Lumos Business Solutions http://www.lumosforbusiness.com en-us DIGITAL: Terra Tribal http://www.lumosforbusiness.com/blog/864/28-03-2014/DIGITAL+Terra+Tribal

Terra tribal.

About a year ago, we talked about the concept of ‘Collaborative Commerce’ and the bottom-line benefits being seen by those companies building high-trust, ûber social ecommerce platforms.

+ DIGITAL: The Advent of Collaborative Commerce+

But there is something deeper happening here. We are going back to our roots.

The Digital world is emerging into the ‘terra tribal’, an online ecosystem for creating tribes.

What do we mean by tribes?

Just like you would see if you were to take a trip to the Amazon in Brasil, or the Sahara of Africa, tribes have formed based around cultures, traditions, lifestyles.

In the globalized world we live in, where the majority buy clothes from the same brands, food from the same stores, and stories from the same media outlets, life can become a little mundane.

And so we search … for something more.

People with similar ideas, interests, passions, a tribe to belong to. A collective, an outlet for inspiring ideas, a place to rest your soul.

And it’s happening Digitally. Why?

Because Digital is a medium, a wavelength, a channel that can cross boundaries, time zones and barriers. It is an opening, a place where space becomes irrelevant.

And not to say that it replaces the face-to-face, that’s impossible. But in an overcrowded city, where people bury themselves in their phones, zone out in their music and escape into the tabloids, building a tribe becomes a little bit difficult.

The terra tribal is happening online. The ecosystems for doing business are shifting. A new phase has begun.

2014-03-28 00:00:00
Organizational Models for the #NewEraBiz http://www.lumosforbusiness.com/blog/862/28-02-2014/Organizational+Models+for+the+NewEraBiz

If it’s time to Let ‘Em Ride and open the gates to the #NewEraBiz, then we need new models to do so.

We have written a lot about business models for the #NewEraBiz, but what about organizational models?

That’s what we are going to dive into the #NewEraOrg in today’s blog.

As a result of the backlash towards the corporate world and its notoriously hierarchial structure, the ‘horizontal’ revolution has started – the vertical walls are coming down. Being ‘flat’ is in vogue and ‘democratization’ is the word of the day.

But you can’t run a business without leaders. Even those with noble intentions, the ones who run their business ‘democratically,’ need to have someone who is ‘higher up’ to to organize and tally the vote.

Any good business, #NewEraBiz or otherwise, needs good leaders, and with leadership comes hierarchy. But in the same way that a company can have a business model – meaning they endeavor to make profits – and do amazing things for the world, a company can have a hierarchy and still support the growth of the people within it.

So what are we talking about?

In the typical corporate hierarchy, you have the C-Suite, led by the CEO.

The CEO’s job is to run the show and grow the business. When the company has a problem, the CEO will be the one to fly on his helicopter and find the solution, at least that’s what we’ve been trained to believe. Just look at the 2008 Financial Crisis. Bernanke and Paulson fly in the CEOs of the big American Banks to resolve the once-in-a-lifetime financial crisis, and voila, problem solved (*cough).

The obvious problem is that the CEO in this context, was not appointed to safeguard society and look out for the world around him, he was put in his place to look out for the interests of the shareholders in his company – it’s his fiduciary duty.

The problem with the traditional hierarchical structure is one of power. Those at the top have the power to make big decisions that can affect large amounts of people (society) and benefit very few (shareholders), and yet there is very little transparency and accountability for how these decisions are made.

But if, for example, the 2008 Financial Crisis were put to a vote, would the outcome have been any better?

The likely answer is no, as it was an acute situation that required immediate action; it could not have been contained in the way it was without billions of dollars being pumped into the economy in some form or another; had a Referendum been required, the whole economy would have likely sunk before the vote was even cast. It’s like congregating the passengers on Titanic to vote on how to manage a sinking ship – it wouldn’t happen.

While naturally there could be A LOT of debate about this example, we are simply using it to set the table for a #NewEraOrg model. The way we want to frame the debate is not around the question of whether or not there should be a hierarchy within the organization, because we clearly believe there needs to be one, but around the question of:

How should we setup a hierarchy in an organization?

The answer, we believe, is ‘distributed authority.’

In the traditional model, you have:

executives → managers → employees → floorsweepers

The power resides within the executives’ hands. The executives design the orders, the managers communicate the orders, the employees’ carry out the orders and the floorsweepers ensure that the marble floors stay shiny and the toilets cleans while the orders are being carried out.

But what if one day the floorsweeper, who has PhD in mechanical engineering, has an idea that could be of massive benefit to the organization.

Given the structure that we have just talked about above, he would tell the employee, who would tell the manager, who would tell the executive, who would then, based on about a thousand opaque factors, make a decision based on his/her own subjective judgment. In this case the likelihood that the floorsweeper would – a) tell the employee in the first place; b) have even the slightest likelihood of bringing the idea to fruition – is slim to none. That’s because the power is concentrated.

In a distributed model, which would be circular rather than tiered, those who develop the strategies and high-level objectives for the organization (typically referred to as executives) would be in their own circle. They would then create new circles around them, based on key strategic areas for development and implementation, and select leaders for those projects (typically referred to as managers). Those leaders would bring in people to help them develop and carry out projects (typically referred to as employees), and those people would require support staff to do less important tasks so that they can focus on their work (typically called floorsweepers).

If one day a support staff comes up with an idea for a new system that could be scaled across the entire organization and save the company millions, he can talk directly to the project lead of the circle. If the idea has merit, the project lead can bring the idea into the strategy circle and assess its validity at an organizational level. If the idea is accepted, then it can be spun out into a new circle and the support staff becomes the project lead. The original project lead can continue on with his mission, find another support staff to fill the gap, and move forward without any impact to his/her position or stature in the organization.

What does this mean?

It means that you can build an organization that can adapt and make scalable changes rapidly. You can create a model where the power is distributed across the organization, so that ideas at all levels can bubble up. It’s a template for an agile and resilient organization, the pre-requisite for any new business that wants to be successful in this increasingly digitalized and fast-paced world.

And we didn’t just make this up. It is being practiced in several forms right now, the most notorious being called Holacracy.

+ Holacracy: How it Works

Holacracy is defined as a form of organizational governance in which authority and decision-making are distributed throughout a fractal holarchy of self-organizing teams. A holarchy is a hierarchy of self-regulating holons (something that is simultaneously a whole and a part) that functions both as autonomous wholes and as dependent parts.

+ Plus Social Good: A New Form of Organizational Governance

The idea is to shift the power from a traditional hierarchy to a network hierarchy.

The principles of Holacracy are summarized as the following according to plussocialgood.org:

  • a clear purpose for the existence of the organization
  • a trust-driven governance
  • radical transparency (internally and externally)
  • belief in intrapreneurship
  • belief in distributed and participatory leadership
  • purpose as the hidden leader

It’s all based on the principle from the text of one of it’s founding members, Ken Wilber, of a concept called ‘intersubjectivity.’ When we have a clear purpose and more freedom within the organization, we have the space to be creative and the building blocks to innovate.

Let’s put this in the context of the #NewEraBiz:

  • fiduciary duty is out (profit), shaking up the world as we know it is in (purpose)
  • boards of directors are out (oversight), ground-up governance is in (trust)
  • audits and CSR are out (regulation), top-to-bottom transparency is in (accountability)
  • executive authority is out (power), distributed authority is in (people)

If the pillars of the traditional organization are shifted from: profit to purpose, oversight to trust, regulation to accountability, and power to people; then the whole lens for how the organization is developed needs to be refocused.

The most important shift is from people to purpose. Whereas a typical organization has always been structured in a way that fosters an environment of individualistic thinking and ego-based roles, the #NewEraOrg is structured based on the overriding purpose of the organization, thus fostering a collective culture and a set of task-based roles.

Big news and buzz was made recently about this because of the implementation of Holacracy by Zappos in the US. In a recent Forbes article on this news, it was described as “a radical self-governing operating system.” Zappos, which is owned by Amazon and has 1,500 employees, is planning to implement the system by the end of the year.

While it may seem radical when you place Holacracy in the context of the traditional business operating environment, it doesn’t seem radical when you place it in the context of the world we live it and the speed of change. Just like the body and the process of cell replication, an organization operating in today’s environment needs to be agile, quick and rapidly resilient. It’s not about advocating Holacracy specifically as an organizational model, it’s about templating the #NewEraOrg to have all those characteristics – Holacracy is just a reference point.

Overall, the #NewEraOrg needs to be structured to support the growth of the #NewEraBiz Business Model. Simultaneously, the two can be synchronized to create a company capable to making both huge impact and money in a lean and efficient fashion. That’s what we are talking about here. So saddle up the horses, get them circled up and Let ‘Em Ride.

+ Download a copy of the business model canvas (click here)


+ BMBreakdown: ETSY
+ Time For BMi


PLAN – the Business Model


+ BMi Services

2014-02-28 00:00:00
Skyscrapers and Sandcastles http://www.lumosforbusiness.com/blog/860/31-01-2014/Skyscrapers+and+Sandcastles

Skyscrapers.

The ultimate symbol of success in today’s society. To have your brand plastered across the front of a skyscraper, your name in the lobby of the building, your ego infused into the structure – it’s The Sign that you’ve made it.

Back in the day, it was probably pretty cool to have a skyscraper associated with your name, the penultimate way to show that the sky is literally the limit. In a time when the world needed rebuilding, following the post-war period and the subsequent boom years, the whole concept of skyscrapers was probably nothing more than a dream for most people. Skyscrapers were cool.

But in today’s world, we have them – everywhere. Major metropolitan cities are defined by them. They are no longer a dream, or a symbol of blue-sky thinking, they are a statement. And in certain spheres of the corporate world, some may even argue that skyscrapers are an essential piece of that big-dog persona that companies strive for in order to stay at the top of the game. The problem is that when you have so many, it loses its edge, its luster.

Suddenly it starts to look a little ostentatious, insensitive even, to build a skyscraper in the name of business.

When the world of business is as backwards as it is, and societal trust is at all-time lows, you can’t help but saying to yourself:

‘it all needs to come down’

Floor by floor, office by office, brick by brick. Until you are left with nothing more than a pile of rubble.

And instead of rebuilding a bunch of eco towers and carbon-efficient colossus with a different set of logos, wouldn’t it be cool to build something different?

What about, say, a sandcastle.

Go to the beach, get swept in by the immensity of the sea, take in the sunset and start piling sand. Take your time, breath in the air and just start from the ground up.

Enjoy the process of it and develop it only to a point where you are comfortable with it. There doesn’t need to be anyone there to watch you, to analyze you or grade you, build the sandcastle for you.

Granule by granule, tower by tower, wing by wing.

And then when it’s built ,walk away, move on to the next one.

The next person to walk along the beach may stumble upon the sandcastle, look at it and have a different view of the horizon.

Skyscrapers or sandcastles?


+ BMi: Time for Business Model Innovation
+ DIGITAL: The InterConnected Strategy


Building Blocks – PLAN – the Business Model


What we can offer

+ Twitter : @LumosBusiness

+ Pinterest : Visualize Trends

+ Google + : Hangout

+ RSS : Subscribe

2014-01-31 00:00:00
Let 'Em Ride http://www.lumosforbusiness.com/blog/859/07-01-2014/Let+Em+Ride

Open The Gates. Loosen the Reins. Let ‘em Ride.

Planning, researching, analyzing, strategizing – all good activities. But there comes a time to put the pen down and set things in motion. The moment is now, it’s time to let the big ideas out of the stable.

Because by now, we’ve heard all the forecasts, seen all the destruction, heard all the doubt. And we’re still breathing, still standing, still moving.

None of that, however, changes the fact that it all needs to be redesigned, reinvented, reconnected. What we need now is to connect the dots and build the next wave.

What is the next wave?

It’s dynamic, it’s digital, it’s designed for big impact. This is the #NewEraBiz, not some masquerade of old ideas packaged up and put on a smartphone. It’s using technology as a connector rather than a distractor, people as catalysts instead of puppets, and resources as fuel for production over consumption.

The next wave isn’t going to be started by MBAs in a classroom or Analysts in a boardroom. It’s started by the horses, the ones with their hooves on the turf and their gaze on the horizon.

Big ideas don’t come from focus groups or market analysis. They come from within – from observation, from experience, from intuition. And once they are there, there is a window of time to make them fly, then the opportunity is gone.

The #NewEraBiz is all about setting big ideas in motion. First a spark, then a flame and suddenly it’s a wildfire. It starts with a quick flicker, a sudden action, an unexpected movement.

The time has come to let ‘em ride.

Open the gates, loosen the reins and let’s go.


+ BMi: Time for Business Model Innovation
+ DIGITAL: The InterConnected Strategy


Building Blocks – PLAN – the Business Model


What we can offer

+ Twitter : @LumosBusiness

+ Pinterest : Visualize Trends

+ Google + : Hangout

+ RSS : Subscribe

2014-01-07 00:00:00
BMi: Business Model Innovation - FINANCE http://www.lumosforbusiness.com/blog/858/19-12-2013/BMi+Business+Model+Innovation++FINANCE

The walls are coming down. The #NewFinance ecosystem is alive. And in this post we are going to explore how Business Model Innovation (BMi) is driving the creation of a new generation of dealflow.

+ Time for BMi – Business Model Innovation

Rigid. Opaque. Vertical.

Would be a few of many possible words that would come to mind to describe the world of Finance as we know it today.

Fluid. Transparent. Horizontal.

Is how the Finance industry of tomorrow will look.

The shakeup has begun, and while we don’t know exactly what lies in between yesterday’s world of crony capitalism and tomorrow’s world of boundless entrepreneurship, big moves are already being made.

In recent blogs, we have looked at how BMi is reshaping the food (#realfood) and fashion (#sustfash) industries, today we are going to look at how #NewFinance is the beacon for BMi among the three.

