Business Model Comparisons

Interesting Article

How Facebook Is Like Ikea- They get their customers to do the work—and to enjoy doing it.

Roughly five years after Internet users caught on, the bookshops are suddenly full of books about the user-generated content that “Web 2.0” makes possible: blogs, Wikipedia, Facebook, and the rest. Well, you can forget them, because easily the world’s most profitable enabler of user-generated content opened the doors of its first superstore 50 years ago, in Almhult, Sweden.

It is now hard to imagine life without Ikea. A folk statistic would have you believe that one in 10 Europeans is conceived in an Ikea bed. But isn’t it pushing it a little to compare Ikea to Facebook?

I’ll admit that the similarities are not apparent at first sight. But a defining idea behind Wikipedia, Facebook, and blogging platforms such as WordPress is that if you give people the right tools, they’ll use them to create wonderful things in collaboration with each other or with the organization that provides the catalyst.

Ikea’s success is not so very different. Ikea keeps its costs and prices low by enlisting its customers—their time, their cars, their ambitions as interior designers, and their inflated ideas of their carpentry skills.

Management experts Rafael Ramirez and Richard Normann pointed this out in the Harvard Business Review back in 1993. Ikea, they argued, was a success because it enabled “value co-production.” This infelicitous term partly refers to offering consumers a discount to build their own furniture. But it means much more: Ikea recruited its customers to the idea that they could not only put up shelves, but also design their own stylish living spaces, equipping them with tape measures and printing almost 200 million catalogs that also serve as design manuals. It also devoted huge energies to helping its suppliers and designers play their part. Ramirez and Normann explain that rather than passively buying what the suppliers offered and reselling it, Ikea provided suppliers with technical assistance, equipment, guidance on standards, and even a kind of dating service that introduced them to new business partners.

We all know that the formula works. But most successful formulas are easy to copy; this one is not, and that is the genius of it. In many ways, Ikea seems to be offering yesterday’s business model: Surely we have less time than we did 20 years ago, while having more money to spend on our homes. When a typical London home costs $600,000, why are cheap sofas to put in it still such a tempting offer?

Yet Ikea continues to thrive, proving how hard it is for competitors to muscle in on a business that has placed itself at the center of a web of economic actors, all striving for the same goal: a funky living room for Steve and Alice.

Not many technology companies have succeeded in mobilizing an army of “value co-producers” in the same way. Microsoft is the most important exception, creating a platform that supports—and is supported by—the efforts of countless other software companies. Game-console manufacturers live or die with the companies that produce the games. And eBay is an old-school dot-com company that has created a near-unassailable position: The buyers go there because the sellers go there, and vice versa.

Facebook, like Ikea—and like Microsoft—has mobilized an army of independent suppliers. In Facebook’s case, they are developers who produce applications that can be plugged into the Facebook platform. In all these cases, the idea is the same: If Facebook (or Ikea) can woo the customers, independent suppliers will be queuing up to help, and if the independent suppliers are queuing up, Facebook (or Ikea) should be able to woo the customers.

Such a market position brings inevitable temptation to exploit it. Microsoft’s tangles with the competition authorities are notorious. Facebook’s new advertising system, “Beacon,” tells your friends about commercial sites you’ve visited: The project triggered a mini-rebellion among Facebook users. Ikea is an old hand at herding customers through a labyrinthine store layout. Customers don’t like it, but, lacking a good enough alternative, we tolerate it. Or we tolerate it up to a point. My love affair with Facebook was brief and bland. And Ikea? Let’s just say that my children were not conceived in an Ikea bed, and leave it at that.

— Tim Harford


Artificial Nature

Read an article recently, where a particular para caught my attention, far more than the main theme of the essay. Its been extracted below:

In the ’50s, this [manufactured or real] was becoming a question for the Falls too. A 1950 treaty with Canada had been signed that allowed more water to be diverted into power plants than ever before. Anticipating the reduced water flow over the brink, Ontario Hydro and the Army Corps of Engineers had scheduled the Falls for a face-lift. In fact, a massive engineering project was in place to carve out the riverbed, reshape the banks, rebuild the viewing points, and artificially raise the water level—all in order to keep up the appearance of natural grandeur. Marilyn’s 116-foot walk strode right to the heart of an issue that was playing out at Niagara and on many fronts in American life.

The above got me thinking, how many of the natural wonders we see or wish to see are actually “face-lifted”? The blue mountain, The great ocean road, The grand canyons, Yellowstone, the various beaches of south-east asia these are just some of the natural areas we like to see, enjoy and fawn over. How many of these are actually the way nature made them?

And as the author points out, if I knew that these places were manufactured and knew how it looked like as nature intended, would I stop visiting them? Or would I disdain them?

