Today’s Harvard Business Review highlights that not all On-Demand opportunities should be analyzed in the same manner. The article takes the corporate point of view. (Next week, I will take the Freelancer’s point of view). The main premise is “more and more of the on-demand businesses we see on a daily basis are being founded atop increasingly weaker value propositions; convenience without any sort of sustainable cost advantage.”
By identifying these inefficiencies, you can highlight market opportunities. This certainly was the case with Airbnb. It is also true that customers are willing to pay a bit more for convenience. The question is how to determine what’s driving innovation (and causing disruption in an existing segment of the market.’ The authors developed a frame work to help evaluate opportunities — to determine if On-Demand companies are delivering convenience at at premium on-demand companies are downright disrupters, efficiency engineers, process engineers, or just plain old sustainers.”
Sapphire Ventures, who created the above model, ask for simple quesitons
- Are you delivering a product or service that would otherwise expire?
- If so, how much vanishing value can be saved?
- Will the business fundamentally change the production process?
- If so, will the production minimize costs to the business?
The basic premise is that before you launch a new On-Demand company, it’s important to understand how your entry into the market place will impact the industry and your ability to satisfy customers. It’s different to compete on price vs. convenience.
My take: Too academic for me. Using a simple model like a SWOT analysis (Your Strengths and Weaknesses and the Market Opportunities and Threats) will get you the same answer.