Through a combination of digital platforms and network-as-market theories, Finance is being flipped on its head. Rather than going to a bank to ask for a loan or a venture capitalist for an investment, SMBs and entrepreneurs are logging into their laptop and tapping dispersed networks of investors.

+ DIGITAL Markets

It’s faster, it’s cheaper and it’s engaging. The wisdom and knowhow of those who make the deals flow is no longer being locked down in an investment bank or holed up on the 45th floor of a skyscraper. It’s being distributed and shared, becoming accessible for the average guy and girl with a dream to start their own company.

Not to say that the old grey hairs of Finance will be left on the sidelines; quite the contrary. It’s the mechanism that will change, as the real juicy deals will originate from outside of the traditional intermediaries and be packaged in simpler terms.

And the upside will be explosive. That’s what happens when you start to open the pipelines to previously unserved markets. In the same way that a spark can set a pool of gas ablaze, it only takes a shot of capital to set pent-up demand on fire.

Using BMi as the tool, a host of impact-driven entrepreneurs are bringing their scrappy, scalable upstarts to the global stage and collaborating with others in order to reshape the financial landscape.

What is Business Model Innovation?

A business model is defined as the rationale of how an organization creates, delivers and captures value.

+ The Key Components of a Business Model

Business model innovation is the process of reinventing the business model itself. Rather than being focused on end-product innovation, like derivatives and securitized debt, BMi focuses on changes in the process of exchange across the value chain, whether it be a new pricing structure, collaborative partnership or customer channel. In the end, it is the model itself that SHIFTS, rather than simply the product or service.

How do we bring BMi to the Finance Industry?

It’s already happening.

While most of the traditional finance institutions have gone on with business as usual on a debt-driven consumption model, others are opening the door to a new model of finance based on productivity and creation. Finance BMi is being driven from the bottom up – by entrepreneurs, customers and investors alike – while in the process, the old-school economic theories about efficiency and the free market are being torn to shreds.

Because the whole industry, as we know it today, is predicated on control and ownership, neither of which are conducive to economic ‘efficiency’ in a ‘free-market’ system.

How can markets be efficient when key information is controlled by a few?

+ see The Libor Scandal

How is our system free market when a few ‘own’ and disburse key resources?

+ see New Scientist’s analysis of the Capitalist Network

If we really wanted to have a system where entrepreneurship could thrive and ‘free-market capitalism’ could flourish, it sure wouldn’t look like this.

Governments would enable global currency exchange at fair-market value. Banks would lend to growing small businesses. Investors would take chances on high-impact entrepreneurs. Communities would ‘crowd fund’ cultural and social projects. People would loan money to one another to help make important purchases.

And so that’s how it’s going down. It’s distributed. It’s disintermediated. And most importantly, it’s driven by a collective.

How do we tweak the business model to make this happen?

Click here to download the PDF. View the larger image here.

The finance business model can primarily be broken down into two main categories: retail and investment banking. The retail banking business model is built off of scale, while the investment-banking business model is more centred around dealflow depth and securitization. There are many ancillary service providers who help fill the gaps in the market via partnerships and alliances with the banks.

The primary cost drivers are: staff salaries, real estate, compliance, back-end infrastructure and front-end systems.

While one business model is based on scale (retail) and another more on depth (investment), both are low-margin businesses. Retail banking profitability is dictated by the spread, the difference between the cost of borrowing versus lending, whereas investment banking is a fee-based business where profitability is more related to the bank’s brand and advisory services. So while one side focuses on scaling, the other is more focused on relationships. In the end though, both fall into the low-margin categories, with retail margins originating from the interest-rate spread oscillating between 0.5 – 5 % depending on macro factors, while investment banking fees typically ranging between 1 – 10 % depending on the type of service (M&A, IPO, etc), the amount of the deal and other factors.

Banks, whether retail or investment, can become extremely profitable if they can scale their brand across a number of different channels and create a diversified product offering. That’s why partnerships are so important. Retail banks partner with (or acquire) credit-card issuers, mortgage-origination entities, loan agencies and any other organization that can help them to extend their brand and add more volume. Investment banks build back-end partnerships to source dealflow, capital and advisory services, anything that will help them land the big deals.

But it’s all changing. As these vertical, debt-driven institutions are coming to a point where their business model will become unsustainable. There is only so much ‘free money’ that can be printed, mortgages issued and fees charged. Change is required from top to bottom.

In the Market Beacons section of our #NewEraBiz research on Finance, we analyzed three companies who are breaking away from the traditional mould and finding scalability through network and transparency strategies:

+ A New Era of Business: FINANCE

  1. Seedrs
  2. Funding Circle
  3. Triodos
  • Seedrs was the first regulator-approved crowdinvesting platform in the world. Built on a nominee model, they allow companies to raise up to £150,000 from everyday investors who have as little as £10, and just recently raised £750,000 through their own platform the fund their European expansion;

+ FT – Seedrs EU Expansion

  • Funding Circle is the pioneer of the P2B (Person-to-Business) Lending market and recently raised $37 Million to expand their presence into the US and build on their momentum in the nascent SMB P2P Loan market;
  • Triodos Bank is a Dutch-based entity who are building a ‘sustainable banking model’ on the pillars of transparency and ethics, and taking a lead in the impact and SRI (socially responsible investing) investment sectors.

On a macro level, there are three key areas of focus for sparking Finance BMi:

Given that borders and institutional walls make absolutely zero sense in the Finance world – capital needs to be able to flow – technology is acting as the bulldozer to break down the barriers.

There is a distinctive difference between what is happening in the ‘emerging’ versus the ‘emerged’ economies. Emerging markets are bringing in low-tech solutions to help money move within the boundaries of their country, while emerged markets are using high-tech solutions to remove restrictions on global capital movement.

emerged

  • Crowdinvesting, where companies like Seedrs enable anyone in Europe, no longer just the UK, to invest as little as £10 in any startup company looking for £150,000 or less in Europe

+ FT – Seedrs spreads across Europe

  • Money Movement, where companies like Transferwise, based out of the UK, facilitate global money transfers between bank accounts, saving customers from having to fork over huge fees just to make a wire transfer through their bank

+ Transferwise

emerging

  • SMS Money Transfer, where services like M-Pesa enable everyday Kenyans and other Africans to send money between one another using SMS on a basic cellular phone

+ Businesses with Bang! M-Pesa

  • Mobile Banking, where companies like CARD Bank, in partnership with the Grameen Foundation, take advantage of existing mobile networks to build banking service solutions for the previously “unbankable” in the Phillipines

+ How CARD Bank activated 480,000 poor Savers

Taking the ‘borders-are-silly’ analogy, #NewFinance is being driven by distributed networks who are connected via platforms, creating entirely new channels for driving dealflow and connecting with customers.

In the emerged markets, this can be seen in the form of crowd-based platforms, while in emerging markets, channels are being created to help impoverished citizens and communities form networks and access capital.

emerged

  • Crowd Lending, where companies like Funding Circle create an entirely new channel for SMBs looking for a loan, making the approval process much faster and the fees lower
  • Sustainable Pipeline, where companies like Triodos help finance businesses who meet certain ethical criteria and build a community of customers around those entities, creating a new channel for ‘sustainable’ businesses

emerging

  • Crowd Micro Finance, where organizations like Aliança Empreendadora in Brazil help micro-entrepreneurs in low-income communities access to capital through their Impacto crowdfunding portal

+ Impulso platform

The movement towards new forms of currencies is in motion. Part of the transition away from the current system is based on the need to move away from purely debt-driven, government-issued currencies and create new forms of exchange between people (P2P).

In emerged markets, new currencies are sprouting up to help spawn new digital ecosystems. In emerging markets, alternative currencies are being developed to help citizens spend their money in local businesses, as typically 90% of the money spent in low-income communities flows out to global conglomerates.

emerged

  • Digital Dinero, where currencies like Bitcoin are enabling a new method of peer-to-peer payment via a digital currency which can be exchanged for real money. Despite its overhyped valuation and flawed structure, it does provide a signal that bona-fide digital currencies will be emerging in the future.

emerging

  • Local Currency, where the Sampaio in São Paulo helps steer citizens in the urban neighborhood of Campo Limpo to spend their $Reais on local businesses and build a flourishing community

+ Catarse: Banco União Sampaio

Overall, if capital is going to flow, we can’t have a million barriers, a thousand fees and a few controllers. Thanks to technology and a growing realization of the need to redistribute dealflow, the #NewFinance movement has come to life. In both emerged and emerging markets, countless examples of BMi exist to show how a few tweaks of the BM can create big impact, both locally and globally. And the beauty is, this is only the beginning.

For more on the ‘emerging’ side of the #NewFinance market, check out Next Billion FI (Financial Innovation)


Have you seen any great examples of FINANCE BMi?


+ BMi: FOOD
+ Time For BMi


PLAN – the Business Model


+ BMi Services

2013-12-19 00:00:00
DIGITAL Markets http://www.lumosforbusiness.com/blog/857/06-12-2013/DIGITAL+Markets

It’s time to redraw the lines with DIGITAL.

Limited only by logistics and imagination, the future business ecosystems will no longer be restricted by borders, barriers and beauracracy.

The markets of the future are networks. Through the digital medium, new networks are being formed around interests, professions, etc., any common thread that that can form the backbone of a community. It’s no longer just about where you are from or what your passport says about you. It’s about the deeper characteristics, the elements that form your true self nature.

Consequently, the way that markets function needs to be rethought around the DIGITAL medium. If strong community hubs that have millions of members form with a globally dispersed audience, then those ‘networks’ may be more lucrative to target than any country or specific place based around geography.

Not only do the ‘targets’ themselves need to be rethought, but also the strategies to reach them. Invasive, corporate advertising techniques will not work in the world of DIGITAL Markets. Instead, it will take a much deeper approach that requires taking the time to understand the fabric that weaves the network together:

  • what drives this community?
  • how do they interact within the network?
  • what can we provide to help them in their journey?

With the right approach to DIGITAL Markets, and a few creative DIGITAL Moves from the InterConnected Strategy, companies can look beyond blue oceans and test the limits of borderless global markets.

+ DIGITAL: The InterConnected Strategy

How do you approach the emerging digital markets?

+ Download a copy of the business model canvas (click here)


+ BMBreakdown: ETSY
+ Time For BMi


PLAN – the Business Model


+ BMi Services

2013-12-06 00:00:00
BMi: Business Model Innovation - FASHION http://www.lumosforbusiness.com/blog/856/21-11-2013/BMi+Business+Model+Innovation++FASHION

Sassy. Sexy. Sustainable.

That’s the future of fashion. And in this post we are going how Business Model Innovation (BMi) is the mechanism to bring it back there.

+ Time for BMi – Business Model Innovation

Not Sassy. Nor Sexy. And certainly not Sustainable.

That’s the fashion industry of today. Why?

Because it’s not sassy to buy a $10 halter top from a fast-fashion brand that’s made on the back of slave labour in Bangladesh.

Nor is it sexy to rock boots and bags mades from the skin of scarce species.

And it’s certainly not sustainable to buy clothes from the fashion houses that destroy the worlds most precious and sensitive ecosystems in order to stock their High-Street shops.

So we need a new vision for fashion, one that is sassy, sexy & sustainable, no compromise.

Unlike the Food industry, which we covered in our initial BMi post, there is no household brand that represents what #sustfash (sustainable fashion) is all about; there is no Whole Foods for #sustfash, at least not yet anyways.

+ BMi: FOOD

Rather, the fashion industry is being led through its metamorphosis by a collective of edgy upstarts & nueluxe brands who are starting from scratch; their designs, materials, business practices and processes are nothing like today’s High-Street fashion brands.

Recycled materials, upcycled designs, tribal patterns and sustainable sourcing characterize how these brands operate. We are moving past the point of burlap bags and hemp overalls, #sustfash is sexy and sassy, far more than its predecessor, the soon-to-be-dead industry of all-that-matters-is-your-image fashion. #SustFash has a soul, a pulse.

As an example, Ser Sustantavel com Estilo (be Sustainable with Style), a Brazilian blog that is on the beat of the #NewEraBiz of fashion, recently launched their runway series SP EcoEra 3.

Wholesome. Colorful. Real. Vibrant. That’s where the #sustfash movement is taking the future of fashion. Defined as – environmentally responsible, socially just, economically viable and culturally appropriate – sustainable fashion is starting to rock the runway.

Not to be completely outdone, a few big brands are starting to realize that you can only run a business with an ignorance-is-bliss / look-at-our-numbers attitude for so long. In the same way people want real, organic food, they want straight-up, sustainable clothes. The demand is building and the market potential is huge.

Will the new fashion industry meet somewhere in the middle, combining the scrappiness and brand purity of the upstarts with the scalability and experience of the icons?

Could be …

But in either case, the real breakthrough potential for fashion is related to Business Model Innovation (BMi). Because stocking a few sustainable brands in the department stores won’t move the dial. You need to create scalable entities and collective units capable of reshaping the world’s High Streets, replacing the icons of today’s fast-fashion / snakeskin-luxury world with spunky, scaleable & sustainable brands. Not just one or two, but hundreds and thousands.

What is Business Model Innovation?

A business model is defined as the rationale of how an organization creates, delivers and captures value.

+ The Key Components of a Business Model

Business model innovation is the process of reinventing the business model itself. Rather than being focused on end-product innovation, such as new materials or designs, BMi focuses on changes in the process of exchange across value chain, whether it be a new pricing mechanism, supply-chain partnership or distribution channel. In the end, it is the model itself that SHIFTS, rather than simply the product.

How do we bring BMi to the Fashion Industry?

As a first step, let’s talk about what we want to BMi towards. We need hundreds and thousands of brands that can deliver on the sustainability side without compromising the design side. Ethics and aesthetics, hand in hand.

