Hello there:
I've been hinting at how without creators the value chain breaks and why productivity is such a big deal for a reason: how we create value and thus make money has changed.
When companies talk about innovation, the status quo says it's an iterative development that happens at product or service level with improvements as catalysts for change.
But what if this way of thinking about it has run its course?
What if the greatest single factor for leap frog innovation is the business model itself: exploring and expanding the ways in which we make money, seeing what catches fire and pursuing the potential from there?
Remember Jack Butcher of Visualize Value? I talked about him in the issue about creators as critical links in the value chain. He was working around the clock as a freelancer, then as the owner of an agency. He decided to give the business model innovation a stab. He’s built up an audience of 300k across social channels. 18 months ago, Jack launched his first digital product. Now, he’s making $1m/year.
His motto is "build once, sell twice." And takes advantage of the costs and potential scale of online products. The first thing Jack did, actually, was to build attention. Then he tried a bunch of ideas to see what stuck, gave people the option to learn what he was doing... as he was doing it. One mere step ahead of them. Of course, you've got to have skills in at least one domain to pull this off. In his case, visualizing value was an idea whose time has come.
You're likely not going to quit your day job today, if you have one. Which is wise. But maybe you'd like to learn to see a bit around corners at work.
In the status quo world you have:
- Transactions that are all about the sale—hence much of the focus ends up going to promotion to get new customers and innovation ends up being unstable.
- Subscriptions that are all about retention—to get to predictable numbers you manage attrition while you work on innovating just enough to keep numbers steady.
- Advertising that is all about attention—media companies have been spinning all kinds of ways to increase time and engagement... social media did bring some innovation, but kept the value.
But these are not the only possible business models. Jack is playing with different business models, each with its own strategy and products. This is how you scale.
In a recent talk, Zoe Scaman provided some examples of what moving innovation to the business model looks like by tapping into what companies are doing in China:
- Books: from transactions and subscriptions as the only options to unlock the ending, pay per chapter, tips, and reading credits, which has a gaming component.
- Podcasts: from advertising and donations to tips, pay per episode, membership, listening credits, and subscriptions.
- Music: from subscriptions, transactions, and advertising to adding ticket sales and live streaming, limited time access, listening credits with access to merchandize, personalization.
The pay-as-you-go business model intrigues me. When you innovate the business model, you can open different income streams and create stability in the business. Here's the business model canvas.
This has been happening for a while, but the challenge for solo creators is often having the time to differentiate income streams. Provide a service as product and a product as well. Speaking, writing, and publishing. By far the hardest part for many I've spoken with is marketing and sales. Yes, even for marketers. It's just a question of bandwidth. Many go solo because they love their craft... and soon find that now they have many jobs.
The tools to make business model innovation possible are starting to catch up. Many of the entrepreneurs I mentioned in the last few weeks are building the next generation of platforms and products. We're not there, yet, because it's both hard to imagine a whole new paradigm (little practice, space, and time to come up with new ideas), and to figure out the architecture of building one.
Social media is all about what is now and got us stuck into that mode, part voyeur, mostly in passive mode. The obsession with the present feeds their built-in need for fresh content around the clock to feed attention. But by doing their bidding, we don't focus on the information we need to achieve our goals.
On the other end of the spectrum, curation of information suffers from poor architecture: how we collect, store, augment, and use what we already know needs help to be useful for decision making and leading. The next generation of tools can improve how we understand the work by adding context and relationships to data and information.
That was the promise of digital. Busines model innovation is the path to start building the next web.
|
|
Structure and order
I'm probably the only person who can use the information, ideas, and use cases accumulated on Conversation Agent over the last 14 years. And a blog is still a few steps better than a social media stream when it comes to capturing and organizing knowledge.
As I mentioned last week, when you find a way to organize and structure what you know, you can increase your productivity and focus on innovation. Here's a very comprehensive map of existing tools for thought (free to members... see what I mean by innovative business models?).
Many existing tools for organizing information are still tied to the old structures: hierarchy vs. network. Crowdsourced information and networks are more powerful, but the only way to tap into that power (so far) is to sign up to become a member of a niche community of practice. These are the places people go to for the content, and stay for the community.
Most of these niche communities operate on Slack, Telegram. and Discord. But these tools are useful to get things done and connect in real time through their chat function. However, they're not very good at helping you find the best content. For that, I still rely on blogs and search.
Wikipedia is the best example of a library maintained by a network. It has the tools to capture, store, and organize information, and the structure to enable collaboration at scale. Anyone who's tried their hand at a company internet likely understands the nature of the challenge to have both: organization and participation.
Paid communities
The first communities that emerged were companions to successful blogs like Farnam Street and The Art of Non Conformity.
Early on, Shane Parrish opened a Slack channel where members could discuss and share what they were learning and get bonus transcripts for his podcast. Long time readers discovered Shane's work at the beginning, as I have a particular knack for spotting new trends way ahead of the curve. Today, Farnam Street has a mailing list of 300k and a thriving paid community.
From the general audience that gathered around his blog, Chris Guillebeau funneled his ideas on travel and building lifestyle businesses into discrete products. If you've been a reader for a while, you might have even purchased one of his products (I participated in his affiliate program). Today, his work and community have evolved into the Side Hustle School.
Toby Shorin has more examples of paid communities:
- Stratechery: paid content + members-only forum, for investors and tech strategists.
- Venkatesh Rao’s Art of Gig / Yak Collective: paid content + a Discord channel, for indie consultants.
- New Models: content aggregator + commissioned content + paid Discord channel (conducted through Patreon), for artists and cultural producers.
- It’s also worth mentioning that Substack is currently layering on commenting + social features for paid newsletters, so many successful Substacks qualify.
As he says, paid communities are a new business model for bespoke communities that solve two problems: scale and participation. You don't need huge scale to create value paying for when you focus on a niche or vertical. And your focus, with some initial help and involvement, will largely drive participation.
Companies could take advantage of this trend. But only when we can address the business model innovation upside in a larger and longer term sense. You cannot just bolt a community onto your existing business model. The incentive structure, funding sources, size, goals, moderation approach, and community management philosophy need rethinking to create long term viability as both businesses AND communities.
+
|
|
Other things of note
A study by the Long Now Foundation on long-lived institutions matches what I've also found through research:
- 90 percent of the companies that are over 200 years old have 300 or fewer employees.
- It also includes a diagram and explanation of the Long Now business model.
- The School of Life is another interesting example of a blog (Alain de Botton's) turning into a site with several business models.
- See if you can spot them: individual, business, franchise.
|
|
Was this a buck worth of sustenance? Hit the button below to show your gratitude.
Grazie mille.
“Creativity without knowledge is stupid.
Knowledge without creativity is sterile."
- Carlo Rovelli, physicist
|
|
|
