Strategy Dynamics Forum

Digital or online businesses
Subject Expert 107 posts KimWarren Subject Expert 107 posts
KimWarren in Q&A on Strategy Dynamics Method and Modelling
What do digital businesses look like, for example Netflix?
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KimWarren Subject Expert 107 posts
KimWarren
Start from the principle that they will likely have the standard items ...
  • customers - often simple 'customers' [Amazon] or subscribers [Netflix] ... but also often needing to distinguish from 'active' customers and 'dormant' customers [still subscribers but don't use the service]. There may be a charge-period [Netflix] driving revenue.
  • staff - often developers [for the service's online features] and customer-support staff, or special types like the content-checkers in Facebook and Google
  • capacity - determined by the number of transactions/period that the system's servers can handle [may be out-sourced to Cloud services, paid for on a capacity-rented-per-period]
  • 'products' - sometimes literally 'product range' like everything you can get from Amazon or all of Netflix's content items, often needs segmenting into types ... sometimes more accurately understood as the feature-set [all the things you can do with Snapchat or Whatsapp] - competition is often based on the appeal of the feature-set offered by rivals
In addition, there can be special items
  • advertisers - as well as user-customers, who are won by the number, quality and activity rate of those user-customers
  • suppliers-v-buyers - in two-sided services like eBay and AirBnB
Regarding 'performance' ... 
  • 'sales volume' is often better understood as the transaction-rate by system users [hits/week] and transaction-quality [minutes viewed]
  • revenue may be based on subscription [Netflix], commission [eBay] or advertising [pay-per-click]
  • profitability follows standard forms - the above revenue, minus the cost of staff, marketing and capacity-provision 
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