The challenge with changing the fashion industry is that there are so many moving pieces, and the logistics/cost pressures required to make a fashion brand fly are immense. With all the factors, including materials, labour, supply chain, distribution, sourcing – it’s a lot of work.

But there are a few mid-size luxury brands, such as Brunello Cucinelli (Italy) and Osklen (Brazil), that are showing that it is possible to deliver on design without sacrificing everything else.

Given our meet-in-the-middle market thesis on the evolution of the future of fashion, it would be brilliant to have heaps of brands who can move into the mainstream market, making it both unfashionable and uncool to purchase a $5 sweatshop T-shirt or a $40 pair of plundered-ecosystem leather shoes.

How can we tweak the business model to make this happen?

Click here to view the bigger image. Download the full PDF here.

The fashion business model can be primarily broken into two main categories: mainstream retail and luxury. Mainstream retail’s business model (ie. Zara) is built off of scale, while luxury’s model is built off of margin.

The primary cost drivers are the materials, designers and labour.

The primary revenue streams are product sales, through both branded and wholesale channels. Distribution Channels is at the core of the fashion business model.

While retail’s business model is based around scale, and luxury’s model around margin, both operate on very high profit margins. From the remnants of the Bangladesh tragedy, a Mango invoice was found showing that the company produced a shirt for $4.45 and sold on High Street in London for $46. Luxury’s margins would likely be even higher because their scale is much smaller. Overall, the typical fashion brand is going to markup products with a gross margin of 75%.

Given all of the moving pieces and logistical components, fashion brands work in a lot of partnerships. Whether it is for materials, design, production, logistics, etc., fashion enterprises rely heavily on their partners to keep everything in motion. In most cases, this is why established brands argue that it is so difficult to become ‘sustainable.’

In the Market Beacons section of our #NewEraBiz research on Fashion, we analyzed a handful of companies that are making moves in an unconventional fashion. These are brands who are shaking up the model in some way, all but one (Fashion.me) in ways that revolve around sustainability:

  1. PUMA
  2. Fashion.me
  3. Eileen Fisher
  4. Catalytic Clothing

+ A New Era of Business: Fashion

  • PUMA is taking on the ultracompetitive sports apparel industry using sustainability as their core strategy. Unlike NIKE, who is focused on Material R&D (link to Sustainability …), PUMA is building their business model on transparency and developing collaborative strategies with sustainable partners (ie. PUMA Wilderness Collection);
  • Fashion.me, the Brazilian fashion social network launched in 200x by two former investment bankers, is selling ‘big data’ packages to brands based on user interaction with key products;
  • Eileen Fisher, the wildly popular New-York women’s clothing line, was built on casual style and a commitment to ethics; however, small ‘sustainable’ tweaks to the business model, such as the Eileen Fisher Repair Program (started in 2005), are what have really helped turn ;

On the macro level, there are three key areas of focus for sparking Fashion BMi:

Materials are one of the key cost drivers in the fashion business; similar to FOOD, the shift from GMO products (ie. cotton) requires a significant shift in agricultural practices and will take time to scale. There is also, however, a significant opportunity to make breakthrough technological advances to speed up the sustainability curve.

  • Cooperatives, where Fashion growers who are farming sustainable crops (ie. Organic Cotton) form cooperatives to help build their collective clout. Inversely, smaller fashion brands can create buying cooperatives to purchase sustainable materials from producers;
  • Nanotechnology, where with new nanotechnologies firms take an approach like Catalytic Clothing in order to bring cool new materials to the small-scale designers who can bring them to the market in imaginative and innovative ways;
  • Collaborative Partnerships, when two different entities find alignment in their motives, there are no limits to what can happen.

Ex. Brazil’s Osklen, a global sustainable-luxury leader, partnered not with another brand, but a country. Italy, a place known for its history of craftsmanship and design, and Osklen have come together to research six new ‘sustainable’ materials and study their potential in the market.

Given the logistical challenges and supply-chain complexity in the Fashion industry, technology can play a huge role in the evolution of the business model.

Beyond Enterprise systems to track inventory and manage suppliers, new brands can use technology to take transparency and brand experience to a whole new level.

  • Material Tracing, where enterprises use technology to trace their entire garment-creation process, from end to end, and show consumers

ex. Rapa Nui – award-winning ‘From Seed to Shop’ transparency

  • Fitting, where companies enable their customers to get a feel for the garment from the comfort of their home by embedding new technologies into their eCommerce store

ex. Embodee – Digital Garment Experience

  • Experience Apps, where companies show how their product(s) fits into their market’s lifestyle and uses technology to help expand their experiences

ex. PUMA Run Navi app

Given that distribution is at the core of the fashion business model, brands need to focus on building new channels via the Web. Especially new #sustfash enterprises, who can use the digital medium to build their market and grab their attention, then enable on-the-spot purchasing.

  • eCommerce, where established eCommerce enterprises scale their channels to help bring new sustainable brands to market, and new upstarts use ecommerce to disintermediate the channels and cutout costly middlemen.

Ex. eTailer Yoox has created the Yooxygen platform for its shoppers who crave chic #sustfash clothing. New startup Evocha is bringing high-quality garments to European shoppers at mainstream prices.

  • Networks, where startups like Fashion.me harness the power of the social web to create new networks of fashion-focused consumers;
  • Clickable Video, where companies take advantage of technologies to enable consumers to purchase garments while they watch a runway show on any one of the main digital media networks.

In the future, fashion brands will start to model their business model around nature. Models built around Closed Loop, Zero Waste and Biomimicry are closer to becoming a reality with each passing day.

Overall, fashion needs to come back to its couture roots while embracing the needs of contemporary culture. BMi is the key to enabling #sustfash to reach a point where it can scale and compete against today’s heavyweights. When this happens, fashion can come back to being sassy, sexy and sustainable, full stop!

Even for those who can’t read Portuguese, ‘Ser Sustantavel com Estilo’ provides a lot of colorful inspiration for sustainable fashion …


Have you seen any great examples of FASHION BMi?

+ Download a copy of the business model canvas (click here)


+ BMi: FOOD
+ Time For BMi


PLAN – the Business Model


+ BMi Services

2013-11-21 00:00:00
A New Era of Business: FINANCE http://www.lumosforbusiness.com/blog/855/01-11-2013/A+New+Era+of+Business+FINANCE

The New Era of Business reports are focused on the future of important industries and include examples sourced from around the world.

How will we finance the future?

That’s the question driving the research behind this report on New Finance, as we take a deeper look at how finance is driving the New Era Business. As Finance is at the heart of the #NewEraBiz – no business can even get started without capital and not everybody is bullish on BitCoins – we wanted to scan the panorama and look at emerging ecosystems in the (new) financial landscape. The goal of next-gen finance platforms is to help entrepreneurs and small businesses (SMBs) avoid using credit cards to finance their entity; instead, they can source capital via these platforms that leverage technology to cut out middlemen and lower fees.

What is New Finance?

If traditional finance is a vertical, competitive and rigid hierarchy dominated by a small group of financiers and industrialists, then New Finance is the opposite. Horizontal, collaborative and fluid, it is an industry that is inclusive and takes advantage of collective actions to drive dealflow.

We’ve talked about New Finance before over the course of the last couple of years.

The first real research down this avenue happened with My Crowdfunding Stud in Latin America, as the advent crowdfunding was the catalyst for many of today’s New Finance platforms. That was followed up by a trip to see what Seedrs and other early movers in the crowdinvesting industry were up to in London.

+ Finance 2.0: Wall Street Meets the Web

Then at the end of 2012, we did a small case study on what’s happening in the UK to demonstrate how the SMB Finance ®evolution is in full effect.

+ The SMB Finance Revolution

More recently, we dissected how New Finance startups like Circle Up were helping to Redistribute Dealflow to the areas of the economy that need it the most; we used Food as an example of an industry that has been chronically underfunded at certain tiers.

+ The Redistribution of Dealflow

Now we are going to take a look at this from the bigger picture and see what the next step is in the evolution of Finance. To put it in perspective, we have embedded a video by Bridgestone founder Ray Dalio to outline ‘How the Economic Machine Works.’

To summarize, the economy is essentially governed by three forces acting simultaneously – the short-term debt cycle, the long-term debt cycle and productivity growth. Together, they work to drive the economic machine that powers the global economy.

Since the financial crisis, governments have resorted to printing money as the strategy to ‘stimulate’ the economy. This stimulus drives the short-term debt cycle, which usually lasts for about 5 – 8 years. When the Central Banks lower interest rates to rock-bottom levels and turn on the money-printing taps, they create an expansion of credit and we move up the short-term debt cycle curve.

The short-term debt cycle, the oscillating squiggly line, is a subset of the long-term debt cycle, the large oscillating line, which operates in periods of roughly 50 – 75 years. When the cumulative debt in an economy builds up to a point where it is no longer sustainable, the peak of the long-term debt cycle, then we begin to enter a period of deleveraging. If done correctly, and inflationary and deflationary measures are balanced, then we can have what Ray calls a ‘Beautiful Deleveraging,’ or an orderly unwinding of a debt bubble.

Thirdly, we have productivity growth, which is the straight line on the graph that increases steadily over time. Productivity is a function of how efficiently we utilize resources to achieve outcomes that boost the economy. The key to the long-term growth of any market economy is increasing productivity.

While the video doesn’t overlay our current economic environment into the model, it appears that we are entering a period of deleveraging when you take into account that:

  • Central Banks are printing money at an unrelenting pace;
  • Consumer Debt has reached unprecedented levels;
  • Underlying inflation remains low;
  • We have rock-bottom interest rates and sky-high sovereign debt.

The ‘stimulus strategy’ has been focused on expanding consumer credit, which is administered by the banks, who have made enormous post-Crisis profits off the spread between what it costs them to loan versus what they charge customers to borrow. Unfortunately, however, much of that cheap credit has failed to reach SMBs, creating a large chasm in the SMB Finance market.

The problem is that, as many studies have shown, it is only (or at least primarily) new firms who create long-term jobs in an economy; therefore, if the required capital is not reaching the SMBs who need it most at an early stage, then a full economic recovery cannot occur. In the UK, for example, the 2012 Breedon report showed that there will be a £84 – £191 Bn gap in SMB loans if significant changes were not made.

Thus, to restore the global economy to an era of robust (and sustainable) growth, the SHIFT should be to measures that boost productivity and increase businesses access to capital, rather than giving consumers credit for consumption. And that’s where New Finance comes in.

Because it’s the SMBs (small & medium businesses) who can reignite the economy in a sustainable fashion – delivering economic, social and environmental benefits to all tiers of society – and bring full-time jobs to their respective nations.

In this light, we have seen several trends emerge in the last few years to provide businesses with the access to capital they need to startup, grow and expand globally, including: crowdinvesting, P2B Lending and sustainable banking.

Crowd Investment

Crowdinvesting is an offshoot of crowdfunding, which was sparked by the launch of Kickstarter in 2009. The crowdfunding model is a donation-based model that uses technology to efficiently enable members of a given community to each contribute small amounts of money to fund a project.

+ Business Model Breakdown: Crowdfunding

With crowdinvesting, ‘the crowds’ are able to actually invest, or take an equity position, in a seed-stage enterprise, rather than simply donating for a reward. While it sounds conceptually simple, it is a complex to implement because it requires national/state security regulators to rewrite security laws to allow for ‘crowds’ of unaccredited investors to buy shares in companies that have not filed a prospectus.

Seedrs, based out of the UK, was the first regulator-approved crowdinvesting platform in the world and uses a nominee model to enable companies to raise up to £150,000. Countries like the US, on the other hand, are trying to roll out nationwide regulations (the JOBS Act) to enable multiple platforms to work within the same framework.

While each country, and the strategy of each platform, is different, the goal is the same – use technology, and the wisdom of the crowds, to capitalize upstart companies. According to Crowd Valley, the market for startup crowdinvesting was approximately $112 Million however, the market is only just beginning and the growth will ramp up exponentially as laws are changed to facilitate crowdinvesting globally.

P2B (SMB) Lending

P2B Lending, in a New-Finance context, is an offshoot of the P2P industry, which was estimated to be a $1.2 Billion industry in 2012 and growing fast.

P2B Lending happens when one business receives a loan from an individual, group or institutional ‘peer’ rather than a bank. In a similar vein to crowdinvesting, P2B Lending leverages technology to create an efficient debt market and remove the middleman, in this case the banks. Rates are typically set using an auction or bid system, and the industry is, similar to crowdinvesting, subject to regulatory laws within each country it is based out of.

Zopa, started in the UK back in 2005, was the pioneer of the P2P Lending market and has facilitated $400 million worth of personal loans since its inception.

Now, the P2B Lending marketplace is starting to get hot, with companies like Funding Circle stepping up to give businesses access to expansion and working capital, plugging the gap left by banks. Since the company’s launch in 2010, it has facilitated $158 Million worth of loans to SMBs at an average rate of 5.8% and loan size of £65,000.

Other sites are popping up globally as well, as the market starts to take shape to start the capital SHIFT to the companies that need it. While the market is only estimated to be worth about $120 M globally, expect rapid growth in the next 5 years.

Sustainable Banking

Sustainable banking is an offshoot of traditional investment banking, with one key difference – it matters how profits are made. Rather than being a black box that bankrolls dictators and unsustainable enterprises, the goal of sustainable banking is to foster a vibrant economy so that there are markets left to bank in the future.

The essence of sustainable banking is that these banks actively fund enterprises that generate a positive impact for society. While a bank like Goldman simply acts as a ‘market maker’ and don’t limit themselves with ethical concerns, sustainable banks look to loan to and bankroll businesses that play a real role in the creation of a flourishing society.

Recently, a few studies have been conducted to compare the performance of ‘sustainable banks’ to ‘too-big-to-fail’ banks. One such study, which analyzed data between 2003 and 2012, comparing Global Systemically Important Financial Institutions (GSIFIs) versus ‘sustainable banks,’ revealed some interesting insights.

