Recently, I have been introduced to the concept of “100 years from now”. Basically — will your business exist 100 years from now?
Let’s look at an example of a business model that will not exist in 100 years— Airline Ticket selling. There are a limited number of airlines. There are a huge number of people selling airline tickets. The people selling those airline tickets are competing on profit margin. As they reduce the margins to compete, the businesses become less and less viable. The ease with which one can integrate ticket selling will lead to even more competition, till at some point there is no money to be made there. Comoditisation of technology means the I.T departments of airlines will start competing with the ticket sellers, and soon the airlines sell the tickets directly.
Let’s look at another similar business that will likely have the opposite happen — hotel bookings. There are a very large number of hotels. Because of the AirBnB style sites, there will become even more accomodation possibilities with a huge number of price points. Those small guesthouses will not have marketing budgets. They cannot build a brand directly to the consumers. So a consumer looking for a stay in Uruguay will not think of Senor Lopez Guest House. He will think of an aggregator like Hotels.com and go take what they recommend for him in Uruguay. The aggregator that provides the best recommendations will have the best reputation. And so people will ignore the individual brands and go for a trusted aggregator brand.
A key question to ask is this — do customers want my business model to exist or would they prefer it not to? For example, customers want to read books for free. Books are sold and customers buy because they don’t have a choice, but the customers don’t want to pay. If the same book were available for free, they would take it. The internet makes a lot of things available for free. One can stave off the fall via DRM or other rights managements, but 100 years from now those things will be free. Any business that is doing somethings customers don’t want, but that the internet makes available, will not exist in 100 years if they don’t switch their model.
Another factor to consider is this — the internet has put billions of people online. If something can be done once and given away for free, somebody will do it in their free time and give it away for free. E.g in software, there are a lot of free alternatives to popular software suites. In 100 years, those free, open source alternatives will be extremely well polished and will be as good as the commercial versions. Would you use office if the alternative was better, compatible and free?
Designs to make cars will come online. The plans you can feed to robot arms to do the construction will come online. Factory parts will be available to buy. Information that was hidden will be available to all, and most of all, will be cheap to implement.
One has to consider businesses now and think if they are building 100-year proof models or if they are built on a market with a finite lifespan. A lot of ideas fail this test. Evaluate yours. Does it pass?