Creating a profitable hub

The real life situations covered so far have been dealing with the connections between the information coming from a solution point consisting of customers, to a supply coming from a solution point consisting of manufacturers or service providers. In the jewellery example, the whole system of supply, to satisfy a chaotic demand for costume jewellery, involved three Solution Points.

1) Customers: supplying information and feedback to the retailers

2) Middlemen: acting between the retailers and the manufacturers

3) The Manufacturers or product producers: supplying the middlemen.

In the world of bricks and mortar - where physical products are involved, or, where communication needs face to face presence - the solution points are self forming. Fashion leaders went to Hyper Hyper and this formed a physical information Solution Point. Wholesalers grouped around Berwick Street to create a physical Solution Point for the retailers to buy from. Manufacturers group in physical locations or at trade shows to provide physical Solution Points for wholesalers to make contact with them.

These physical Solution Points have evolved as a natural result of a dynamic system's self-organisation towards increased efficiency. The system has matured, having discovered its own way of coping with the chaotic changes in fashion. This makes it easy for anyone, even with relatively little specialist knowledge, to tap into this naturally formed system and begin trading straight away.

Having a physical presence at one of the solution points (such as a jewellery counter in Hyper Hyper, a wholesale premises in Berwick Street or a stand at a trade fair) makes the creation and maintenance of a business enterprise much easier. Without such a physical presence, it is necessary to create a personal solution point. This must take the form of a list of personal contacts. Such a list is not something that can be acquired easily. It is something that has to be carefully built up, one entry at a time.

It becomes obvious here, how silly it is to create a stand alone Web site that is not at a Solution Point i.e., a place where there are no contacts regularly connecting to it. However attractive and creative a site may be in a visual sense, it is totally useless unless it is the Interface to a number of people. It is the getting of these people to interact with a site that is the tricky part, not its design. Many people are under the impression that an attractive site will attract people. That is a fatal fallacy. A Web site is about creating a Solution Point, not creating a technological wonder.

People involved with e-business and e-commerce must each have two Solution Points; these can be looked at as an input and an output to a person's activity. These Solution Points can be such that one is in the world of bricks and mortar and the other in the environment of the Internet (Web sites are included in this environment). Alternatively, they can both be in the environment of the Internet. More intriguingly, both Solution Points can be in the world of bricks and mortar - but, connected together with a series of Solution Point pairs in the environment of the Internet.

Whichever combination is used in any particular business situation, it is almost certain that one or other (maybe both) of the solution points will have to be created from scratch. E-business or e-commerce people will have to find their own contacts and create their own Solution Points. Invariably, these will boil down to a list of humans: either customers or trusted contacts.

In the world of bricks and mortar, sales men and women are the people most noted for making use of a list of contacts. In the minds of most people, sales people, and their lists of contacts, are associated only with the sales transaction itself. Few people see these in terms of a communication network. Yet, most salesmen and saleswomen are interested in more than simply single sales; their prime interest is in establishing contacts for long term relationships which will result in a series of sales.

Sales people, who are working towards building up a list of long term relationships, will usually expend much energy to build up a relationship of trust before they start to profit from the relationship. Invariably they will use a tit-for-tat strategy where they will open the relationship by cooperating, which will involve giving the contact something - usually in the form of information, help or guidance. - and waiting for the contact to respond with a co-operative response.

Many people are wary of this approach and suspect that such a strategy is designed to build up to where a sales person can make a highly profitable sale and then defect. This is a very short sighted view. It is only used where the sales product is such that long term customer relationships, or, reputation, are not seen to be worth cultivating. This happens almost invariably in zero sum games, where the winners win what the losers lose. A reasonable amount of common sense keeps most people out of such situations.

Most times, sales people are working for continuous mutually profitable relationships; it is only a short sighted sales person who works any other way because all the hard work goes into a first sale and, if the customer benefits from the sale, subsequent sales get progressively easier. In a non zero sum game - a win-win situation - mutually profitable relationships can be maintained indefinitely. This is the kind of relationships that are most profitable to seek out in the environment of the Internet.

In situations, where a sales person has worked to build up a list of personal contacts, the successful continuation of the interactions must be based upon the sales person's ability to create benefits for all concerned: a win-win situation. Such a list of contacts can be viewed as a network, where the sales person is the hub of this network : a hub that is distributing wealth to all the contacts connected to it. The sales person takes a proportion of the wealth created at this hub in the form of commissions or a percentage of the sales revenue.

In this way, it can be seen that a hub can be profitable to everyone who is part of it. This brings about the interesting situation that there can be two major strategies in the environment of the Internet that will both be profitable:

1) To be an initiator and form a hub, or, solution point.

2) To arrange to connect to the hubs of many initiators.

The second strategy involves forming a virtual hub that, in effect, connects a single person to many hubs. In this way a person can benefit from many hubs that dissipate benefits without having to initiate any themselves. It is this realisation that there are two types of strategy, and that they are complementary, which can lead to an understanding as to how to make best use of the Internet. It is especially powerful if a person is able to make use of the two strategies simultaneously: perhaps one as an input and another as an output, in a business role or a business venture.