Entrepreneurial Mechanics: Causing an Epidemic with your business
You brooded over a business idea for some time, carefully built a team and made the right pitch to investors. You successfully launched out and invested your initial CapEx. But most of the things you had intended to do have not panned out quite exactly so. Most startups whether they be small companies or new services and products in incubators in already established organizations face such a similar situation.
For most startups they might have expected to reach a market share of some x% after some months of execution but the more they try the more it eludes them. Your business has to affect its intended audience to convince them to actually purchase a product or service. This is at the heart of any successful business.How do you then get your business to its market audience?
Is your business that type whose success depends on shear volume? Facebook’s success is driven by the number of active users such that the more users it has the greater the chances of more additional users. It impressively diffuses into an entire system. There is a way also to make your business spread like wildfire and to reach a lot of users or customers. You can actually cause an epidemic with your business. Consider how diseases like the flu or measles spread throughout an entire population. These are contagious diseases with models developed to measure their spread so us to curb the rate of transmission.
Adopting these contagion models for the business world is a real catalyst for business growth and success. In the medical realm they are interested in stopping the spread of a disease. In the business world we are interested in spreading an idea, a product or service. The number of people who will contract the flu at a particular period is predicated on the number of people who currently have it, the level of contact they have with the unaffected population and the rate of transmission.
Simply then the number of new people to your business or idea would depend on the number of already existing clients, the likelihood that when two individuals or groups meet there would be a transfer of your idea or transfer of information about your product or service from one to the other and the level of influence your existing clients will have over non clients or the transmission rate. This leaves us with a nice diffusion model for your idea, product or service.
Let: N = The entire target market
Ot = The number of people (clients) who love your idea, have accepted your product/service at a particular time (t)
(N-Ot) = The number of people who are not yet clients
Ԏ = transmission rate: this is the likelihood that your client(s) can influence another person to accept your idea or purchase your product or service. Ԏ is the rate at which this occurs.
So then if two people meet what’s the likelihood that your client will influence the other to accept your services, idea or products.
O/N = The probability that one of them is your client
(N-O)/N = The probability that the other is not your client
The likelihood that your idea will be transferred from one to the other is:
Ԏ(O/N)(N-O/N);
Ԏ(Ot/N)(N-Ot/N)
Let’s now introduce the contact rate as it depends on how often these two people meet.
Contact rate = C
Number of meetings = #C
Putting all this together gives us:
(#C )Ԏ(Ot/N)(N-Ot/N)
Therefore the number of new clients to your idea or business is given by:
Ot+1 = Ot + (#C) Ԏ(Ot/N)(N-Ot/N)
Ot+1 = New clients in the next period
Ot = Existing Clients
(#C) Ԏ(Ot/N)(N-Ot/N) = Probability of idea transfer or those who are influenced to become clients in the next period.
Success sure is non linear.
Carefully devising your business strategy with a clear understanding of this { Ot+1 = Ot + (#C) Ԏ(Ot/N)(N-Ot/N) } will go a long way in bringing your business out of obscurity. Sometimes it only takes a spark to start a wildfire.
For most startups they might have expected to reach a market share of some x% after some months of execution but the more they try the more it eludes them. Your business has to affect its intended audience to convince them to actually purchase a product or service. This is at the heart of any successful business.How do you then get your business to its market audience?
Is your business that type whose success depends on shear volume? Facebook’s success is driven by the number of active users such that the more users it has the greater the chances of more additional users. It impressively diffuses into an entire system. There is a way also to make your business spread like wildfire and to reach a lot of users or customers. You can actually cause an epidemic with your business. Consider how diseases like the flu or measles spread throughout an entire population. These are contagious diseases with models developed to measure their spread so us to curb the rate of transmission.
Adopting these contagion models for the business world is a real catalyst for business growth and success. In the medical realm they are interested in stopping the spread of a disease. In the business world we are interested in spreading an idea, a product or service. The number of people who will contract the flu at a particular period is predicated on the number of people who currently have it, the level of contact they have with the unaffected population and the rate of transmission.
Simply then the number of new people to your business or idea would depend on the number of already existing clients, the likelihood that when two individuals or groups meet there would be a transfer of your idea or transfer of information about your product or service from one to the other and the level of influence your existing clients will have over non clients or the transmission rate. This leaves us with a nice diffusion model for your idea, product or service.
Let: N = The entire target market
Ot = The number of people (clients) who love your idea, have accepted your product/service at a particular time (t)
(N-Ot) = The number of people who are not yet clients
Ԏ = transmission rate: this is the likelihood that your client(s) can influence another person to accept your idea or purchase your product or service. Ԏ is the rate at which this occurs.
So then if two people meet what’s the likelihood that your client will influence the other to accept your services, idea or products.
O/N = The probability that one of them is your client
(N-O)/N = The probability that the other is not your client
The likelihood that your idea will be transferred from one to the other is:
Ԏ(O/N)(N-O/N);
Ԏ(Ot/N)(N-Ot/N)
Let’s now introduce the contact rate as it depends on how often these two people meet.
Contact rate = C
Number of meetings = #C
Putting all this together gives us:
(#C )Ԏ(Ot/N)(N-Ot/N)
Therefore the number of new clients to your idea or business is given by:
Ot+1 = Ot + (#C) Ԏ(Ot/N)(N-Ot/N)
Ot+1 = New clients in the next period
Ot = Existing Clients
(#C) Ԏ(Ot/N)(N-Ot/N) = Probability of idea transfer or those who are influenced to become clients in the next period.
Success sure is non linear.
Carefully devising your business strategy with a clear understanding of this { Ot+1 = Ot + (#C) Ԏ(Ot/N)(N-Ot/N) } will go a long way in bringing your business out of obscurity. Sometimes it only takes a spark to start a wildfire.