While global return on equity was greater for the traditional banks, it’s clear that it comes at the risk of depositor’s savings and assets. A breakdown of individual CAGRs in different banking categories, however, showed that sustainable banks outperformed in all categories.

It goes to show that there is a business case for sustainable banks, and that it goes beyond just ‘ethical’ rhetoric. While traditional banks will be able to maintain immense profitability for the interim, the whole banking business model will need to evolve to become more sustainable in order to bankroll the #NewEraBiz to grow globally in the decades ahead.

Market Beacons

Seedrs

Seedrs, who we alluded to earlier in the ‘Crowdinvesting’ section and have talked about in several previous blog posts, continue to be the beacon of crowdinvesting in our opinion.

While they have not generated the same volume as their closest competitor CrowdCube, who had about a year head start, their nominee structure and everyday-investor attitude make them the model to study for long-term crowdinvesting success in our opinion.

In addition to offering everyday UK citizens the opportunity to invest as little as £10 in startups, they also have worked with the UK Government to create the SEIS program and other seed-investing schems.

With Seedrs ramping up growth, they recently broke the £2 Million pound mark and have started opening innovative fund mechanisms, such as the recently funded WebStart Bristol, which raised £150,000 on the platform to launch their incubator.

Funding Circle

Funding Circle, who we alluded to in the P2B SMB Lending section, is pioneering the loan market for SMBs. The company is ramping up growth, developing new partnerships, and has a bad-debt rate of only 1.4%.

Beyond the numbers, they are meeting their market’s demand. A study conducted by Nesta showed that 77% of businesses would return to Funding Circle as their source for future financing. 75% of lenders, on the other, stated their willingness to increase lending in the next 12 months.

The strength with Funding Circle, other than general satisfaction and lower interest rates, is the speed. New applications are reviewed with 48 hours, and the average funding period is 12 days, compared to 15 to 20 weeks with the banks.

The company just raised $37 Million and is expanding into the US.

Triodos

Triodos is one of the best of the sustainable-banking bunch. Founded in 1980 and based out of the Netherlands, Triodos is gaining traction in a banking world for a characteristic not typically associated with financial institutions, transparency.

On one side, they offer their customers the unprecedented opportunity to see where their money is being invested by acting as a ‘sustainable fund manager.’ Beyond simply offering feel-good investment opportunity, these ‘sustainable funds’ also offer a solid return. As an example, they have setup the Triodos Microfinance Fund, which helps to develop financial services for low-income people in developing countries; it has achieved an average annual return of 7.1% over the last three years.

For business financing, they only ‘finance organizations working to build a sustainable future for individuals, the community and the environment.’ Their criteria enables both charities and businesses to borrow money, with loans ranging from £25,000 to £15,000,000 and up. They offer a range of business credit products, including working-capital loans, commercial mortgages and cashflow lending.

End to end, Triodos strategy is based on openness, as they show full transparency on their loan portfolio and banking fees across the gamut. And the results are there to back their strategy. In 2012, they grew their balance sheet by 23%, increased SMB Lending by 16%, upped their customer base by 23%, and reported a 31% increase in net profit (€22.6 Million) from the previous year.

————————————————

Overall, the New Era of Finance is focused on building a balanced and sustainable economy around impact-driven SMBs. Rather than traditional banking, where profits are derived at all costs and very little money actually circulates into the real economy, the new frontier will be built on the bedrocks of technology, collective wisdom and transparency.

How do you see the future being financed?

+ Download a copy of the business model canvas (click here)


+ BMi: FINANCE
+ Time For BMi


PLAN – the Business Model


+ BMi Services

2013-11-01 00:00:00
DIGITAL - The InterConnected Strategy http://www.lumosforbusiness.com/blog/854/24-10-2013/DIGITAL++The+InterConnected+Strategy

If ‘interconnected’ is the word of the century, than how can we build ‘The Interconnected Strategy’?

+ DIGITAL: Inheriting a Complex World

The Digital World is reshaping the way that brands interact with their customers. The rise of social media has laid the groundwork for the world 2.0, creating an environment where consumers can engage with their favorite brands and stay ‘connected’ from the palm of their hand. Via smartphones and portable devices, the ‘consumer,’ as they have become known, is becoming a ‘prosumer’ and beginning to shape the brand in the manifestation of their own desires. And the key enabler is the digital medium.

The implication that this has for brands is immense. The question is, where should an enterprise focus their digital resources?

The initial evolution of Digital Business has focused on two areas: eCommerce and social media.

Corporate titans like Amazon and Facebook have pioneered these digital avenues. Amazon has built an empire through the development of an eCommerce channel, leveraging technology to create supply-chain efficiencies and cut costs. While Web 2.0-giant Facebook has risen to prominence by creating an advertising platforms based around social interactions.

The question is, does generating eCommerce sales and getting a few thousand Likes really shift the customer experience?

In some ways yes, but in many ways no. Because for many they are still focused around the monetization of customer interactions, and not the experience. At the core, brands are facilitators of experiences and act as a proxy between the customer and a specified outcome. The problem for many of today’s companies is that they view themselves as the owners of these experiences, and are thus constantly stuck in a mode of trying to sell.

What the digital medium is doing is transforming the dialogue from a one-way message to a two-way conversation. The conversation itself is becoming the centerpiece and reshaping the way brands are perceived. This is the beginning of something big.

Businesses need to wake up to the fact that customers want more. Deliver a great experience, make a positive impact in society, and provide the means to engage – this is the new baseline. In today’s world, customers are looking to build a connection rather than simply engage in a transaction.

That’s why the Interconnected Strategy is the new strategy for doing digital business.

Rather than trying to build online channels and networks to push products and scale promotions, the focus should be on connecting. While on Facebook or Followers on Twitter can have some significance, that is not where the real focus should be.

What matters is the quality of engagement. The sharing, the participation, the conversation – in the long-term, those are the qualities that will define a brand.

So what does a company need to build the Interconnected Strategy?

Website

Given that it is 2013, pretty much every company at least understands now that a having website is essential. But what should the website have?

That, of course, depends on what type of message and image the company is trying to convey. But there are a few essential points to focus on:

  • the site should be responsive – adaptable to any device – so that visitors can comfortably read and engage with the content from mobiles phones, tablets and laptops;
  • the site should look active; rather than being a one-way ‘look-at-us’ website, there should be the feeling of some ongoing conversation – ideas include a blog, special content features, podcasts, or video features;
  • the site should focus on communicating and conveying the essence of the brand. There doesn’t need to be any digital ‘bells and whistles’ to show how avant garde the company is, the beauty is in the simplicity and execution of the essentials. Make the site design driven, rather than digitally driven.

Video Networks

A Like, a Follow, a PIN – these are great, but they are passive actions.

The real movement behind a brand happens through word of mouth, people need to be talking to a brand in order for it to build traction.

However, in a world where everybody has a connected device and network connectivity is becoming omnipresent, customers no longer need to be physically present to connect with a brand.

While Skype was the pioneer, new services such as Google Hangouts enable brands to take video chat to a whole new level. Via Google Hangouts, companies can chat with up to ten people simultaneously. And here’s the kicker, it’s free.

The power of real conversation has not diminished because of ‘social media,’ if anything it has increased. One expert estimates that only about 7% of word of mouth happens in these social-media channels.

eCommerce

A decade after the Dot-Com Bubble, eCommerce is finally starting to blow up. But it is an area that is very poorly understood by most companies. Why?

Because it is not like traditional retail and there is no instantaneity to it. It requires an investment of time and resources, along with a little experimentation.

But the eCommerce channel is essential to The Interconnected Strategy because a great eCommerce strategy will help hurdle over geographical boundaries and tap into new markets globally.

Earlier this year, we talked about a few companies who are doing this really well in our ‘Collaborative Commerce’ post.

+ DIGITAL: The Advent of Collaborative Commerce

The key is to build both the eCommerce framework, and the strategy to move customers there. Now that customers are engaging from mobile and tablet devices, the whole process needs to be thought through comprehensively.

It takes thorough research, planning and time, but eCommerce is the essential cornerstone to The Interconnected Strategy because it provides companies with a mechanism to SHIFT their business model and open new market boundaries.

Overall, the world of business is changing rapidly and the digital domain is the new frontier. While entering the fray with a traditional business mindset may bring in a few Likes and eCommerce sales, companies of the future realize that customers want more and that the real power lies in connections and conversations. That’s why ‘interconnected’ is the word of the century.

+ Download a copy of the business model canvas (click here)


+ BMBreakdown: ETSY
+ Time For BMi


PLAN – the Business Model


+ Dmo Services

2013-10-24 00:00:00
BMi: Business Model Innovation - FOOD http://www.lumosforbusiness.com/blog/853/07-10-2013/BMi+Business+Model+Innovation++FOOD

The food industry is ripe for a revolution. And while many companies have helped jumpstart the #realfood revolution by bringing in organic, there are few examples of food companies using business model innovation to spark scalable change. That’s why in this blog we are going to look at how BMi can be used to go beyond organic and reinvent our entire food chain.

Business Model Innovation – it’s the theme du jour these days on the blog as we start exploring ways to use it to shakeup some big industries. In our last post, we talked about a few inspiring BMi examples and shared some basic BMi strategies; however, in this post, we are going to get down and dirty, and take a look at how to sow seeds using BMi to bear fruit in FOOD.

+ Time for BMi – Business Model Innovation

When we think of companies that have really shaken up the food industry for the better in the last few years, the first company that comes to mind is Whole Foods. In fact, over the course of the last decade, Whole Foods has become the beacon for what we call the #real-food revolution. Thanks to their leadership, organic has become less of a hippy-homestead symbol and more of a food-conscious-family staple. Step into any Whole Foods store at lunch hour in New York City, for example, and you will see a construction worker entering in one door and a yoga teacher the other.

+ Real Food: The #NewEraBiz in NYC

And yet, for all their hard work and commitment to reinventing the food supply chain, their business model is anything but innovative. They, like all other major supermarkets, have three key revenue streams:

  • grocery product sales;
  • eat-in market;
  • branded line of products.

Their business model is based on high markup and low wages; recently they have started to compete more with the mainstream market on price, but this is the model which has made them a tremendously profitable and allowed them to reach their current scale.

And while Whole Foods has had a tremendous effect on transforming the supply chain, shedding light on genetically-modified foods, and bringing real food back to dinner tables, it pales in comparison to the potential enabled by BMi.

What is business model innovation?

A business model is defined as the rationale of how an organization creates, delivers and captures value.

+ The Key Components of Business Model

Business model innovation is a process of reinventing the business model itself, rather than focusing on end-product innovation, such as technological, material, etc. This could include simple changes, such as pricing mechanisms, distribution channels or forging new partnerships. In the end, it only the model that needs to change, not the product itself.

How do we bring BMi to the food industry?

First of all, we need to know what the objective is. From our perspective, it’s the return of #realfood to the masses, and it goes far beyond organic.

In a marketplace that is dominated by ten major brands, and a supply chain saturated with GMO inputs (approximately 80%), we need to build a whole new stable of food companies who have both the brand and distribution power to take on the giants.

Graphic sourced from the Huff Post, and the article has 25K+ Likes …

As a starting point, there’s a target: to replace the ten mega multinationals – who strive for profitability at all costs – with a global network of real-food enterprises.

What can we do to tweak the business model to make this happen?

Looking at the business model of the typical food enterprise, it is pretty simple.

The primary cost drivers are inputs (ie. ingredients) and salaries, along with the cost of production equipment and facilities.

The primary revenue streams are product sales, whether through retail or wholesale channels, and for many prominent retail chains, franchising fees.

Click here to view the bigger image. Download the full PDF here.

Depending on the nature of the business, margins can range drastically, from razor thin in the case of most major supermarkets, to fat-cat juicy, as is the case with most premium products and brands. The major moneymaking factor comes through scalability – for retail products, it’s through global distribution, for cafés and restaurants, it’s typically through national expansion.

In the Market Beacons section of our #NewEraBiz research on Food, we highlighted several enterprises that are shifting the dialogue around the dinner table through their trailblazing efforts, including:

  1. The Peoples Supermarket
  2. LYFE Kitchens
  3. Real-Time Farms
  4. Credibles

+ A New Era of Business: FOOD

Beyond being innovative in their own right, each of these entities has used BMi to bring their business to the masses:

  • The People’s Supermarket uses a volunteer workforce to staff its store, and can therefore offer its products at a strong discount;
  • LYFE Kitchens is building a technological system, similar to McDonalds, to streamline and scale its all-organic fast-food offering;
  • Real-Time Farms charges a subscription fee to restaurants, caterers and grocers to use their crowdsourced farm and artisan guide;
  • Credibles has built on the crowdfunding business model and developed their own form of currency to help spur local food businesses.

On a macro level, we see three key areas of focus for sparking Food BMi:

Ingredients are the key cost driver in the food business; therefore, the key to being able to offer lower prices on organic (etc) products and compete against traditional GMO offerings is to focus on cutting the costs of ingredients.

While much of the focus is on expanding the organic (etc) supply chain through agricultural means, new collaborative models need to be developed to help bring down the cost using BMi.

Some ideas for this include:

  • Collaborative buying schemes, where multiple companies in the same industry build collectives to buy ingredients in larger quantities from growers and vendors
  • ‘Hacking’ to increase transparency in the market and shed light on the pricing structure and other variables in key input markets

Ex. Food-Tech Connect’s Hack/Meat Program

  • Open Source Product Development, where companies, suppliers and distributors work in tandem to bring new products to market.

There are already smaller derivatives of these types of ventures underway, as many entrepreneurs and food pioneers are already beginning to experiment in this space. The key is to remember that collaboration is more important than competition, and that the whole industry needs to be overhauled- there will be more than enough of this pie for everyone once the ball really gets rolling.

