Monday, October 26, 2009

How to Build Sustainable Products

via Trizle by The Trizle Team on 10/26/09

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  1. "Step right up! Step right up! Buy the Miracle Growth JOOOOOOOOOOOCE!"
  2. "You will get 10 times taller and 20 times stronger and 400 times sexier by sipping this juice!"
  3. "Get it for $986,594,895,820,958,253,253,233,253,235.99! TODAY ONLY SON!"

The Big Bad Business Amateur

The Big Bad Business Amateur thinks thriving in business is a zero-sum game; that is, the more you take from your customer, the richer you'll become.

So, they screw Customer X for their $ -- which becomes incrementally unsustainable over the long-term.

For instance, take the financial industry:

  • Bernie Madoff built a ponzi scheme that stole billions from his customers; his ponzi scheme toppled because screwing over customers = not sustainable.
  • Blackrock, on the other hand, has built a sustainable win/win revenue model by aligning their interests with their customers: the richer their customers become, the richer Blackrock becomes

Experienced business leaders

Experienced business leaders take this mindset:

  1. In a free market economy, buyers will gravitate to those where they can get the greatest value
  2. The sustainable way to build a business then is to build products that provide that value

How do you build sustainable product?

Make customers richer/happier with every purchase of Product X.

For instance, take these sustainable revenue models:

  • AdWords: the higher you bid, the more customers you attract
  • Brokerages: the more you invest, the greater value you get
  • Candy bars: the more you have, the happier you get
  • Walmart: the more items you buy from them, the more you save on those items

Unsustainable revenue models?

  • Cars: its depreciating effect will burn you; the higher you pay for a car, the more money in equity you lose
  • Newspapers: the more you buy, the sadder you get (i.e., you don't need three copies of today's newspaper)
  • Manufacturing in expensive countries: the more a business spends, the more money in opportunity costs it incurs
  • Pyramid schemes: the more you spend, the poorer you become

Align your interests with your customers' interests.

You'll build products that will provide customer value ages from now.

Make customers richer.

Posted via email from Ranjan's posterous

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