I’ve recently been following a number of online conversations on what makes a growth-oriented entrepreneur different. The consensus seems to be that the serial entrepreneur who rapidly grows one business after another just is a different kind of an animal. S/he appears to have a drive that is difficult to consciously duplicate. In my mind, s/he also has a way of seeing the world in terms of connections. In quantum physics it is more and more understood that it is not aggregations of the smallest bits of matter that count, it is how they interact. It’s not the things themselves that matter, it is the relationships between the things. Growth-oriented entrepreneurs are relational thinkers.
I recently attended a presentation by Brian Wiegand cofounder of Alice.com. This is his fourth internet business. The other three were successfully sold and are still operating in one form or another. His new business identifies a market failure in the delivery of certain commodity priced, consumer staples. He identified an opportunity in that many of the brand name items were being forced off store shelves by store brands. He looked at the reasons online groceries continue to fail and came up with a different model to monetize his idea. He used a combination of “long-tail” theory and conventional business model theory to figure out where the weaknesses were in existing models. What he didn’t do was decide to go into the online grocery store business and begin his research with the end model in mind.
Although the site may look like a typical online shopping site the business model is quite different. One of the things that stood out for me in listening to him was that he thought in the big picture arena of how the particular goods that he was interested in are produced, distributed, and delivered to consumers. What he did not do was focus on the specifics of the current models surrounding brick and mortar and online shopping. It was this big picture thinking that allowed him to identify the market clearance failure he hopes to exploit.
I don’t know whether you can train yourself to think that way or not. I tend to think on the macro level and it is the macro questions that fascinate me. Here are a couple of examples of big picture ways to think about some familiar businesses. I hang out with a lot of people in the publishing industry. Writers in particular seem to believe that a “knowledge-based” economy will be an economy that is post-the production of stuff. However, the biggest example of a successful knowledge based business is Wal-Mart. They were early adopters of specialized supply chain and point-of-sale software, which is one the main things that led to their success. Amazon is not just a company with an internet front-end; they warehouse and distribute books and other goods.
There are steps common across industries that get goods from production to consumers. Producers-> Processors ->Distributors->Sales Outlets. Some of these four might be collapsed, but this chain follows across industry. Examples – the pork industry – Producers (hog farmers)-> Processors/Distributors (meat processing plants) -> Sales Outlets (grocery store). The publishing industry -> Producers (writers) -> Processors (publishing houses) -> Distributors (book distributors) -> Sales Outlets (book stores). In the recent past pork processors have created shortages and controlled the prices farmers are paid and grocery stores can charge by exercising the advantage of their position in this chain. Amazon’s biggest success has been in collapsing distribution and the sales outlet to the consumer and controlling both. What market clearance failures and opportunities can be identified by taking the big picture view of your industry?