Verbs are disrupting Nouns! Almost every company CXO or board member or investor one speaks with and the question is common. How are we getting disrupted and it seems like in slow motion that there is nothing we can do to stop this change? What should we do? Why are tens if not hundreds of billions of dollars in value chains either at risk or getting disrupted as we speak globally?
Behavior (noun from the verb, “behave”) disrupting companies and industries as platforms on a scale never witnessed before? Economics of 5Cs, Context, Community, Content, Collaboration and Commerce are now less than $0.001/behavior. How did Intermarche, a French company leveraged “ugly vegetables instead of throwing them away” a pilot that actually sold out! Or companies such as Airbnb, Uber, Lyft, SolarCity, et al disrupting industries?
http://www.wimp.com/allsupermarkets/
Let’s start with some very interesting behaviors or how platforms are leveraging new business models + supplychain optimization to create a new competitive advantage by inventing new industries that are moving;
# Consumption to Prosumption – Postpaid to Prepaid
# Ownership to Access – Subscription
# Capex to Opex – Subscription/OnDemand
All above are behaviors! What disruptive startups are doing are creating platforms which are software algorithms wrapped around behavioral business models that capture demand and map to supply, while turning the entire value chain into services! The result. New metrics for value.
1. Value capture (verb) – Connecting fragmented demand and supply via Aggregation
2. Value sharing (verb) – Including the demand-supply chains as benefices of economies of scale and scope as ecosystems
3. Value unlocking (verb) – Geometric or exponential return by lowering Inventory holding, Higher Stock Turns, Lower Cash Conversion Cycles and Higher GM/Stock Turn, for every stakeholder, demand-supply, employee and investor
Some quick examples.
A look at Airbnb. Built around a behavioral platform of “Trust”. (From Google trends)
#PredictablyIrrational resultant behaviors
http://www.huffingtonpost.com/2014/04/29/airbnb-laws-san-francisco_n_5235820.html
A look at SolarCity Built around a behavioral platform of “scarcity”. (From Google trends)
#PredictablyIrrational resultant behaviors
http://www.fool.com/investing/general/2014/01/15/solarcitys-new-trillion-dollar-enemy.aspx
A look at Tesla. Built around a behavioral platform of “Risk” (From Google trends)
#PredictablyIrrational resultant behaviors
A look at Uber. Built around a behavioral platform of “Access” (From Google trends)
#PredictablyIrrational resultant behaviors
Looking at interest in Fortune 500, Forbes 100, S&P to startups and the trends are incredible. Verbs are disrupting Nouns!
Losses, poor asset quality, high inventory, low stock turns, high Cash Conversion Cycles, low GM/Stock Turn and predictably irrational behaviors in PE ratios.
By looking at behaviors and mapping to fundamentals is the nature of our work. This gives us as a team the algorithmic ability to look at what’s broken in an industry, company or market and what our model creates as a result from there on what the next opportunity, business model and investment opportunity will be.
It’s the (behavioral) economy stupid!
Categories: Uncategorized
