Changing Business Model
When you start a new software business, you need to decide how to set up a business model. Where are your customers? How you will drain money from them? What exactly you’ll sell and what you’ll be just giving away for free? You have to name all those things unless you plan to be charity organization.
When talking about choosing a business model one thing is worth emphasis – the model you’ve chosen on the beginning will most likely change. Assumptions you’ve made on start will appear to be incorrect and the whole business environment (or rather your knowledge about the environment) suddenly will change. And, you want it or not, your business model shall follow.
You can quite safely assume that chosen business model will change. Especially when you run yet-to-be-established company, a microISV for example. Seth Godin mentioned that when he was writing about Squidoo outcome:
“What you start with is wrong. At least what we started with was. Fortunately, we planned on being wrong, and have revamped most aspects of what we built.”
The same thing we did with Overto. On the very beginning we believed people would be willing to pay for additional information we can provide. After service growth and analysis which people come and how they interact with the service we changed our approach much. For the moment we don’t plan to give paid functionality – all features should remain free in predictable future (which in software business isn’t very long by the way). The way we see environment we act in is significantly different. We’ve just learned much about our audience and it wouldn’t be the best idea to keep the old track with that knowledge.
By the way the actual business model is a subject for another post – I hope to reveal a bit of that in near future on the blog.
2 comments:
Hi,
Found you thru linked in PM Bloggers.
Lots of good thoughts here. On business models, I will say that what is important is to have a target business model, try it, and see what happens. The experimental mindset is all important. This is where I have had challenges in the past, thinking that I could plan success in. Bust I have found that the best way to plan success in is to be prepared for many steps over the long haul.
Think, try, observe outcome, determined altered plan, then repeat the cycle. Interestingly, that thinking, it seems, is not in close alignment with project management thinking.
What do you think?
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John Reiling, PMP
PMcrunch
Project Management Training Online
I believe the clue of what you've said is the experimental mindset. Yes, without long-term plan it's har to run a business but you should be prepare to change things.
I don't think it's not in alignment with project management mindset. When you run a project you often face new situations, new people, new issues. Although general plan don't change much, methods, milestones and schedules can be adjusted. To give an example - lately we moved final deliver by a couple of months just to give our client chance to add some new features, which were key for marketing. According to a plan we shouldn't do it as it affected our payment dates too, but we could find way satisfying both sides.
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