: The next business The future of business Background: www.cineboutique.fr What is your opinion? coming soon
  41. 41. what do future successful businesses do? 1. _____________________ 2. _____________________ 3. _____________________ 4. _____________________ 5. _____________________

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