May 26, 2022

4 proven business strategies from NYU Stern Prof. Scott Galloway

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Growing a business can be rough. Even after you’ve drafted a masterful business plan and secured enough capital to see it to fruition, you’re still facing an uphill battle.

In fact, 65 percent of businesses fail within their first 10 years.

So how do you beat the odds? You can start by leveraging these four winning concepts NYU Stern Professor Scott Galloway lays out in his upcoming Business Strategy Sprint.

We’ll break them down.

1. Network effects

What it means

When you have more people using your product, it improves over time.

An example

Take a look at any social network or crowd-sourced online app. Instagram wouldn’t be fun if there was no one there to like your pics, Yelp wouldn’t be helpful if nobody left reviews, and Tinder would be depressing if there was literally no one to swipe right.

When more people participate, these companies become more valuable.

Why it matters

Most products depreciate over time. The new car you bought in 2012 wouldn’t fetch as much on the resale market today as it did in 2013.

But if you have a product that taps into the network effect, it becomes more valuable with each passing year. As a result, your business practically ages in reverse – like Benjamin Button.

What you can do

Find creative ways that you can leverage your customer community.

If you opened up a quaint seaside bed and breakfast, your furnishings probably aren’t going to become more stylish over time.

But what if you were to diligently gather reviews or set up an online forum for visitors to share local tips?

When more people leave reviews, that builds trust. When you give your community the tools to connect and play off each other, they gain value from those interactions as well as from your product.

2. Rundles

What it means

A “rundle” is what you get when you match up an opportunity for recurring revenue with a bundle of services that keep customers coming back.

An example

Amazon Prime set the standard for rundles. When you sign up for membership, you get free, faster shipping – plus a lot of other perks that justify keeping your membership for another month, like access to Amazon video or discounts at Whole Foods.  

(Psst - Section4 is also an example of a rundle. You might come for unlimited sprints, but you also get workshops, events, coaching and community).

Why it matters

When you sell a customer a product, it’s one and done. You’ll have to chase after them again to make another sale.

But if you get them to subscribe, you’ll suddenly have revenue on a reliable basis. Factor in the added benefits you bundle in, and you can add to the value proposition and prevent your customers from looking elsewhere.

What you can do

If you’re starting a new business, find a way to shift your product to a recurring revenue model – then focus on building partnerships to expand the services you can offer.

Let’s say you’re starting a sock company. Set up a subscription service that sends customers a few hand-selected items every month, and partner with other retailers to throw in offers like laces, foot cream, or discounts at nearby shoe stores.

3. Vertical integration

What it means

Vertical integration is an intimidating buzzword, but it boils down to finding unique ways to oversee as much of the customer experience as you can, whether that’s through the supply chain, marketing, or distribution.

An example

Are you reading this on an iPhone? If so, you’re using an Apple product running Apple software built in an Apple facility that was sold to you directly by Apple – maybe even at an Apple store.

That’s vertical integration at its finest.  

Why it matters

Going vertical allows you to set prices and control how consumers see your brand.

What you can do

Start small.

If you’re starting a brewery, you probably don’t have the resources to also manufacture your own bottles.

You can, however, work incrementally to control more of the experience, like selling limited-run beers exclusively through your own website or hosting curated pop-up events.

4. Visionary storytelling

What it means

So, who are you?

You should have an answer that’s more compelling than when your company was founded and the products you sell. Visionary storytelling lets you articulate a bold vision for where your company’s going and what it plans to achieve.

An example

Facebook started with a clear, coherent vision they could take action against: “Connecting the world.”

This provided a bold promise for both its users and those who could see the business potential in bringing the entire planet together on a single must-have platform.

And while Meta has experienced its share of headwinds, their current push to build the metaverse continues to link back to their initial story.

You may not agree with his mission, but you have to admit he's consistent.

Why it matters

Visionary storytelling is attractive to customers, but it also helps keep your stakeholders on the right path and boosts your appeal with potential investors.

What you can do

Tell a story that’s aspirational but also believable.

If you’re developing an app that’ll help people quit smoking, it’s fine to lead with the vision of a healthier, smoke-free future.

However, once you end up promising to single-handedly eliminate cancer, roll back climate change, and basically cure everything that ails the world, you’ll be presenting a story that even your most hardcore supporters will scoff at.

Want to learn more about the strategies powering today's top companies? You're in luck. Scott's Business Strategy Sprint is enrolling now.

Greg Shove
Section Staff