Pigs and Chickens – Business Model

Is your business a pig or a chicken?

Harold Star’s book “Chicken and Pigs – Business Models and Competitive Strategies” puts  businesses into 4 categories.

These models are referenced by transaction frequency and revenue contribution from each transaction.

My takeaways from this book are:

Business models are about customers not end users, often people get these stakeholders mixed up. Customers are the ones writing the cheques.

  •  Few companies know why their customers came to them and why they stay
  •  It takes different skills to attract customers and retaining them
  • Once established a business model is very difficult to change. This comes from the customer behaviours and required skills associated around maximizing operational efficiencies working each model.
  • Business models are predicated around decisions made by management around three model elements (strategic DNA) : Customer, Resources and Capabilities and Value Proposition.
  • Many companies operate multiple models,  as such they need to be conscious that each model requires different skills and behaviours

Through his book it he never actually mentions why he calls them such, perhaps obvious, but my take is:

Chickens: Lay eggs – lots of regular contributions
 Pigs: good for bacon and ham at the end, lots of reward once
 Black Widows: Mate and kill their prey, like big customers who consume your business leaving you  at risk with a small number of large customers
 Locusts:  lots of them and they move in packs, short life expectancy

Check out both Harold Web Site and his book for more detail on this pragmatic approach to classifying and developing strategies to manage your customer pools and business model.

The web site has plenty of great information. Click on each model to get more information.

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Kick Starting New Ventures

Many people are stuck in a deadly procrastination loop over whether to start a new business venture or not. Bending any ones ear that will listen, but never actioning it or getting into enough detail to hit the go button. Business is not a spectator sport.

My advice to people is that this activity is wasting your live away. My motto is – new ventures should “grow fast or fail fast”.

5 Steps to Kick Starting your new venture:

1: Find out what you don’t know – you don’t know
2: Create a brief business plan and get it challenged
3: Identify what’s in the way of getting started
4: Validate your market
5: Revise you plan and get it challenged again.

GMC in conjunction with Grow Wellington run the Activate – Jump Start boot camp. Taking  new ventures through steps 1-3 in 48 hours, helping all of them make significant progress in moving their businesses ahead.
Then following the weekend up with a support programme, including a post weekend strategic review and follow up mentoring.

Learning’s from the weekend included:

–   Peer review of your business model and plan is the quickest way to transform your thinking
–   Being away from home and the internet for a 2 days and nights can aid your thinking process and help you get clarity
–   The simple act of presenting your business model and plan to someone – will help you get clarity.

If you are sitting on the next big thing, or are stalled making the next big change to your business than would recommend signing up to one of the remaining jump start weekends for 2011  Wellington-Palmerston North 18- 23 Nov or Auckland 25 – 27 Nov.

If you have a GST registered business you may qualify for up to a 50% discount for events like this, contact me for more information.

Typical feedback from the weekend and follow up sessions:

“Relevant and to the point… with immediate and significant impact on my business.  It has paid for itself in the smart decisions I have made since.

The Activate weekend is different to all other business workshops I have been to, no hypothetical cases leaving you to interpret and apply to your business.

It was amazing what we all learnt from analysing each other’s business; I left having made some fundamental shifts in my business strategy.

The post weekend mentoring has been invaluable in accelerating the journey of my business.  

John Matsis – Founder Tonic Foodgroup Ltd

“Exhausting and inspirational in the same moment… this is gold.”

“Mark and Activate have transformed my business from a cool product, into a focused business with a clear strategy to market. ”

The ability to get clarity out of the chaos for my new venture is invaluable, the investment to participate paid for itself 10 times over in saved time.  

Rachel Hatch – Founder Mexis – Virtual Reality Devices

“Brutal and inspiring… don’t start a new venture without attending Activate.
It begins with a startup bootcamp weekend that exposes and plugs any gaps in your business model
“.

“Mark has a great way of saying what needs to be said – even it’s not what we want to hear – and making us feel good about it.”

“We are operating at warp speed as a result of attending Activate The follow up support has been key in keeping me on track and focused on getting the important high value stuff done. I recommend any business owner, new or nearly new, attend this practical programme.”

Judith Eastgate – Founder, Perfect Accent