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Fresh Business Opportunities and New Business Models

Business is about strategy. And strategy is about an effective business model. New technologies are making new business models possible...and more effective in today's world.

Find green business solutions
By Carolyn Allen, Editor

Earlier this week, Taiwan Semiconductor declared its new intentions with a bold gesture. It stripped Rick Tsai of his chief executive title and placed him in charge of a new unit created to look into fresh business opportunities.

Business Models for Sustainable Results

A recent visit with a product development VP pointed out the value of "systems" in the pursuit of revenue. He has found that innovating a better merchandising system can be more profitable than innovating a new product. With that thought in mind, I have looked at "fresh business opportunities" as a way to innovate. The key metrics of better business models are using new technologies to gather information (sensors, monitors, communications), and finding new needs that have arisen from new social changes. For example, long commutes and high gas prices create demand for alternative transportation that saves money -- but it could also create demand for working at home if the right computer system can be set up!

This overview of several "newer" business models can get you thinking about how to turn a relatively new problem into a new business model that capitalizes on the efficiencies and laws and challenges now available.

The Foundry Business Model

The foundry model with a heritage in the heavy metal mills has grown in popularity as fewer companies have been able to handle the costs of building cutting-edge processing and manufacturing plants that can churn out high tech products using expensive and rapidly developing technologies.

These contract shops can produce more product than any most other manufacturers. This specialty outsourcing arrangement places the burden of building plants that can cost billions on one company, while affording customers the chance to concentrate on engineering.

This model stimulated the global outsourcing movement.

The ESCO Business Model

An energy service company (ESCO) is an engineering oriented business that provides a broad range of energy solutions including installation and management. The ESCO provides an in-depth analysis of the property, designs an energy efficient solution, installs the required elements and maintains the system to ensure energy savings during the payback period. The savings in energy costs is often used to pay back the capital investment of the project over a 5 to 20 year period. If the project does not provide savings or ROI, the ESCO is often responsible for paying the difference.

A variation of this commercial-scale ESCO is being developed by regional governments. California, for instance, has passed AB811, legislation that allows municipalities to offer residents the opportunity to fund energy projects such as new heating and air conditioning systems with the funds applied to the property itself -- not the individual's personal account. The loan is then paid for as an addition to the property taxes.

It all started with Berkeley and the “Berkeley First Program.” A company called Renewable Funding developed a system for financing home solar energy systems and energy efficiency improvements by partnering with a city and adding the cost of the solar systems or improvements onto the homeowner’s property tax bill, amortized over twenty years.

The Massively Collaborative Global Business Model... or Microfinance

The Internet has become the tool to pull together "volunteers" to contribute content to global websites and blogs, to contribute ideas and innovations, to raise funds for micro-finance projects, etc.

The massive scope fits with the massively growing population.

The world's population is escalating and local organizations have a hard time distributing the wealth of ideas and revenue equitably across the globe. The old fashioned nonprofit or non-governmental organizations have a hard time with the growing needs. Bring on the Internet!

Forbes reported on 50 Top Microfinance Institutions in 2007. And the World Bank estimates that there are now 7,000 microfinance institutions! It's a new business model.

Social Capitalism: The Socially Responsible Business Model

Companies that seek to do good by capitalizing on our existing shopping patterns such as Tom's Shoes that gives a pair of shoes to a child in need for each pair of shoes sold to his customers.

Socially responsible businesses could also encourage consumers to spend money in ways that promote social or environmental benefits such as buying organic foods, or buying locally, or buying shade grown coffee that also is produced with social justice principles. Or purchasing certified products -- certified for environmental or other best practices.

The Trade Union Business Model

Governments are beginning to promote "livable wage" business strategies to bolster family incomes, especially in impoverished communities. By requiring public projects and private contractors with the government to adhere to a business model that includes livable wages, municipalities are acting much like trade unions. This business model is intended to decrease the load on welfare budgets and strengthen the lower and middle class communities by redistributing the wealth to people who are working full time and not earning a sustaining wage, while business owners harvest the majority of the revenue.

Sustainability Business Model

What often started as a public relations effort to differentiate and get attention in the media, environmentally-conservative processes are becoming a new business model that reduces risks, reduces energy costs, reduces waste, and enhances the working environment and productivity of workers.

Among the many specialized solutions are strategies such as recycling water, using natural light and LED light sources, adding localized cogeneration capabilities with solar or wind, heat capture, composting, recycling waste into reusable materials, aerodynamics, and green chemistry.

By seeking zero waste, carbon neutrality, zero water or other goals that a few short years ago sounded bizarre and unachievable, companies are becoming highly productive and at a lower cost. Frugality is the new business model, based on nature's own highly productive processes.

Distributed Income for Families

Corporate life is being viewed by millions of laid off workers as highly risky. Profitable while it lasts, maybe, but poof...and it goes away.

Sideline businesses, hobby businesses, franchised sales, gardened specialty crows...the creativity and determination of families to have an alternative source of income that is under their control is a growing phenomenon. Quiet, but growing. Even the mayor of Los Angeles encouraged laid off workers to start a business!

Business Model Summary

New technologies bring new ideas and capabilities. The Internet has changed the way we do business. Anyone can now market their products not only from a storefront or streetside stand...but regionally or even globally.

"Necessity is the mother of invention," my mother always told me. We have met necessity and it is us! Business models will adapt to the tools and supplies and abilities we bring to the necessity. New tools are heavily technology driven, but technology is only the tool. At the heart of these new business models is how people interact with people -- what value is created to meet "obvious" needs in new ways.

We will be seeing many new business models in the coming months. Keep an eye out...you will find them fascinating and one of them might be an idea you can move along into an even fresher business model!



Edited by Carolyn Allen, owner/editor of California Green Solutions
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