Technology is the great equalizer for small companies, and food is one of the industries where technology can be used to create scale and efficiency in ways that were traditionally only available to big companies.

Beyond ERP systems at the supply chain and inventory management level, companies can use technology to build rapidly scalable entities and connect across the ecosystem to source better ingredients, find new partners and enter new markets.

Some ideas include:

  • Operation Scaling, where companies such as LYFE Kitchens use the power of technology to add efficiency to production lines and save costs on menial staff labour;
  • Smart Sourcing & Data Mining, using sites like Real-Time Farms to find local producers and databases to find high-level information related to market, consumers (ex.% of the population who are lactose intolerant), etc;
  • Mobile Payment Applications to enable customers to pay more efficiently and reach a broader market, especially for single SKU companies and restaurant chains.

Ex. Sweetgreens salad chain partners with LevelUp to develop their own mobile payment app

Many companies already employ technology in small ways to help them become more efficient, but it is those who can implement technology into their core business model that will see the big results in the long term.

Getting products into key supermarkets and retails stores has always been the key hurdle for new food companies face. Up to this point in history, the strategy has always been to work with distributors and agents (ie. middlemen) and offer a percentage of sales made in return.

But in the network economy, companies can start to focus on reaching customers directly and bypass the middlemen.

Some ideas include:

  • eCommerce, developing a strong online business right out of the gates and making full profits on every item sold;
  • Networks, using social media and actively engaging with specific online communities to promote new products and special offers towards;
  • Mail, distributing a new product via registered mail

Ex. Graze in the UK delivers its weekly snack packs via Royal Mail

Rather than focusing on vendors and distributors, the new network economy will allow future businesses to build people-powered networks and kickstart their companies via online channels.

———————-

Overall, the food landscape is ripe for BMi on multiple different levels across markets globally. Those who can take advantage of network strategies to connect across the ecosystem, and build lean enterprises via BMI, will have competitive advantages that last for the long term. The time has come to stop picking the low-hanging fruit and start harvesting the bumper crop.

For additional resources, BMi examples and inspiring stories in FOOD, check out Food Tech Connect:

+ Food Tech Connect

Have you seen any great examples of FOOD BMi?

+ Download a copy of the business model canvas (click here)


+ BMi: FINANCE
+ Time For BMi


PLAN – the Business Model


+ BMi Services

2013-10-07 00:00:00
Time For BMi: Business Model Innovation http://www.lumosforbusiness.com/blog/852/14-09-2013/Time+For+BMi+Business+Model+Innovation

September has arrived. The shakeup is in full swing. And while the medium is variable, BMi (Business Model Innovation) is the mechanism, and that’s what we will explore in the following post.

With old-world businesses on the downfall, the #NewEraBiz is shooting up through the cracks to fill the gaps; but to make the this process happen requires new models, new business models to be precise.

While everything new and exciting gets broadly categorized under the umbrella of innovation, let’s break down the different types:

  • technological innovation brings new technologies to our lives that increase efficiency, enhance comfort and aid us in discovering the unknown;
  • social innovation brings new processes, concepts and structures to help meet the world’s most pressing social needs;

Yes these types of innovation are fundamental pillars of society, but they are not the key variable in the ‘world-changing’ equation; business model innovation is. And if necessity is the mother of invention, BMi is the mother of big change and sustainable impact.

What is BMi?

A business model is defined as the rationale of how an organization creates, delivers and captures value.

Business model innovation is a process of reinventing the business model itself in order to deliver and capture enough value associated with the new creation to bring it to market. While the actual definition is tricky, SustainAbility wrote the following:

“We settled on this: a novel form of exchange at some point along a company’s value chain.”

+ How Firms Innovate Their Business Models for Sustainability

Because without a new mechanism to capture value, and generate sustainable cashflow, we are left with another technology that collects dust on a workbench or another social venture that inspires a few people in a boardroom but never actually reaches its intended target. To bring the types of ideas to fruition that make fossil fuels obsolete or access to clean water universal, there needs to be a business model there to back it.

Why?

According to the authors of the upcoming book ‘The Risk Driven Business Model …’ (HBR, 2014) who have studied hundreds of business models in their thesis:

“we often see that groundbreaking technology rarely achieves mass adoption without a corresponding innovation in the business model around the sale/use of the technology.”

We could substitute ‘social innovation’ in for ‘technology’ as well, but overall, the point is clear, we need to focus on the target:

“there are numerous innovative technologies that are waiting for an innovative business model that will facilitate their use and adoption, and there are numerous business model innovations that can make everyday activities more sustainable.”

To be able to survive through the ups and downs of bringing something truly innovative to the market, we need to create models that will enable organizations to profit and grow sustainably. BMi is the foundation, the fundamental building block for the #NewEraBiz.

Let’s look at three examples from all different parts of the world to illustrate this point:

Inspiration

Tesla: US-based electric car pioneer led by iconoclast Elon Musk

BMi: developed battery-swap system so that drivers can charge cars (approx. 90 sec) faster than they can refuel conventional cars at a gas station. Tesla identified the biggest barrier to mass-scale adoption of electric cars as the battery, so they developed an innovative way to deal with this problem that would put them on even footing with gas-powered cars. While drivers will have to drop the fresh battery off on the return leg of their journey and pay a ‘transport fee,’ this BMi could be enough to convert a few more customers to Tesla, enough to build critical mass.

Fast Pack Swap Event from Tesla Motors on Vimeo.

+ More about Tesla from the Lumos Blog

M-Pesa: simple SMS money-transfer system that revolutionized Kenya and other surrounding African markets

BMi: Vodafone realized the solution to this problem was not a high-tech mobile solution, but a low-tech communication one. So they built a bare-bones SMS app and trained a countrywide network of M-Pesa agents to collect and transfer the money; in the process, they created a new business model for one of the world’s most successful ‘mobile’ apps.

+ more on M-Pesa from the Lumos Blog

Catarse: the top crowdfunding platform in Brasil, Catarse is building a platform that empowers Brazilians to reinvent their collective realities via collaborative financing

BMi: While still a work in progress, Catarse is starting to move away from Kickstarter’s product-driven rewards model and focus on tapping into the power of Brasil’s social capital. Using a subscription-based curation model, where campaigns are categorized and packaged based on social issues and then targeted at specific members of the community, Catarse hopes to hone in on more specific themes and drive social innovation through its network. Catarse makes 13% on all funds raised through its platform.

+ More on Catarse from the Power of Sharing

In all three cases, the technology used to initiate the solution takes a back seat to the BMi. Each example showed the potential for scalable social impact, but didn’t stray from the objective of developing a sustainable business model.

Let’s look at three strategies to answer the next part of the #NewEraBiz BMi equation:

How?

Target select networks of people who are most closely affected by the problem you are trying to solve and take an open and transparent approach to engaging with them.

Use social media and rich medium (ie. video) to open the conversation, reach out to community leaders and influencers, and use feedback to form market-entry strategies.

example: Catarse published a blog prior to launching in order to engage the Brasilian creative community and source their first four projects

Work with a local partner. Make use of any technology that already exists. Align incentives so that everyone is motivated to make the venture work.

example: M-Pesa worked with mobile operator Safaricom and microfinance institute Faulu to develop their pilot project and entry strategy into the Kenyan market.

When you have a vision, the only way to make it a reality is by continuously experimenting.

example: Tesla’s battery-swap system. Will it lure more people towards Tesla? More than likely, but there is only one way to truly find out.

Overall, the SHIFT is happening and the #NewEraBiz is gaining progressively more momo with each passing day. But we need more, much more. To accelerate the SHIFT and drive greater impact, we need to focus less on the ideas and more on the model. While the medium is variable, the mechanism is BMi – let’s make it happen!

What great examples have you seen of BMi?


+ BMi: FINANCE
+ DIGITAL: InterC Strategy


PLAN – the Business Model


+ BMi Services

2013-09-14 00:00:00
DIGITAL: Inheriting a Complex World http://www.lumosforbusiness.com/blog/851/31-08-2013/DIGITAL+Inheriting+a+Complex+World

We live in a complex world, the days of black and white decision-making are over. And while there is little doubt as to whether or not that complexity exists, the real question is how do we deal with it. The answer to that question, as we will explore in this post, will depend on who you ask, Gen Ys or CEOs.

Back in 2010, IBM conducted a survey ‘Inheriting a Complex World: Future Leaders Envision Sharing the Planet.’ It was a global study that compared the insights from IBM’s annual CEO survey with its first ever survey of Students, over 3,600 Gen Y respondents from over 40 countries. What the study showed was that there exists significant discrepancy between Gen Y’s views and values on the world of business, and those of CEOs.

A large part of the study was dedicated to trying to understand how the different Generations will use data to aid in decision making, but a significant amount of research was also done to analyze the values and viewpoints of each group. Many intriguing insights that were shared in the three-year-old survey illustrate how there is a large Generational Gap between Gen Y and the Boomer/GenX-led CEO cohort:

  • in a question that asked what they thought would be the top three factors that impacted organizations:

Gen Y placed a much higher weight on ‘Globalization’ and ‘Environmental Factors’ than the CEOs

  • in a question that asked what they thought would be the top three leadership qualities:

While both placed creativity at the top of the list, Gen Ys placed much greater importance on ‘Global Thinking’ and ‘Sustainability.’

Fundamentally, the biggest difference between the two groups is that Gen Ys are born with a natural understanding that the world is interconnected:

Thus they recognize that the decisions made by a company cannot be calculated in a vacuum and measured only against shareholder wealth creation. The externalities (social, environmental and cultural) must also be taken into account and calculated.

What makes this report so interesting is that the qualities described by those in Gen Y are much more conducive to the #NewEraBiz. At the top end, this means creating global companies that generate profits for all stakeholders, act in the best interests of society, and focus on creating genuine relationships with customers rather than viewing them exclusively as profit centres.

To reach this level will require a new methodology of leadership, one that fosters creativity, harnesses collaboration and empowers employees.

The kicker in this situation is that both groups do not have equal opportunity. The CEOs are the ones with the power, who make the decisions and control the companies that drive our respective economies. Very little has actually changed in the world of business over the last three years at the top level, despite the new ethos that Gen Y brings to the table.

Furthermore, it’s been a pretty great last few years for Banks and Fortune 500 Companies. Profits are up, market share is increasing, and governments have given them access to ‘free’ money.

Gen Y’s, on the other hand, have seen their fortunes heading in the opposite direction. Youth Unemployment is skyrocketing past historic levels in countries all over the world, while many youth who are employed work for organizations that run counter to their beliefs. This generation has even been labeled by some as the ‘Lost Generation’ to reflect the loss of hope and disparity being seen by young graduates.

The real problem is that many Gen Ys are beginning to come to the realization that they will be the ones who are forced to resolve and clean up these problems being created by reckless businesses. One on side, this can be viewed as a great opportunity, but on the other side it is infuriating to witness the destruction from the sidelines.

Thus as Gen Y gets ready to ‘Inherit a Complex World,’ the question becomes when will ‘Future Leaders’ get the opportunity to put their talents to the test?

At a moment in history when many businesses are beginning to face an existential crisis, and reaching the crossroads where they realize their path is no longer sustainable, it’s time to focus on interconnectivity and sustainability as the drivers of future commerce. For the young Generation, who are born with an inherent understanding of these concepts, the golden opportunity to step up and grab the reins has arrived.

And while an awareness and inherent understanding of these concepts may not generate results in the next quarter, they can be used to drive long-term strategies that will enable businesses to survive the transition and thrive in a complex world. It’s part of the move to the #NewEraBiz and will open up a new array of paths for global business in our interconnected world.

How do you think we can bridge the Generational Gap between Gen Ys and CEOS?


+ BMBreakdown: ETSY
+ Time For BMi


PLAN – the Business Model


+ BMi Services

2013-08-31 00:00:00
Sailing Ships and Telling Stories http://www.lumosforbusiness.com/blog/850/25-07-2013/Sailing+Ships+and+Telling+Stories

The sea. The combination of the clear, blue water and endless horizon makes it the ultimate symbol of possibility. And it’s that immensity, that well of opportunity, where we need to focus.

Because to make the new era of business happen, we need the dreamers to start building ships and setting sail. We need to mobilize people around blue-ocean ideas and opportunities.

And rather than label, dictate, segment and assign,

‘If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work,

we need to inspire people to believe in something big, something deeper than what we see on the surface.

but rather teach them to long for the endless immensity of the sea”

It’s time to build ships and set sail towards a new era. It’s time to put the post-war industrialists and die-hard capitalists in the rearview and build the world that we want.

We need to start telling a new story.

Despite the array of new marketing tactics and digital strategies, storytelling still remains the simplest and strongest method of connecting people. In the world of business, we don’t need more people who can present powerpoints or put together spreadsheets. We need people who can imagine new horizons and script a story about how to get there.

The summer is the perfect time to bask on a chair under the sun and daydream. Let your mind wander to a place of deep possibility and endless horizons. Long for the sea.

Let’s set sail and tell a new story.

Vamos-lá. Allons-y. Vámonos. Let’s Go!

This post was inspired by the blogging duo of yinxyang:

+ http://yintimesyang.wordpress.com/2013/07/19/long-for-the-endless-immensity-of-the-sea/


+ The Entrepreneurship Era
+ #Sustainability as a Strategy


Building Blocks – PLAN – the Business Model


What we can offer

+ Twitter : @LumosBusiness

+ Pinterest : Visualize Trends

+ Google + : Hangout

+ RSS : Subscribe

2013-07-25 00:00:00
#REALFOOD: The #NewEraBiz in NYC http://www.lumosforbusiness.com/blog/848/27-06-2013/REALFOOD+The+NewEraBiz+in+NYC

New York. New York.

