Monopolies on the Internet

Monopolies on the Internet

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When the Internet was still a toy a decade or so ago, many business leaders and strategists didn’t believe that it would be possible to create a profitable business online.

The reasons given to support this belief were many and various.

Some argued that business on the Internet would never work because it is impossible to establish trust online. However, businesses like eBay, Amazon, Paypal, and LinkedIn have all proven this argument wrong.

Others argued more persuasively that business on the Internet would never work because, since anyone can have a website, the large number of websites would lead to a kind of hyper-competition resulting in the destruction of profits online; a boon for consumers but not so great for Internet-based businesses.

As it happens, this second argument also turned out to be wrong. But why?

If everyone can have a website why is it possible for some Internet-based businesses to compete successfully?

The answer is an ancient one, and appears to have been discovered in the early days of civilisation by the priests and then later by the universities.

In short, it is possible to establish a monopoly online with the help of three simple concepts: brand, scale, and network effects.

Brand is your level of social recognition, or share of mind. Since websites are typically free (in whole or in part) they are uniquely well suited for brand building.

Scale is how many people you can reach, and since websites can be accessed anywhere in the world, instantly and free of charge, the Internet is the most effective tool ever devised for reaching people at scale.

Network effects is when you bring people together around a common interest or shared purpose. Amazon and eBay connect buyers and sellers, Facebook connects friends, LinkedIn connects colleagues, and so on. The Internet enables online businesses to build monopolies by connecting enough people in a particular market segment to establish strong network effects.

Brand, scale, and network effects are three powerful barriers to entry that every Internet-based business needs to be aware of, and which can be used to build monopolies online.

Ready or Not

The Consulting Industry is Ripe for Disruption

Ripe for Disruption

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ACCORDING to the Harvard Business Review, the consulting industry is one of the most resistant to change. Even though consultants are brought in by corporations to innovate and shake things up, the consulting industry itself has been slow to innovate.

At its core, the consulting industry has remained the same for more than 100 years. Meanwhile, new tools and technologies have become increasingly sophisticated and available.

This begs the question, “why hasn’t the consulting industry been reinvented?”

CONSULTED, a company run by CEO Sebastian Sager, have not only asked this question but are also taking action, and may be on the cusp of profoundly changing everything.

Using a non-traditional business model, CONSULTED is on a mission to give companies access to expert consulting without the long-term commitment or initial expenses.

Traditional Consulting

Traditional consulting is perfect for enterprise businesses that have massive budgets, constantly “creeping” needs, and a particular business structure which is difficult to change. But even so, engaging a traditional consulting firm often only makes sense if the consultants are used to the fullest.

The issue with traditional consulting is that it doesn’t work in all cases. Very rarely do businesses – big or small – use the full consulting retainer. As a result, money that gets paid to consultancies could have been invested in other areas of the business.

The startup world is rapidly changing the way that businesses operate. For example, it is now easy to find credible, highly regarded contractors to fix your house through online tools like Angie’s List.

Why aren’t the same resources available for helping businesses get advice?

Many founders and mid-level managers don’t need a long-term consulting contract – they’re just looking for some quick, credible advice to guide them through a problem situation or challenge.

Credibility is key, but you shouldn’t have to pay an arm and a leg for it. Consulting should also be flexible so that people can get the advice they need by scheduling a quick phone call or discussion via Skype. You shouldn’t need to “know a guy” or have a contract in place to get the help you need.

A New Era of Consulting

It’s finally time for a fresh new approach to consulting – something that is designed to truly help businesses.

Enterprise-level clients are starting to look at changing the way they engage consultants. Professional service companies in the past charged high fees for standard service packages, making them unsuitable for companies that needed a more discrete piece of advice.

Many newer consulting firms are addressing this pain-point by offering smaller and more flexible consulting “blocks” and flexible collaboration packages so that companies can get on-demand consultancy on topics ranging from audits to Lean Six Sigma to strategic planning. This is a step in the right direction, but a whole new consulting model appears to be on its way.

Companies like CONSULTED are developing solutions which allow clients to forget about meetings, memos and all the other unnecessary hassles that come with engaging a major consulting firm. They also allow users to browse a range of experts from around the world, review consultant credentials and save money by paying for only the time they use.

Is this a disruptive innovation? How is this new consulting model likely to affect your business? Share your thoughts in the Consulting Forum.