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 :
# 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)
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