Over the years New York has built up a larger-than-life repuation: from Broadway to Wall Street, the Yankees to the Juilliard, chances are if something big is going down, it’s happening in New York.

With that in mind, we recently headed there to see how the #NewEraBiz was blossoming in the Big Apple.

By #NewEraBiz we mean the new-era business, the one that’s designed to be open and collaborative in nature and make things move. The type of business whose collective spirit inspires others around it and ultimately helps form an ecosystem of brands and partners who are united by a common thread.

After doing several trips last year to explore a series of exciting new developments in the collaborative economy (yet to be defined), it was exciting to get back on the road and experience what’s happening first-hand.

If you have read any of our blog in the past, you will have maybe noticed that there are three key industries we have been focused on for industry-specific posts:

  • Finance: which includes crowdinvesting and the #NewFinance movement

+ The Redistribution of Dealflow

  • Food: which relates to organics and the #realfood revolution

+ A New Era of FOOD

  • Fashion: which relates to next-generation materials and #sustfash

+ Avant Garde: Moving Fashion Forward

Why these three?

Part of it is personal preference and part of it is collective importance. Of course there are numerous other exciting industries and important trends happening at the moment, but these three in particular really need to be redefined and reinvented before we are going to see real progress and ‘economic growth’ again.

That’s because everyone needs to eat (well!), (almost) everyone gets dressed in the morning and everyone needs to be bankrolled if they want to start a business. In a system where Big Ag dictates what we eat, Haute Fashion defines what’s stylish and Big Banks decide who gets money, you get big problems.

So what’s moving and shaking with the #NewEraBiz in New York?

FOOD is happening, and in a big way. It was certainly the focus on this trip.

#RealFood NYC

Whole Foods

There are several Whole Foods located in Manhattan (probably 5 or 6), all of them huge, and all of them are packed. The most reputable real-food market in the big-grocery business recently made headlines when they announced that all products in their stores would be GMO-labeled by 2018. Evidence that people are becoming increasingly conscious about what they eat can be seen right away when you walk into a Whole Foods in NYC:

Cooperatives

While Whole Foods (many times referred to as ‘Whole Paycheque’) is great if you fit into the affluent-urbanite category, the reality is that the majority of people just can’t afford to pay those types of prices for their food on a daily basis. Which is why it is exciting to see Food Cooperatives (Coops) emerging in many middle-class neighborhoods. One in particular, the Park Slope People’s Coop in Park Slope, Brooklyn was full of everything you could imagine when it comes to real food – local produce, organic ingredients, whole-grain baking, etc. – and the prices on several items were about half of what you would find in a Whole Foods.

Coops function differently than traditional grocery chains. To be a member, and therefore purchase goods at the Coop, you must put in a volunteer shift every month and pay an annual membership fee. Thus Coops don’t pay the same labour expenses as a traditional grocery chain. They also markup their items at a fraction of what traditional chains would, and in many cases, depending on how the Cooperative is setup, will redistribute profits to the members.

The Coop structure is a very promising development in the #collaborativeco and something we will be researching in greater depth during the months ahead.

Outdoor Markets

Outdoor markets were everywhere. In Manhattan, in Brooklyn, everywhere. And they were packed, everywhere.

The reason for this is simple, as the real-food revolution is all about bringing the farmer’s food directly to the table.

Farmers and food vendors are able to take their product directly to the consumer, which helps the farmers cut out the middleman. From a consumer’s perspective, it is very reassuring to not only see the people making the food, but to hear their stories. In a world where food has been commoditized, among other things, outdoor markets bring everything back to earth.

The hallmark of the NYC outdoor markets is organic everything – from slushies to sandwiches – and an increasing array of biodiversity in crops like beans, tomatoes (heirloom tomatoes to die for) and others.

Artisan Vendors

Artisan is a buzzword that food-marketing mavens have definitely caught onto, so watch out. At the core, however, it relates to the craft of making or manufacturing the food to the highest of its potential.

One example is chocolate. Thanks to the whole industrialization and globalization of food, many ‘chocolate bars’ on shelves aren’t actually chocolate anymore. They have been cut with every filler, sweetener and artificial flavour imaginable and labeled chocolate bar. That’s why companies like Mast Brothers have come to fruition:

In the heart of Williamsburg, Brooklyn, they handcraft chocolate bars using the best beans from around the world.

Artisan is about bringing food from the source to you. So the story is a key part of every artisan vendor’s strategy – if they don’t have a story, they aren’t artisan. Luckily NYC is teeming with artisan vendors like Mast who are the real deal.

#SustFash NYC

After spending quite a bit of time Europe last year researching the New Era of Fashion, it was quite an interesting to contrast the action over there to New York.

+ A New Era of Fashion

While New York is a big and very important fashion market, they are definitely far behind Europe when it comes to ‘sustainable fashion.’

This can be seen not only in the lack of consciousness about #sustfash for the average New Yorker, but also by the lack of marketing initiatives on the businesses part, meaning it’s not top-of-mind for consumers (yet). After a long stroll through the Fashion District, there was very little evidence of any ‘sustainable fashion’ marketing and whatever we came across was put up by brands we were already familiar with. Certainly there are no brands targeting the young generation, a big missed opportunity, especially when you compare the ‘sustainable fashion’ movement to organic food.

On the other hand, there are many young artisan and upstart designers who are coming to market in the US with a ‘sustainable’ focus. Additionally, there are a few cool initiatives being done to knit together these emerging designers and give them more resources to move to market. Overall though, it looks like NYC has some work to do in the #sustfash market, especially compared to #realfood.

#NewFinance NYC

Only this year did we start writing a little bit about #NewFinance in the US.

+ Funding the Niche

That’s because the big story was, and continues to be, the rolling out of the JOBS Act, which will effectively legalize everyday Americans to make equity ‘crowd’ investments in early-stage American startups and small businesses – at least that’s what it set out to achieve.

Undoubtedly crowdinvesting is the future frontier for finance, but each country is taking their own approach to it. While the UK has focused more on a case-by-case basis (ie. Seedrs), the US has opted for a full-legalization approach, which is causing delays and a lot of ambiguity.

+ The Seedrs Report

Now many are saying that the JOBS Act is so watered down that it will be up to States to come up with their own regulations to legalize true crowdinvesting. Until something moves in one direction or another, however, the real stories related to #NewFinance will be happening outside of the Big Apple.

Overall

NYC provided a great opportunity to see the #NewEraBiz coming to life, in food anyways. To actually see and feel this change is very exciting because a of its magnitude, which will eventually flip ‘business’ on its head. The tides are turning and the Bull is no longer behind Wall Street.

And:

  • While major fashion brands continue to plunder ecosystems and drive species to extinction to make designer clothes & handbags, we need to wear our values on our sleeves.

  • While major banks continue to hide behind their bodyguards and funnel money from public sources into private ventures, we need to put our money where it matters.

  • While mega food brands of the world continue to pump hormones and chemicals into our food and call it wholesome, we need to pull up our chair to a different table.

Because like Socrates said:

“The secret of change is to focus all of your energy, not on fighting the old, but on building the new.”

By focusing on the new, and truly collaborating, we can create a whole new era of business and make it an unforgettable journey in the process. It will take new business models, strategies and everything else, but there’s no use trying to pretend anymore that the old way still has legs.

The summer months provide a great time to chill out, sit on the patio and think things through. So take advantage because September, the time to start fresh, will be here in a heartbeat.

+ Download a copy of the business model canvas (click here)


+ BMi: FOOD
+ Time For BMi


PLAN – the Business Model


+ BMi Services

2013-06-27 00:00:00
#Sustainability as a Strategy http://www.lumosforbusiness.com/blog/847/30-05-2013/Sustainability+as+a+Strategy

The word on the street these days is sustainability – everybody’s thinking about it, everybody’s talking about it – but few are doing anything about it; in the business world anyways. That’s why in today’s blog we are going to talk about #sustainability as a strategy and show why it’s not just wise, but essential, to get serious about sustainability.

A few months back we talked about The New 20%. The essence of the post was that in today’s world, most brands are so irrelevant that the average consumer wouldn’t care if 80% of them ceased to exist tomorrow. That means that only approximately 20% will survive as we shift to a new economy, becoming The New 20%.

+ Reality Check – The New 20%

Why?

The majority of companies have always operated on, and continue to operate on, the assumption that the only thing that the average consumer cares about is that a product/service does what they want and is available at as cheap a price as possible. Thus they have outsourced production to China, replaced real materials with cheap synthetics and plundered precious ecosystems for scarce inputs, all the while thinking consumers wouldn’t care.

But they were wrong. People do care. And now the game is changing.

Recently a study – The ReGeneration Roadmap – was completed to better understand how much consumers care. Naturally, one of the study’s main sponsors was a corporate juggernaut (cough SC Johnson) whose main interest is to further enhance it’s greenwashing capabilities ; however, the study, which included over 6,000 consumers across six countries, did reveal some illuminating insights into the future of purchasing.

The majority of respondents said ‘we need to consume a lot less to improve the environment for future generations.’ In this light, alternative consumption patterns are emerging (#DIY, repair, reuse, etc.). In developing countries, 60% said that they would be willing to pay more for products with social and environmental benefits, versus 25% in developed countries.

Globally, consumers agree that they would purchase more products that are socially and environmentally geared if:

  • 75% would buy more if it performed as well or better than the alternative
  • 70% would buy more if it didn’t cost more
  • 64% would buy more if the company’s’ claims were more believable

Interestingly, there is some discrepancy between the barriers to ‘sustainable consumption’ in developing versus developed markets. In developed markets, price is the key barrier, while in developing markets the problems relate more to performance and not knowing the benefits.

Perhaps one of the most interesting insights revealed relates to the tribal dynamic, where 54% of consumers in developing markets would purchase more sustainable products ‘if it connected them to a community of peers who share their values and priorities.’ This insight coincides well with what we see emerging as part of our research into the collaborative economy, especially in industries like fashion, where the social aspect of purchasing is becoming more and more sought after.

+ BMB: Fashion 2.0

While we can see how the consciousness around purchasing is undergoing a dramatic shift, we certainly don’t expect it to stop. In developed countries, ‘having a lot of material possessions is important to my happiness’ was true for 49% of respondents (vs. 23% for developing). In developing countries, 77% said that ‘shopping for new things makes me happy’ (vs. 48% in developed).

It goes to show that, while cutting down on consumption is certainly an imperative, we also need to focus on consuming better. The more conscious the consumer, the more pressure there is on brands to develop products/services that are in-sync with the world around us. And rather than just consume, consumers (for a lack of a better term) want to play a part in the regeneration, with more than two-thirds globally saying that they are:

‘interested in sharing their ideas, opinions and experiences with companies to help them develop better products or create new solutions.’

That’s what we call co-creation, and it is the most powerful force that next-generation brands can tap into.

So given that the rules of the game are changing and the lines are being redrawn, who are these new consumers and how can companies connect with them?

Image taken from Green Africa Directory

The study broke down the market into four key segments:

  • Advocates (14%): highly committed to sustainable purchasing

28% Brasil. 15% India.

  • Aspirationals (55%): style & status seeking, aspire to purchase more sustainably

53% China. 42% India. 35% UK.

  • Practicals (34%): price and performance minded

43% Germany. 37% UK. 36% US.

  • Indifferents (16%): the least engaged

22% US. 18% UK.

Developing markets present huge opportunities for ‘sustainable brands.’

For those brands who want to be at the forefront of this movement, it is the two leading segments that are the most intriguing.

The Advocates are willing to pay extra for socially and environmentally-driven solutions. They feel a sense of guilt about their impact on society and always try to do the right thing; they believe others should follow their example. The interesting thing about this group is that while they are relatively small in size, they have the potential to disproportionally influence others by taking action on issues and causes they care the most about.

+ 81% are interested in sharing their ideas and experiences to help companies develop better products and advance solutions;

+ they are fact seekers, so if you try and BS them, there will be ramifications.

The Aspirationals are referred to in the study as the ‘persuadable middle,’ meaning that while they are materialistically oriented, they aspire to purchase more sustainably. This is the group who is actively seeking info online from social networks, along with their family and friends, in order to help inform their decisions. Despite the fact that they care more about style (65%) and social status (52%) than the other segments, they are the biggest market segment of all four and they sincerely want to use their purchasing power to make good things happen.

+ it’s as much about people as the product for them, so brand socially;

+ to reach them, brands need to design new business models with fewer impacts.

New Business Models. That’s the point we want to focus on.

To make #sustainability as a strategy work, it has to be embedded in the heart of the business model. It has to come from the core.

Many companies try and tack on something that they think will be perceived as sustainable into their product or service and then market themselves as if they are ready to reinvent the world. The problem is that consumers can sniff out these half-hearted initiatives in a heartbeat, leaving the integrity of the brand in question and planting doubts about how sincere the company to change the future.

Instead companies need to be willing to redefine their value proposition to consumers and in many cases redesign the entire experience. To put it succinctly, bold brands need to march out there and move sustainability to the core of their strategy, putting short-term profitability on the line and exposing itself to potential failure. The upside is that they are the only ones who will be around in the future.

+ Business Modelling 2.0

Who’s out there doing it now?

Osklen, a Brazilian-based pioneer in luxury fashion, is one prime example that we have talked about several times before on the blog.

+ Avant Garde: Moving Fashion Forward

At the grassroots level, there is FAIR Spirits, a France-based company producing the world’s first line of fair-trade certified spirits. The video below takes us into the heart of Bolivia to see the company’s production facility for its Quinoa Vodka:

The team at FAIR has thought through multiple dimensions beyond just the product itself; from the inputs, to the workers, to the dispersion of wealth, it’s a company that’s designed to make a difference.

At the top level, NIKE’s Material Sustainability Index initiative is one of the best examples of a sincere effort that we have seen from #bigbusiness. The company has been working with the Sustainable Apparel Coalition and Duke University to create an open API for a global sustainable-materials database, giving ‘future makers’ the ability to find and source top-quality sustainable materials.

