Sat, Oct 06, 2018

The Business Models They Are a-Changin’

In economics one of the most famous and taught concepts is the demand curve – it depicts the relationship between price and quantity (high price, few buyers; low price, many buyers). Typically it is combined with the supply curve to explain market dynamics and provide guidance on pricing and production. Of course, everybody knows that these curves are oversimplifications of a much more complex reality – they are seen as useful tools nonetheless.

Sadly they don’t work that well anymore.

We live in a world which sees its fundamental assumptions being turned upside-down, from physical to digital goods, from products which were once scarce to ones which are now abundant, from printed money to cryptocurrencies, from labor to robots, from human thought to AI. All this results in a world which operates on a whole new set of business models – ones which are born in and made for, a digital-native, exponential age.

Let me give you an example: We already know that companies don’t bother charging for their products anymore, as the value is in the data their users generate. Moreover, increasingly it is not the company itself which is harvesting the value in the data (e.g., through advertising) but 3rd parties which take the data, combine it with other data sources and create wholly new offerings based off of this.

This is all incredibly exciting for every entrepreneur (especially the heretically ones) – as it means that there are entirely new markets (and models) to be created from the ground up. I tell the entrepreneurs I work with to pay attention to this and spend time deeply thinking through their business models, how they might already be built on a new foundation and how to further extend on their insights. Empires will be created on new economic models.

P.S. I am so excited about this that I have been researching this space for a good year now and am working on a new series of talks & workshops and eventually a book. Drop me a line if you have some research or insight you’d like to share. :)

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