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