You can read more about the specifics of the project on the RhOK website (Random Hacks of Kindness):

+ RhOK: Nike MSI brief

This open R&D venture by Nike reflects a serious effort by the company to make #sustainability as a strategy work, and makes us at least consider that this company wants to be around in the future. Despite the numerous social and environmental hurdles that still face the company, it’s clear that they are making moves from the core:

+ Nike Sustainable Business Report

Using materials as the key focus, they are going on the offensive with sustainable innovation and working towards their vision of a closed-loop business model. Whether you agree with their vision or not, they have at least aligned the pieces to make it happen.

Overall, these few examples go to show that #sustainability as a strategy is no longer reserved for the eco and organic brands of the world. It’s something that every company needs to take seriously and start embedding into their strategy. While the types of moves required to make this work are not for the faint of heart, those that move now will at least have a pulse when the dust settles.

Have you seen any great examples of #sustainability as a strategy?


+ The Entrepreneurship Era
+ The Redistribution of Dealflow

Crowdfunding Strategy – Summary


Building Blocks – PLAN – the Business Model


What we can offer

+ Twitter : @LumosBusiness

+ Pinterest : Visualize Trends

+ Google + : Hangout

+ RSS : Subscribe

2013-05-30 00:00:00
Business Model Breakdown: FASHION 2.0 http://www.lumosforbusiness.com/blog/846/15-05-2013/Business+Model+Breakdown+FASHION+20

The world 2 point O (2.0) is upon us. The 2.0 buzzword, used to characterize the diffusion of technology and social media into traditional markets, is permeating every industry and vertical on the planet. One industry in particular, fashion, is starting to see profound effects as a result of this shift, which is why in this edition of Business Model Breakdown we are going to analyze Fashion 2.0.

Around the world, the movement has begun to create open and borderless markets powered by social connections. It’s what we call ‘the collaborative economy.’ With technology as the enabling factor, enterprises are becoming empowered to efficiently develop and mobilize the people and resources they need to make their mark. That’s how the world 2.0 is happening.

But what’s behind this movement?

Beyond the impulse to create enterprises and ecosystems that are social, the real reason is rooted in the desire for democratization. Tired of watching big brands and multinationals dictate the rules of engagement, global communities are mobilizing to develop open, transparent markets and shift the focus from consumption to creation.

And no other industry in the world fits this profile more closely than fashion. With hordes of heritage and fast-fashion brands driving the style agenda, the emphasis has shifted from creativity and natural beauty to profitability and manufactured looks. Now, consumers and designers alike are collaborating to counter the trend and bring fashion back to its roots.

While some focus on the technology side of Fashion 2.0, we are going to focus on the social side: user-generated content, co-created fashion lines, community lookbooks, these are just a few examples of how Fashion 2.0 is evolving from this perspective.

Fashion 2.0

User-Generated Content

Rather than the brands defining the content and setting the style bar, what if the customers themselves began to write, record and create the content about the brands they love and the looks they roll with. And not just on their own personal blogs, but on the brand’s site itself.

Burberry developed Art of the Trench, which shows photos of customers rocking the iconic Burberry trenchcoat. While some photos are specifically commissioned by Burberry, others are uploaded by customers themselves; users can vote and comment on their favorite photos and share with their networks.

Community Lookbooks

As a strategy for brands to sell their wares, they create lookbooks, visual collections of selected garments that help customers visualize new clothing lines as part of a look. Naturally though, many customers have their own version of how the new clothes could be combined, and not all of them will be from the same brand. So people have started creating community lookbooks, customized versions created by users and voted on by the community.

The Brazilian website, Fashion.me, was created for just that reason. On the site, which blew past more than a million users last year, users can create their own lookbooks from an assortment of brands, vote and comment on other lookbooks, and connect with community members.

Co-created Fashion Lines

Since forever, major fashion houses have brought in sought-after designers from the top fashion schools to design their new collections. But those who attend those establishments represent only a tiny fraction of the collective design talent out there. That’s why brands are starting to tap into that latent talent by integrating their customers into the design process (co-creation).

Mod Cloth, an online women’s clothing store specializing in vintage and retro, recently completed their ‘Make the Cut’ competition where users submitted designs for an upcoming collection and the community voted on it. Now that the winning design has been selected, the next step will be put into into production and sell it on the company’s website.

While that all sounds cool and exciting, the question is, where is the business model in all this?

Business Model

Beyond just a branding tool for fashion houses, communities and shopping portals are being created to create socially-driven experiences. Rather than just click and buy, users are immersing themselves in the content, interacting with the community and expressing their tastes through their own creations. It’s evolving from the traditional one-way, you-buy-we-sell experience, towards an open-ended ecosystem where anyone can buy, anyone can design and anyone can sell.

And behind this engagement is a big business model.

View the larger full-size image(). Download the Fashion 2.0 BM Canvas (PDF).

To illustrate our point, we will use Fashion.me, the social fashion community that started in Brasil. The company was created by two former investment bankers in 2008; the duo started building an e-commerce clothing website on the weekends for their wives, when they realized how big of a need there was for a site that centralized around user-generated content. Now they are a full-scale startup which recently launched in the US.

Their business model has several revenue streams (present and future), all of which centre around the community:

Present BM:

  • Affiliate Clicks

When users create customized lookbooks, they include a selection of garments from a range of potential fashion brands, big and small. If someone from the community sees a piece of clothing on a community members’ lookbook, they can click on that item and be taken directly to the brand’s website in order to purchase the piece of clothing. In this case, the click will be marked and tracked back to the site where it originated, earning the platform a commission on the sale.

  • Sponsorship

Brands can sponsor certain areas of the main community pages in order to have their clothes featured; it’s a way to promote without creating an explicit ad.

In this case, Fashion.me has the ‘Look do Dia’ (Look of the Day), which in this particular case is sponsored by e-Closet. The assumption here is that e-Closet has paid to have their clothes featured there, but that is not known 100%.

Next-Level BM:

  • Data & Analytics

With so much rich interaction happening on the site, the 3rd potential source of revenue will be related to data and analytics. Currently, Fashion.me offers brands the opportunities to create ‘Brand Pages’ for free. As the community grows and user interaction with brands’ content increases, Fashion.me can start to use that data to analyze trending styles, understand user behaviors and forecast future patterns, all of which would be valuable to brands on the site.

Polyvore, the US-based equivalent of Fashion.me, incorporates analytics into their site to measure trends about hot products (ie. wide-brimmed hats). While it is unclear whether they would actually sell these analytics to brands, it looks like they are currently using it to increase traffic to top-selling products, which would help increase their affiliate revenues.

  • Advertising

Finally, we would expect to see advertising become a substantial revenue stream in the future as well. Ideally, they would take the time to develop an advertising-as-content strategy; otherwise the ads will diminish the quality and feel of the site.

Polyvore has ads on the side of their website from major brands as soon as you click off the main page.
____________________________

The key for any company operating with the Fashion 2.0 business model is that they focus on enhancing the user experience without making the Facebook mistake – building their business model for corporate interests using advertising – so that the community can continue to grow without users losing trust in the platform.

In fashion in particular, there are a lot of big brands with a lot of money to spend who will be keen to jump on board to new sites like this in order build their presence. The risk is the site will become cliché and commercial and develop a consumption-driven community rather than a creation-driven community.

Another key is to develop partnerships with entities that have an aligned vision. In Fashion.me’s case, their major partner is Intel. Beyond just the capital injection, Intel can help them move into the US market, which is clearly high on their radar. Intel clearly has an interest in Brazil as well, the 3rd largest PC market in the world and has a highly-connected Internet population.

While what Fashion.me and other similar Fashion 2.0 sites are doing is interesting, there is a lot of room to develop it further and bring the impact of the business to a whole new level.

What lies beyond for Fashion 2.0?

Future BM

  • Sustainability

With ‘sustainable’ fashion brands just starting to get the #momo behind them, the next generation of Fashion 2.0 platforms need to start mixing values and ethics into online communities, rather than just style.

To make this happen, education needs to be integrated into the platform design, so that users know what to look for (ie. which materials are sustainable) and how to find design-driven brands that make being sustainable stylish. From there, the community can evolve and influential users can use their clout to drive business to up and coming brands and share in the profits.

+ Avant Garde: Moving Fashion Forward

  • Gen Y

The shifting demographics globally represent a huge opportunity for the first group of communities/platforms who can figure out how to make a custom-tailored Gen Y experience, especially in fashion.

Given that our generation is wired to be social, are very values-driven in our purchasing decisions, and will go to great lengths to find brands that can deliver full-spectrum performance, there is a need for new-era platforms that bring a visual, immersive and playful experience to commerce. Beyond just the cliché business trends like ‘gamification’ and ‘social commerce,’ people in our generation are looking for authentic experiences from real brands. Add in the ability to be tribal and connect with the brands that we love, and you have the future of fashion e-commerce for Gen Y.

Overall, Fashion 2.0 is an exciting movement that can bring badly-needed creativity and connectedness back to the industry. It’s part of a shift to a more collaborative economy, one that requires new business models and a new view on markets. For those enterprises who understand the ecosystem mentality and can build trusted platforms, the opportunity is massive.

+ Download a copy of the business model canvas (click here)


+ BMi: FASHION
+ Time For BMi


PLAN – the Business Model


+ BMi Services

2013-05-15 00:00:00
The Entrepreneurship Era http://www.lumosforbusiness.com/blog/845/30-04-2013/The+Entrepreneurship+Era

The transition is live. Following decades of ‘growth,’ leading to the creation of the most unbalanced industrial economy in history, the shift has begun. Today we are going to dive deep and explore the inception of The Entrepreneurship Era.

The movement to resolve societies biggest problems and restore balance into the economy has begun; however, it is not being led by the traditional suspects, business leaders and politicians, but by dyed-in-the-wool entrepreneurs.

After watching the destruction of the global economy from the sidelines, entrepreneurs have awakened and moved back onto the playing field. With resources mobilized and an ecosystem in place, they are ready to open up their big-game playbook and start building the new economy. This is The Entrepreneurship Era.

Before diving deeper and analyzing how The Entrepreneurship Era is evolving, it’s important to define what entrepreneurship is all about:

What makes an entrepreneur an entrepreneur?

Simply being the owner of a business does not make you an entrepreneur. To be an entrepreneur means that you have to go against the grain and bring something into the market that is unknown. Opening up a Laundromat or food franchise has nothing to do with entrepreneurship unless:

  • There is a new business model being created
  • The people have never seen a Laundromat or food franchise before

While different, the two are not mutually exclusive. A businessman, on one hand, can launch a venture with capital at risk, which can theoretically be measured on an Excel spreadsheet. An entrepreneur, on the other hand, has to manage capital risk in addition to social, cultural and emotional risk, the majority of which cannot be measured statistically.

Understanding the differences between businessmen and entrepreneurs is important for several reasons:

  • entrepreneurs are hard-wired to solve problems that have a high-degree of risk and invest themselves emotionally in their endeavors;
  • businessmen can remain emotionally detached from the ventures and (try to) calculate their risk statistically; this is a huge reason why the Financial Meltdown started in 2008, as businessmen and bankers started trying to compartmentalize risk using a complicated set of financial derivatives;
  • entrepreneurship should be synonymous with solving a societal problem; in today’s world, many businessmen call themselves entrepreneurs and make buckets of money without adding any value to society.

To be an entrepreneur does mean you need to reinvent the wheel (ie. innovate). Nor do you necessarily need to build something from scratch, as entrepreneurship can be achieved from within existing organizations as well. But you do need to be working towards a high-level objective at something where the end result is about more than just the money being made.

New research shows that approximately 3.5 – 5% of the population are hard-wired to be ‘opportunity entrepreneurs,’ those who innately scan the horizon for opportunities to make an impact. The question is, what has happened in recent years to suddenly ignite the internal flame and propel entrepreneurs into action?

The Financial Meltdown:

The Financial Crisis in 2008 sent shockwaves through the entire global economy and served as a big wake up call for many. Even those who weren’t laid off were suddenly forced to start asking the question, what’s happening here?

Thus the entrepreneurs who put their college dreams of building a business on the backburner for an i-banking career suddenly started to reflect and look at opportunities to add real value to society.

The Enviro Crisis:

No matter what side of the global warming / climate change debate you stand on, there is no denying that we face unprecedented environmental challenges related to ecosystem destruction, deforestation, resource depletion, etc. With politicians engaging in endless banter and big business pulling the patrimony puppet strings, somebody else has to step up.

Thus those entrepreneurs with an inherent eco-consciousness and domain knowledge have started to take matters into their own hands and develop solutions from the ground up.

Youth Unemployment:

Last year we wrote a blog about ‘Youth Entrepreneurship and Crowdfunding’ that referenced a quote from One Young World 2012:

“youth unemployment is the biggest systemic threat to our generation”

+ Youth Entrepreneurship & Crowdfunding+

With youth unemployment levels topping 20% in countries across Europe and LatAm, and youth underemployment critically affecting youth in countries such as Canada, youth joblessness is a time bomb that ticks louder with each passing day.

Young guns from around the world have heard the call – shakeup global business and bring GEN Y back into the economy – and are beginning to answer the bell by building their own businesses.

