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The Anatomy of the Business Model Simplified: Non-Linear vs. Linear

Business Model: Non-Linear vs LinearThere are an incredible number of ways to analyze a business model. One way is to look at it from the perspective of complexity science, which is the study of non-linear systems.

Nature, being organic in form, is a non-linear system—where a small disturbance can create a devastating effect in a positive or negative direction. Overpopulation of one species affecting the food chain of other species in the ecosystem is one example.

"Startups and companies that appeal to the non-linear behavior of humans win BIG."

Humans' behavior is non-linear in nature too. It is difficult to predict what humans will do next. That’s why marketing to humans is unpredictable. Figuring out the next viral video super hit is as much science as marketing voodoo. If you absorb anything today, realize humans are non-linear from a psychological and action perspective. Startups and companies that appeal to the non-linear behavior of humans win big.

A few simple examples …

The gaming industry surpassed the film industry in the entertainment format because games, in their story format, are more non-linear in nature. The linear format of storytelling is not going away but it has been surpassed by the non-linear because humans like to explore, discover and interact. (continued below)

Social Media became an overnight (decade-night)[1] trillion-dollar industry as a communication mechanism between humans because the digital platforms like Facebook, Twitter and LinkedIn provided non-linear ways of communicating between users.

“When you look at your own business model, look at it from the non-linear perspective.”

When you look at your own business model, look at it from the non-linear perspective. How non-linear is your business, from a product, service and business model viewpoint?

Netflix is one example of a perfect, non-linear business model. It grew to 33 million subscribers because the Netflix business model is based on fulfilling the users non-linear viewing experience. Today it seems obvious how Netflix business model of non-linearity became a dominant species in the entertainment sector.

On-demand viewing is a non-linear business model. The TV and cable industry will need to shift to the non-linear business model as quickly as possible because of competitors like Netflix and Amazon. When I can watch anything at anytime I want, what good is a company that is trying to feed me programming when they want—just to make their advertisers happy.

Your entrepreneur mind is non-linear. This is why you are able to innovate and generate ideas that can disrupt industries. Make your business model non-linear too so that when conditions in the environment change, you can shift your business in the direction of the momentum.


[1] In Entrepreneur Myths: The Startup Reality I discuss the myth of overnight success but it’s still fun to use the term.

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Damir Perge, author of Entrepreneur Myths: The Startup Reality, is the founder of entrepreneurdex, a startup studio using complexity science to fund, launch, accelerate and scale startups and growing businesses.

An entrepreneur and investor, with more than 25 years experience, he's worked with ventures in the technology, internet, media and publishing, entertainment, energy, and manufacturing sectors raising more than $300 million in capital for various companies and investing more than $50 million into startup and emerging ventures. He's sat on the boards of 11 companies, served as editor-in-chief of Futuredex, a private equity magazine. Follow 

Pre-order Damir Perge's upcoming books at damirperge.com >

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