One thing is for sure, my urge to visit Niagara Falls has gone down considerably. But maybe when I do visit it, even the artificial falls may be too awe-inspiring to care about real and artificialness.

The Necessity of Sadness

Been reading a lot of articles lately. This particular one caught my eye.

In Praise of Melancholy is an ostensibly perverse article. It not even implies, but bluntly states that sadness and melancholy are a necessity of a fulfilling life.

Though, I agree one cannot enjoy life to the fullest having always experienced the best things, the best things would differ from individual to individual would they not?

For example, the worst thing for the son of a billionaire would be his private helicopter not working, the best thing….well whatever it is these uber-rich enjoy.

The worst thing for a normal schoolboy would be to fail is exams while the best may be to top his school, or country.

Does this mean that the billionaire-son and the schoolboy have never experience melancholy or sadness? True, they may, and the majority of middle class and above, wont experience poverty, extreme tragedy, or some other extreme forms of emotions and life-thrusts. However, within their own confines, they undergo the goods and bads of life has to over.

I think that’s what the author fails to understand; that everyone need not have to deal with deaths and riots to actually be sad. If a person what’s to be sad, there are a million and one reason to be so.

On a side note, the article did point out Keat’s life story. Keat’s one of the poets I like and I know he died of TB, but little did I know his family history etc. A short, tragic but admirable life indeed.

When he was only nine years old, his father fell from his horse and died the next day. A few years later, his mother was diagnosed with tuberculosis. Though Keats nursed her assiduously, sitting up with her all hours of the night, cooking for her, reading to her, she died in 1810, during Keats’s 15th year. Keats was assigned to a guardian and soon after taken from a beloved boarding school and required to apprentice as an apothecary. He found the work tedious, for during these years, his late teens, he was awakening to the grandeurs of poetry, especially the verse of Spenser and Shakespeare. To complete his training, Keats had to learn surgery. Day after day, he toiled in a hospital, malodorous and bloody, where he witnessed nothing but suffering. As he was turning from surgery to poetry, his first substantial poem, “Endymion,” was published in 1818. Two of the leading literary magazines of the time attacked the poem for not making sense.

Around this time, Keats’s brother Tom died after a long and painful illness. While attending Tom, Keats met the love of his life, Fanny Brawne, and became engaged to her. However, he soon realized that he would never be able to marry her because he himself was doomed to fall prey to the same disease that killed his family members. He knew he would die without ever consummating his ardent love.

One would think that Keats’s life would have fostered bitterness in him, but he remained generous in the face of his difficulties. He didn’t flee to the usual 19th-century escapes: Christianity or opium, drink or dreaming. Though he unsurprisingly underwent pangs of serious melancholia (who wouldn’t, faced with his disasters?), he nonetheless never fell into self-pity or self-indulgent sorrow. In fact, he consistently transformed his gloom, grown primarily from his experiences with death, into a vital source of beauty. Things are gorgeous, he often claimed, because they die. The porcelain rose is not as pretty as the one that decays. Melancholia over time’s passing is the proper stance for beholding beauty.

Keats understood that suffering and death are not aberrations to be cursed but necessary parts of a capacious existence, a personal history attuned to the plentiful polarity of the cosmos. To deny death and calamity would be to live only a partial life, one devoid of creativity and beauty. Keats welcomed his death so that he could live.

Taking this double stance — suffering death while transcending death — Keats was in his pain and yet above it. He developed this interplay between detachment and attachment in one of his most famous letters, written in 1819. “Do you not see how necessary a World of Pains and troubles is to school an Intelligence and make it a Soul?” he asked. He’s here implying that an abstract mind can develop into a full-hearted person only through enduring long periods of sadness and pain.


All of us swim in the one sea all our lives, trying to stay afloat as best we can, clinging to such lifelines and preservers as we might draw about us: reason and science, faith and religious practice, art and music and imagination. And in the end, we all go down, down, down into the darkness. Some lie back, float calmly and then succumb, while others flail about furiously and go under all the same. Some work quietly through tidy, too hopeful stages; others “rage, rage”.

But all get to the “dying of the light.” Some see death as a transition while others see it as extinction.

That we get sick was acceptable. That we die was not. Pain, suffering, the awful losses disease exacted, were all endurable so long as consciousness remained animate:

– ‘Swimming in a Sea of Death’ by David Rieff

Writer’s Block

I am back to my Writer’s Block mode, where tonnes of things are happening around me but nothing worth writing about nor raving over.

Usually such modes are resolved by constantly changing my site theme. But guess this time, I hit upon a layout I like way too much to change 🙂

So until I can think of something to write about or crib over, au revoir 🙂