With millions of entrepreneurs around the world all of a sudden waking up to a stark reality, many have realized that it is their time to step up; however, seeing the problem is one thing, finding a solution is another. To mobilize the resources and catalyze action on problems of this nature cannot be done individually; in response to the need for collaborative engagement, three major trends have gone through an accelerated development process to support the genesis of The Entrepreneurship Era:

social networks:

social-media usage has exploded in the last five years around the planet. The advent of social networks has given entrepreneurs the ability to mobilize people behind their brand and move their message into new markets without spending a dime.

today, the playing field for early-stage enterprises has leveled off substantially and social media has become the new medium for customer engagement.

technology:

technology’s affects can be seen everywhere in today’s society, but two technological advances in particular have brought entrepreneurs an exponential increase in productivity:

  • smartphones
  • VOIP video chat

now, all any entrepreneur needs is a smartphone and Skype, and they can connect with anyone at anytime from anywhere on the planet, for free.

crowdfunding:

raising capital, especially at the seed stage, is the biggest barrier for entrepreneurs bar none. The inception of the crowdfunding movement was a direct result of the need for a more efficient and transparent way for entrepreneurs to raise capital.

today, entrepreneurs can use donation-based platforms to raise money for their early-stage ideas almost anywhere in the world, and in a few countries they can use specialized platforms for equity-based crowdfunding.

+ The Small Business Finance Revolution

These three elements have acted as the key drivers in the creation of The Entrepreneurship Era. Now the question is, what needs to happen for it to reach the next level?

Global Collaboration

Entrepreneurs need to build connections with other entrepreneurs in similar fields and start creating ‘collaborative hives.’

Once many entrepreneurs get started, they bury their head in the sand and become myopically focused on building their own enterprise. In today’s world, we need entrepreneurs to search out other entrepreneurs and partners in similar circumstances and start developing hives, physical and virtual workplaces, to collaborate. The future is less about one big idea and more about a big collection of small ones.

E2E Education

While a few ironclad entrepreneurs have been able to successfully put the pieces together and launch their ventures, millions are waiting on the sidelines because they simply don’t have all the tools to launch a new company.

Incubators and workshops are great, but what we really need is active entrepreneurs to educate sideline entrepreneurs by giving them practical advice and sharing real experiences (E2E). This could include providing short-term shadowing opportunities, sharing live case studies, or launching a weekly videocast to talk about what’s happening in the trenches.

It’s not celebrity entrepreneurs that people need to follow, it’s those who are one or two steps above them.

Government Participation

Nobody wants to see the government mentioned in a post related to entrepreneurship, but in today’s world we need governments to recognize the power of entrepreneurs to reshape our current reality and start putting in policies to support that. These include, but are not limited to:

  • exploring effective models of equity-based crowdfunding (ie. Seedrs) for implementation of new securities regulations;
  • modifying visa & immigration laws to facilitate movement of knowledge workers and high-impact entrepreneurs across borders;
  • cutting early-stage enterprise tax rates to zero (under a certain revenue threshold) and giving investors a tax-credit incentives on seed investments (see UK’s SEIS model);
  • creating efficient grant programs for youth entrepreneurs who need small sums ($2,500 – $10,000) to cover their living expenses while they research new ideas.

Certain governments have already begun putting programs in place to lure global entrepreneurs to their country, while others are actively preparing the groundwork:

- Chile launched the Startup Chile program;

- Brazil recently hosted the Global Entrepreneurship Congress in Rio

———-

Overall, the call to bring big-picture solutions to pressing problems and restore balance to the global economy is being answered by entrepreneurs everywhere; but the work has only just begun. The shift to a more fluid and balanced economy requires deep collaboration and global action, from everybody. So get on board and join the movement, because the impact is imminent!

What do you think entrepreneurs need to be able to scale their impact?


+ The Redistribution of Dealflow
+ Finance 2.0 – Wall Street meets The Web

Crowdfunding Strategy – Summary


Building Blocks – PLAN – the Business Model


What we can offer

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2013-04-30 00:00:00
Crowding the Runway : Funding & FASHION http://www.lumosforbusiness.com/blog/844/18-04-2013/Crowding+the+Runway++Funding++FASHION

The Year of the Crowd is in full swing; crowdfunding is taking off in 2013. While some industries are tapping into the crowd #momo with full force, others, like fashion, need to pull up their proverbial socks. The time has come for fashion designers and enthusiasts alike to start crowding the runway and funding designers of the future.

What is crowdfunding?

Crowdfunding is a collaborative funding process where individuals/entrepreneurs can raise funding for their projects/businesses from their networks through online platforms. Project creators make a short video and launch their project online, and project backers (the crowd) each donate different amounts of money until the project is funded. What started off as small experiment in 2009 with Kickstarter has now become a red-hot industry with an expected transaction volume of $5.1 Billion in 2013.

+ Funding the Niche

How is crowdfunding relevant to the fashion industry?

Crowdfunding is helping to move capital to the industries that need it most, and fashion is definitely at the top of that list right now. With the industry in need of a radical shift, crowdfunding can spur a new generation of fashion designers and help democratize the way clothes are created.

+ Avant Garde: Moving Fashion Forward

What’s happening right now?

Fashion designers and next-generation brands from all over the world are beginning to experiment with crowdfunding as a way to bring their new clothing lines to life.

Here are three examples of how clothing designers are starting to crowd the runway:

Wowcracy

Wowcracy went of its stealth mode on Sunday and opened up the site to start accepting projects. The Italian-based entity has been promo’ing their launch since late 2012, and it looks like the veil is about to be lifted on the crowdfunding portal that promises to bring ‘Endless Fashion Week’ to its collaborators.

Wowcracy will function using what’s known as the ‘pre-buy model,’ where project backers can collaborate to help bring new collections to life. Essentially, backers will pledge to pre-buy the garment or accessory of their choice, and if the entire campaign is funded (all or nothing) then they will (technically) donate the money to the designer and receive the specified garment when the collection is finished.

Expect to see live projects on Wowcracy in the coming weeks.

+ www.wowcracy.com

Kickstarter

Kickstarter is the original crowdfunding platform that sparked the global crowdfunding movement in 2009. After having helped project creators raise millions of dollars globally, the platform is now being used by fashion designers in selected countries (US and UK) to help get new collections off the ground.

One duo in New York recently decided to launch a crowdfunding campaign for their sustainable line of activewear, made using Merino wool.

To create Opus Fresh and start re-defining adventurewear, they were hoping to raise $15,000 USD over the 90 day time period. Well as you can see, they have blown that target out of the water and raised more than 300% of their original goal; and they still have a month and a half to go!

+ Strategies for a Successful Crowdfunding Campaign

Kickstarter is built to help get projects like this off the ground. While it’s not strictly a fashion-focused funding portal, like Wowcracy, it is another great option for aspiring fashion designers to bring their ideas to life.

+ Kickstarter: Fashion Projects

Everlane

Everlane is a US-based fashion retailer committed to shaking out the middleman and helping bring fashion back to its roots. When the company was thinking about how to approach the Canadian market, one of the engineers in the company came up with the idea to crowdfund their market entry to see if the demand was there. And so the #CrowdFundCanada campaign was born.

#CrowdFundCanada campaign

So the company created their own branded crowdfunding campaign with the goal of raising $100,000 to break into the Canadian market.

And they succeeded! By raising $118,000 through their #CrowdFundCanada campaign, Everlane showed that not only can crowdfunding be used to get off the ground, but also to enter new markets.

We talked about this strategy last year, in our Building Blocks for the #NewEraBiz series.

+ BB: Test Demand via Crowdfunding

Everlane is the best example we have seen of actually executing this strategy, showing how brands can use the collective crowd power to their advantage to blaze new trails and enter new markets.

+ www.everlane.com

Overall, the time to crowd the runway has come. With an abundance of creative talent and a shortage of capital, crowdfunding can help connect the dots between aspiring designers and would-be backers. Suit up for a spring full of crowdfunded fashion!

+ Download a copy of the business model canvas (click here)


+ BMi: FASHION
+ Time For BMi


PLAN – the Business Model


+ BMi Services

2013-04-18 00:00:00
Break it down: Business Model Breakdown http://www.lumosforbusiness.com/blog/843/11-04-2013/Break+it+down+Business+Model+Breakdown

Back in the summer of 2010, in search of a catchy name for a blog series about business models, ‘Business Model Breakdown’ (BMB) came to life. After nearly three years, it is our most visited set of posts and the only series being actively rolled out on the blog. In that light, we look back to the beginning of BMB and break down the best of the bunch.

Here we go …

BMB Top 5

Original BMB post (June 28, 2010):

+ Business Model Breakdown: Quirky

Most Popular BMB post:

+ Business Model Breakdown: PayPal

view the PayPal Canvas

Most Tweeted BMB post:

+ Business Model Breakdown: Android

view the Android Canvas

+ (Tweet History on Topsy)

Most Research-Intensive BMB post:

+ Business Model Breakdown: Collaborative Consumption

image taken from Uncluttered Whitespace

view the Collab Consumption Canvas

Lumos Favorite BMB post:

+ Business Model Breakdown: Etsy

view the Etsy Canvas

Newest BMB post:

+ Business Model Breakdown: Fashion 2.0

download the Fashion 2.0 Canvas

Other BMB Posts

BMB : Crowdfunding

+ Business Model Breakdown: Crowdfunding

BMB : ASTA Networks

+ Business Model Breakdown: ASTA

BMB : Community Lend

+ Business Model Breakdown: Community Lend

BMB : Mobile Apps

+ Business Model Breakdown: Mobile Apps

BMB : Freemium

+ Business Model Breakdown: Freemium

And that’s the break down of the BMB series. Of course none of it would have happened had Alex Osterwalder et al not brought the concept to life.

+ Blank Business Model Canvas (PDF)

What is your favorite BMB post?

Like, Tweet, +1 or PIN to vote for your favorite post, or write a good old-fashioned comment.


+ Business Modelling 2.0
+ The Advent of Collaborative Commerce+

Crowdfunding Strategy – Summary


Building Blocks – PLAN – the Business Model


What we can offer

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2013-04-11 00:00:00
Beyond Organic : The New Groove of FOOD http://www.lumosforbusiness.com/blog/842/04-04-2013/Beyond+Organic++The+New+Groove+of+FOOD

(Almond) milk on cereal for breakfast in the morning. A (bean) burger for lunch. A stirfry on (brown) rice for dinner. Topped off with some (fair-trade) dark chocolate and a glass of (sulphite-free) wine. Welcome to the new groove of food.

Thanks to an explosion of next-generation producers, a renewed focus on food education and a deeper awareness about food in general, the creation of an entirely new food ecosystem has begun. And this isn’t some hippie-driven hullabaloo, it’s a real-food revolution, and it goes beyond organic.

While there are no shortage of headlines in the news to show why certain parts of our food ecosystem need to be radically reinvented (ie. Ikea horse meatballs), there are deeper reasons as to why it’s necessary and why it is gaining traction so quickly.

It’s based on a need for diversity.

What do we mean by diversity?

Humans thrive in diverse environments. Regardless of the specific context, it’s a law that can be applied almost universally to every facet of life. We need to have choices (not too many), and to be able to have a set of choices requires diversity. Strip away diversity and you very quickly start running into problems.

And that’s where we are at today. We have a food system that is dominated by multi-nationals and agricultural giants (Big Ag). These major food companies have a bigger R&D budget for frozen pizzas than most market players would make in an entire year. As a result, there are ten multinationals who control the entire top-tier of consumer brands.

Graphic sourced from the Huff Post, and the article has 25K+ Likes …

Do these multinationals care about diversity and a well-rounded food ecosystem?

No.

They care about sales and profits. After all, it’s not primarily for our benefit that they insert polyphenols and Omega 3’s into their products. And the sugar-free, fat-free and calorie-free offerings on the shelves weren’t developed to help people eat better. It’s all part of a diversion to make people feel like whatever they’re eating is great no matter what it is they are eating(!).

JIF, owned by J.M. Smucker, added anchovy and sardine oil to their PB so that you can get more Omega 3-s! Ironically, Smucker was part of an effort lead by Monsanto to crush Prop 37 in the US on GMO-food labelling.

And so instead of having a diverse food system where farmers flourish and consumers chow down on freshly-picked offerings, we live in a world where food is day-traded on world markets and sold in major supermarkets at razor-thin margins. Producers get squeezed, fresh products are sold at high premiums and Big Ag drives the agenda.

But all this is changing, and fast. The new groove of food has arrived. What started off as a small ‘organic’ movement a decade ago has now become a massive real-food revolution hitting all levels of the food chain.

Farmers implementing new (non-GMO) cultivation methods are experiencing amazing yields. Brands who may have begun their ascent into food markets as organic are starting to become household names. Mainstream supermarkets are expanding their natural sections at a rapid pace. And big moves are being made.

Last month, Whole Foods announced that they would require GMO-labeling from all of their suppliers within five years. What started off as a non-profit project (the non-GMO project) will now become a business requirement for any company that wants to list their products in North America’s leading natural and organic food retailer.

Transparent labeling. Whole ingredients. Supply-chain localization. Rather than it being a rarity that something we eat would be grown and produced naturally, it will soon become an expectation. And it goes far beyond organic; it’s about putting delicious food on the table that people don’t even need to question:

Did they use a lot of pesticides? Where was it grown? Is it GMO? Are the ingredients real?

Soon enough, these won’t be questions that circulate through peoples’ minds every time they want to purchase food. All information will be right on the label, and anybody selling food that isn’t organic, non-GMO and real-food certified will be shipping their products to Mars.

And those who get this will reap the rewards for decades to come.

Back in the fall, in our blog ‘A New Era of Food,’ we looked at a few enterprises who are on the edge of this movement:

+ A New Era of Food

These are the Market Beacons who, in our opinion, are moving the dial ahead at the top level. But every country, city and community has their own set trailblazers who are setting the new standard. Food has so much cultural and social significance that what’s considered a seismic shift in one region may not even register in another.

Of course there is a lot of work that needs to be done to increase real-food production, educate consumers and develop new products. But it’s happening, quickly. So throw on a pot of (shade-grown) coffee and grab a few (whole wheat) cookies, because the new groove of food is rolling into a town near you.

+ Download a copy of the business model canvas (click here)


+ BMi: FOOD
+ Time For BMi


PLAN – the Business Model


+ BMi Services

2013-04-04 00:00:00