September 2005


Profit_multiplier_model_1Profit Multiplier Model is seen in firms which try to leverage their base and build multiple avenues to build profitability. "LionKing" story can be the base and other multipliers can be LionKing Broadway movie, Lunchboxes, TShirts..This model is different from Multi component profit model where the product tends to be the same, but the packaging is different. In this model however, only the base like IP, Skills and assets are same, the resultant products are different

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Profit_multiplier_model_1Profit Multiplier Model is seen in firms which try to leverage their base and build multiple avenues to build profitability. "LionKing" story can be the base and other multipliers can be LionKing Broadway movie, Lunchboxes, TShirts..This model is different from Multi component profit model where the product tends to be the same, but the packaging is different. In this model however, only the base like IP, Skills and assets are same, the resultant products are different

This type of profit model is more relevant for R&D firms which aims at a blockbuster and puts all the resouruces behind ONE product and then reap the benefits of the products if it succeeds / close the shop if it fails

Profitability5_1Time Profit model typically is followed by a firm which comes up with a product,skims the market by catering to the early adopters and let the other players in the industry copy its products, specs . Hence the entire focus of the company is to come up with products at a faster rate. Intel is one classic example in the semi conductor industry where its self annihilation strategy coupled with time profit model has kept its flag high in the highly competitive market. When Intel are first to market with a
new product, profits happen in the first four or five quarters and then
drop down very quickly to almost zero after that. To make a profit,
Intel must work hard to maintain a two to three-year lead over its
competitors. Diffusing the product as instantly as possible helps
extend their period of profitability.

What are the other companies that use this model ? Food for thought !

GtdOne of the weekdays , there was a surprise visit from my undergrad friend, Sendil . Was very anxious to meet him as it was more than 6 years since I had any talk with him. He later called me up and said he would be late by half hour. The next best thing to do was for me to do was browse through Gangarams book store , where I chanced upon " Getting Things Done" , a book which remained in the national best seller’s list for a long time. I for one totally believe that disciplined and systematic life would go a long way in becoming a happy man.Though I became JIT(Just in time ) person for the last 2 years or so, I am slowly going back to MRP+JIT system which makes life easier and simpler.

The book starts off saying that each one of us has innumerable commitments and most of them stay in our heads rather than as a system in the external world, which can help us meet those commitments.Hence to begin with managing commitments means
1. Anything outside the mind must be captured in a trusted outside system
2. Clarify exactly what your commitment is and decide the next few steps
3. Put a reminder service in place so that you are constantly aware of the same.

The basic premise of the book is "Key to managing all your stuff is managing actions". The author goes on to explain a 5 step methodology to manage actions.
1. Collect things that command our attention
2. Process what they mean and what to do about them
3. Organize the results
4. Review as options for what we choose to
5. Do the tasks

GTD Philosophy:
Workflow_diagram_4

The take away from the book is to maintain the following the lists:
1. "Projects" list
2. Project Support material
3."Calendar action" list
4."Next action" lists
5."Waiting For" lists
6.Someday/May be list

Before reading the book, I was a believer of daily to-do list. However, post GTD read, I have set aside few hours today to revamp my personal scheduling system .I am now using Basecamp,Backpackit, Mozilla Calendar, Sage to manage my tasks, schedule, feeds .I did spend quite sometime in getting a online GTD system at one place, but I realized that there is no one comprehensive GTD system in place as of now..Many people have tried a wiki approach, task management sites, but none come close to GTD. Hey, its a nice opportunity for anyone to come up with a GTD service and push it as a free service. With the amount of buzz on GTD, lot of people will lap the service .

To summarize here are 2 flow charts which describes the actions:

Gtdflowchart1Gtd2_1

Profitability4 Another Model described in "The art of Profitability " is the Switch board model. It is characterized by 3 aspects

1. Packaging – Bringing together a disaggregated tasks/individuals/etc.
2.Concentration of power : Cater to all the disaggregated needs by one core product/service
3.Critical mass / scale

One of the examples mentioned by the author is the business of bringing of set of actors, musicians, etc to a recording studio and providing a platform to come up with a TV Opera / Movie by bringing in Good content to the entire set up.
In the example mentioned, the actors, actresses, directors are always in need of ppl. Hence switchboard model works by first bringing together and satisfy their need of great writers and stories.Thus once the packaging and concentration aspects are taken care of, the set up is scaled so that it reached a sustainable mass where by it can bargain with both ends of the parties

The following can be different types of switch board models :

Different_switchboard_modelsThe examples which follow these models are

# Integrated Direct – a one-to-one relationship between the buyer and seller;

# Company.com – where the seller constructs a Web site for many buyers; also referred to as a storefront.

# Micromarkets, Marketplaces or Communities – where many buyers and sellers do commerce on a common site;

# Auctions – where either a buyer or seller puts his or her product or service out to bid;

# Content Aggregators – where a neutral site gathers all the relevant information from a number of sources for one buyer.(Google, eBay)

Refresher:
Switchboard Profit identifies the components that led to the business success
    of the Hollywood agent Michael Ovitz who took the bundling-of-talent concept
    that he so successfully perfected in television, and applied it to film-making,
    but with a difference, because it was much more difficult to create a concentration
    of power in an industry fragmented by many movie studios. Ovitz’ first step
    was to assemble talent; the second, to find a source of stories through a
    great literary agent; and third, the creation of critical mass. In the author’s
    words, "The more critical mass you build, the higher your probability of putting
    together a package that works. That, in turn, means that a star, a writer,
    or a director will be better off being represented by you rather than
    any other agent, because the odds of being part of a winning combination are
    so much higher. …So now the studios have to deal with you, and the
    stars want to deal with you." Thus the analogy of the old-fashioned
    switchboard Ovitz became that all his various contacts needed to plug into.
    The lesson, of course, isn’t that simple. Predictably, much work is needed
    to arrive at the numbers constituting the critical mass that is required to
    generate revenues seven to ten times greater than in the traditional model
    for that industry. And Zhao coaches Steve through the mental ordeal of working
    out how Ovitz arrived at this successful profit model