Tag Archives | business models

3 Mistakes in Managing Risk and Uncertainty

фотосессия во Вьетнаме

Not long ago, I stood on a pier near Cape Canaveral, Florida and watched a SpaceX rocket launch.

People were wearing SpaceX t-shirts and talking excitedly. SpaceX has brought the thrill back into space exploration.

Founder Elon Musk figured that by developing a way to reuse rockets, just like airplanes, he could reduce the cost of travel to space by a factor of a hundred.

He’s well on his way to achieving that. The company created the first commercial spacecraft in history to shuttle cargo to and from the International Space Station, and has already cut the cost of launching into space to less than a tenth of its prior level.

His ultimate goal, however, is to colonize Mars, making human life inter-planetary.

How’s that for a bold vision statement?

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When you’re being attacked by new competitors, make a new friend

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Every industry undergoes change.

The players who devise a different and better way of capitalizing on these changes are the ones that emerge as winners.

Few arenas have experienced more change in the last decade than the music industry. It was the first mass-media industry to be hammered by the digital revolution, shrinking from $25 billion in annual revenues in 2002 to only $15B in 2014.

This industry provides a dramatic example of how revenue sources can quickly shift as new businesses and business models are introduced into the market.

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When revenue sources dry up, step up the experimentation: Bezos transforms the Washington Post

IMG_7680Are you making money the same way now as you were five years ago?

Have some of your prior revenue sources disappeared?

Have you created new revenue sources—new products, services, customers or geographies—to maintain your business growth?

The newspaper industry is an apt example of a sector where revenue sources have shifted—and shrunk—over time.

Newspapers used to rely on advertising and subscription sales, but as these revenue sources have dried up—with print ad revenue dropping from $44.9 billion in 2003 to $18.9 billion in 2012—publishers have worked hard to find new revenue sources, such as conferences and marketing services.

Amid all this turmoil, Amazon CEO Jeff Bezo chose to purchase The Washington Post for $250 million dollars.

At the time, he conceded that the business looked “hopeless” from the outside, but called the newspaper a “black box” for experimentation and development.

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