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Reinventing business models for the 21st century: A war cry

The klaxon of reinvention is sounding, and there’s never been a better time to look at new ways of doing business.

emma clarke the selective idealog new business models?I think we can all agree that, for a while now, the traditional marketing and creative services industries in New Zealand have not been meeting the needs of SMEs. In a country where over 90 percent of businesses have fewer than five employees, the conventional agency model just isn’t a good fit anymore – it’s expensive, complicated and outdated. 

Shifting your business model means you can make money differently, while also looking at how assets, capabilities and other elements are configured in the value chain. It’s an approach that many believe is one of the most important ways small businesses can succeed in these gritty economic times.

Start by looking at what customers really want…

Economist Theodore Levitt once quipped, “People don’t want to buy a quarter inch drill, they want a quarter inch hole”. In other words, customer needs are paramount. Companies can improve their offering until the cows come home, but if they’re not what the customer needs it’s all for nothing.

Marketers need to understand the social, functional and emotional dimensions of projects in order to design business models, products and services. Google was created to help people find information; it wasn’t designed for a specific “search demographic”.

Next, turn the model on its head…

Let’s take it back a few years. My marketing teeth were cut working with global brands around the world, before working for Microsoft back in New Zealand

In hindsight, the seed for my business, The Selective, was sown in those early days. I never felt there was a level playing field for smaller businesses to access top quality creative and marketing expertise. Ad-hoc access to creative and marketing experts, high quality work from suppliers, quick and efficient turnaround, reasonable prices – these things weren’t exactly easy to access for smaller enterprises.

Even for larger corporates having to use a predetermined agency for every single campaign and tactical piece of work, no matter how small is frustrating. The process is slow and overpriced, and limits return on investment.

The Selective is a new take on a traditional full-service marketing agency model. Clients of any size can access top talent without middle-men, overheads, or ongoing commitment. Essentially, The Selective is a virtual agency, where clients are matched with the best marketers and creatives, job-by-job. These are talented folk who run their own businesses with proven track records. I have worked with them all personally and, as these businesses are engaged independently, while they work with us at The Selective they’re also growing their own businesses. It’s an entirely new way of working, and one that mirrors similar innovations in other sectors.

Notice shifts in other areas…

Recruitment is a good example of an industry with long-held, outdated methods that don’t work for all businesses.

The work environment, the way we communicate, what employees want in a role – all these things have changed, yet the model that many recruitment agencies follow in this country hasn’t adapted.

Larger organisations have become more cost focused in recent years and have responded by establishing their own in-house recruitment teams to handle the bulk of their hiring needs. Meanwhile, smaller businesses must choose between DIY or paying recruitment agencies’ hefty fees. Fifteen percent of the first year’s salary is standard for most recruitment agencies in New Zealand – certainly not a cost effective solution for a small enterprise.

It’s obvious that our recruitment industry has been crying out for a business model shift.

Rice Consulting launched an unconventional offering called VirtualRPO in 2012, which offers a model allowing companies of any size to manage and run their own recruitment process, contracting experienced recruiters at a fraction of the cost.  VirtualRPO clients pay around the third of the standard price, without any loss of service.

Founder Jonathan Rice says the model was initially intended to offer a flexible and lean hiring solution for clients, but it also turned out to be just what many of New Zealand’s top recruiters were looking for. VirtualRPO has more than 120 on-demand recruiters who work on an hourly rate in the client’s office or from home.

“These are experienced, quality recruiters who are looking for more than a 9-to-5 job – these are people who had previously been unable to fulfill their productivity potential. Our business offers them that opportunity.”

VirtualRPO has started to change how recruitment practices are delivered in New Zealand. They have thought about what their clients need, listened to and understood what New Zealand businesses want.  How long will it take for other outsourcing businesses to follow their lead?

Get the ball rolling…

Looking at the local picture will always help with the process of understanding and adapting a business model. Enterprises in countries with large populations and large organisations are intrinsically different from those in smaller countries with smaller businesses.

In New Zealand, SMEs operate with relatively fewer resources and smaller budgets. This necessity means we must invent a new way of doing business.

For me, it’s immensely satisfying to have created a model that addresses a resource disparity in the New Zealand market, and my challenge goes out to other sectors: find a simpler, less expensive solution for New Zealand’s largest customer segment.

Emma Clarke is a marketer and the founder of The Selective, which provides companies of any size access to independent, creative and marketing talent on a job-by-job basis

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