« GetFriday.com - The Online Assistant | Home | GoChongo - Promote Yourself On a Spanish Monkey Slang Site »
Core Business Models
By Jason | May 2, 2007
What is life like as a student/entrepreneur/business owner around Finals time?
Hell..
Although I have been putting my time to good use. I just finished a 31 page paper on a full out, competitive analysis of Yahoo, and I came down to one crucial difference between profitability and mediocrity - core business models.
Google reigns supreme in search with integrated advertising. We all know that. Yahoo, on the other hand, has its head turned the other way, wondering which direction they need to go in. Google wants to make all the world’s information searchable, while Yahoo wants to make all the world’s information searchable for enthusiasts. That is the crucial difference.
In short, Google is a search company, and Yahoo is a portal company. Now this is all well and great, but how does this apply to startups outside the valley?
In essence, it gives us a chance to learn. Yahoo is unbending when it comes to changing its direction. Unbending to the point of a 27% increase in revenue from last year, with 21% debt. Meanwhile, Google posted a 69% increase in revenue through the last quarter, with only 9% debt.
My point is that any business needs to grow and adapt from their original plan. What works one day might work tomorrow, but it might not. Strategies need to be in place if the original business model doesn’t work out quite right.
In fact, look at the real world example of General Electric. Not only have they grown, changed, and adapted, but they have been successful at (almost) every turn. The only time they differed from that path was when they had too many pots on the stove to be effective.
Any startup needs to have a core competency which it is built from, but that doesn’t mean it is the only way to be successful. Paths will change, people will leave, and customers will fall off. It doesn’t mean the end of the world; it just means that you have to adapt.
Topics: Strategy |
May 2nd, 2007 at 8:26 pm
Right out of college I worked for Harris Semiconductor. The company began by making printing presses. Sixty years later it was all HDTV and military electronics. Had they stuck with printing presses, they would probably have been out of business a long time ago.
May 3rd, 2007 at 4:34 am
How true that is. And a great addition to the article. If a company is unwilling to change, they will die barking up the wrong tree.
Especially on the Internet, a day late is often just late enough that there isn’t a second chance..
May 3rd, 2007 at 7:56 pm
I’ve seen too many startups (immature) that stick religiously to their defined business plan and don’t see what the customers are telling them and the following financials.
Often they don’t see nor hear the warnings signs until its too late. Suddenly changing direction can be like re-steering (is that a word?) the Titantic; when u’re big or not used to changing course it takes time … and can have a disasterous result.
Lal
May 4th, 2007 at 3:48 pm
Absolutely Brendan. Its funny because I went boating not to long ago and you analogy is perfect. I was taking a tight turn and in my mind likened it to steering a big company.
I guess that’s what happens when you can’t turn ‘off’ work, even when you are doing something recreational :0)