Switchboard Profit Model

For the second time this month I discussed with someone a very interesting business model: the Switchboard Profit model. The Switchboard Profit model is an exciting model for evaluating and developing business models.

Adrian-Slywotzky's Art of Profitability is a business noval set in a very simple plot: a teacher (David Zhao) with many years of practical experience and a willing student (Steve Gardner) who is committed to move his organization forward.

The book covers 23 profit models in a way that hits the little gray cells. By no means what is written is sufficient in itself, but I found by rereading some chapters I filled in more details than actually are there.

Another interesting and sometimes bothering thing is, is that a lot of the homework assignments for Steve are to read other books.

Back to the Switchboard Profit model.

Switchboard Profit identifies the components that led to the business success of the Hollywood agent Michael Ovitz who took the bundling-of-talent concept that he so successfully perfected in television, and applied it to film-making, but with a difference, because it was much more difficult to create a concentration of power in an industry fragmented by many movie studios. Ovitz' first step was to assemble talent; the second, to find a source of stories through a great literary agent; and third, the creation of critical mass. In the author's words, "The more critical mass you build, the higher your probability of putting together a package that works. That, in turn, means that a star, a writer, or a director will be better off being represented by you rather than any other agent, because the odds of being part of a winning combination are so much higher. …So now the studios have to deal with you, and the stars want to deal with you." Thus the analogy of the old-fashioned switchboard Ovitz became that all his various contacts needed to plug into. The lesson, of course, isn't that simple. Predictably, much work is needed to arrive at the numbers constituting the critical mass that is required to generate revenues seven to ten times greater than in the traditional model for that industry.

With this in mind I discussed a business model for a professional-association and a university. The interesting part is that with a model like the Switchboard Profit model one can quickly translate it to the specific situation and drive down into the particular crucial nifty gritty details. And the Switchboard Profit model is just one of the models that can be used to evaluate and develop profound sounding business models.

Of course the real interesting and challenging part is what is coined in the book as the drudgery part of innovation. Where people need the most pressure and encouragement: turning a new idea into people working processes, procedures, etc to deliver the real products; from marketing to sales, from purchasing to manufacturing and delivery. However interesting, it is outside the scope of the Art of Profitability.

MAYA-principle: a successfactor for implementing change

The key to any well implemented change is how well the change is embedded inside the minds, behavior and actions of the involved people. They MAYA-principle, Most Advanced Yet Acceptable, can be very useful for planning the change to maximize the embedding of the change.

We first encountered the MAYA-principle in our research to develop a good Personal Branding process. It turned out that in our Personal Branding process the MAYA-principle was extremely useful for both branding the process in our company, and in branding our people.

The MAYA-principle is the invention of Raymond Loewy, an industrial designer. He believed that, "The adult public's taste is not necessarily ready to accept the logical solutions to their requirements if the solution implies too vast a departure from what they have been conditioned into accepting as the norm." Calling the concept "beauty through function and simplification," Loewy spent over 50 years streamlining everything from postage stamps to spacecrafts. "I'm looking for a very high index of visual retention," Loewy explained of his logos. "We want anyone who has seen the logotype even fleetingly to never forget it." Among Loewy's highly visible logotype designs are those for Shell Oil Company, Exxon, Greyhound and Nabisco.

What we learned from the MAYA-principle is that in order for something/somebody to be well placed and ‘sticky’ in the mind of the target audience, the basic message must be simple, recognizable, and at the same time very different from past experiences.

To give an example. We’re in the process of developing a product for the time being called “Project Portfolio Management the Symbision Way”. We believe from our experiences that we have a way of implementing and managing the Project Portfolio of an organization that is both very effective and practical in terms of realizing the organization’s objectives.

Of course there are others that claim to be similar, even better, and/or that it is done already 30 years ago. This is like ‘fighting a battle uphill’, you need to be hugely outnumbering the others and accept high losses. Well Sun Tsu claimed that the best way to win is to position yourself in such a way that you don’t need to fight. And here we believe the MAYA-principle can be very useful.

When the objective is to implement a change, the best way to have it implemented is by not fighting the people that are confronted with the change. Of course there are plenty of alternatives to the one that is chosen to be implemented, possibly some of them even are much better. Of course any good change is sound in its basic and of course people did in the past sound things as well, thus it resembles what was done years and years ago. If we have to address this kind of energy we’re fighting a battle uphill.

The change should be communicated visually with a high degree of retention. The communicated change should be simple enough to directly grasp directly the essence and apply to every detail of the change. And yet, the change must be experienced as something unique as something invitingly new.

During my career I’ve seen some people hopelessly fail in well implementing a change. I’ve stood aside people implementing the seemingly impossible as it was the easiest thing in the world. Even in situations that were ‘tainted’ with many years of failure. One of the key differences was how the change was communicated. If ‘not advanced’ enough, people ‘resisted’ because they kept asking why this change and not something like …. If ‘not acceptable’ enough, people ‘resisted’ because they couldn’t grasp it directly and needed more ‘time’ and ‘understanding’. The change agents that were successful had an easy to grasp message that was very different from what most, if not all, knew.

A very good example is Demings’ PDSA-circle. Over 60 years later it is still an essential part of improvement and quality programmes. The PDSA is so different from anything else before and after. The PDSA it is so simple and yet very profound. The PDSA grasps you visually. All the key ingredients of Loewy that he formulated into one single term: MAYA; Most Advanced, Yet Acceptable.