Almost every large and small company tries to make money with the World Cup in South Africa. A good business model is a starting point for each action.For South Africa itself the World Cup offers opportunities for e.g. investors. A major quality boost to the infrastructure is given. The World Cup of 2006 from the German economy to almost 3 billion. In addition, over 38,000 new jobs were created . It is estimated that due to the WC 1 billion U.S. dollars of capital will come in South Africa. The money was paid to include six new stadiums and the renovation of the airport so the capacity to process air traffic has increased significantly. Besides that, the construction of the Gautrain (a South African high-speed line), new roads and hotels costs a lot of money. Is there any profit for the local people? Only official FIFA sponsors may advertise terms like 2010 and World Cup and around the stadiums is a sales ban for local entrepreneurs. In addition, there are indications that the actual revenues will not be as good as expected.

For FIFA World Cup means South Africa is a guaranteed commercial success. Countries are lining up to organize a European Championship or World Cup and FIFA to take on both sticks profits from ticket sales, sponsorship deals and TV rights. FIFA Secretary General Jerome Valcke said earlier of an income increase of 50 percent over the World Cup in 2006 and expected – despite disappointing ticket sales – a profit of approximately $ 1,000,000,000. Another indicator of ‘football as big business, the report “The World Cup & Economics 2010″, Goldman Sachs, where soccer countries around the world discussed and showing clearly that the Western world no longer has a monopoly on football revenue. Football is a global profit machine, so it seems. With Business Models Inc, a think tank where new innovations in business models are encouraged, we drew an initial design of the business model of FIFA. That would look like this (see above):

5 reasons why FIFA’s business model works best:

1. Virtually all revenue going to the World Cup FIFA with some kick back to the hosting country

2. Sponsors pay big bucks for the brand and the World Cup / European Championship to be associated

3. Raw materials (the players at the World Cup) are relatively cheap

4. Countries are eager for the tournament to take on and invest

5. FIFA in turn invests little money in the hosting country

In the Netherlands, the orange-mania this year is crazy. The Dutch Energy Company offers one year free flow if the Dutch will be world champions. Especially the big supermarkets and food brands bet on World Cup action. It has recently been a real struggle: Who has the best orange premium can be sure of a large increase in sales. Even supermarket chain Dirk van den Broek, traditionally not supporting any promotions is also joining the game. Albert Heijn joined relatively late with their ‘beesies ” special World Cup figures of which 31 million copies have been ordered (as against 15 million’ wuppies’ in 2006).

Dutch (top) football clubs will get financial support through FIFA. FIFA will pay each player who travels to the World Cup 1600 Euro per day, starting at fifteen days before the tournament. For Ajax – listed with a total of nine players – this will add up to at around 400,000 euros. Conclusion: World Cup is big business and many companies would be delighted to be part of that.

An interview with Patrick van der Pijl by John van Schagen, Management Team Magazine, The Netherlands.

As a company you would like to make money. However, the revenue model that works today is obsolete tomorrow. Important to keep up to speed.

An economic crisis, the increasing speedy development of Internet and a more and more critical customer. It is not easy to run a company in 2010. Products and services that were cash cows in the past are hardly appreciated in today.

Different rules of the game

Internet definitely changed the rules of the game of how to make money in the business world, according to Patrick van der Pijl. He is founder and CEO of Business Models Inc, a boutique that stimulates business model innovation. “Business developments are changing at a much higher rate than the past. My grandfather had a milk shop in the seventies and earned a living for many years in the same way. But then the supermarket was introduced in The Netherlands and grandfather had to close his doors. Now Internet is increasing the speed and is making business models obsolete. The shelf life of business models is decreasing. Information is also traveling at an enormous speed. In minutes your company reputation can be ruined globally. ”

Information is outdated

Many companies ave difficulties in keeping up the speed of change. Consequences? Less clients, decreasing revenue and the worst case scenario – closing down the company. Research from ao McKinsey shows the life expectancy of companies is decreasing. According to Van der Pijl 80 percent of the companues has an issue with their revenue model. “Know your customer. Know your customer needs. That is one of the most important ingredients of your future business model. 

“I see that many companies stick to their management information system but the information is mostly outdated. You need not to know the past orders of your clients but you need to know his current needs. Then you can do business.”

We spent the first two days with Kaospilots Team 14 talking about and practicing the business model thinking. What are the business models of today? How can you come up with the business models yourself? How do models on social entrepreneurship look like? (thanks to Alex!). And how does the model of Kaospilots look like? This was an interesting question as the coming week we are working on an IT Academy model for Estonia. We were amazed by the positive energy and enthusiasm of Team 14; 2 days was simply too short to model all their ideas. Many business ideas were around social entrepreneurship, doing good for the community and saving the earth from more trash and stuff. Wonderful.

We spent Friday with Espen Sivertsen and the teams 15 and 15+. They work on an exciting project “better city, better life” for Expo 2010 Shanghai. Besides modeling the new ideas they were especially interested in the business model for the book. Part of their Shanghai assignment is to create the book with 100 concepts designed for a better city-better life, which will be presented in Shanghai.

Cool heads and warm hearts is what the Kaospilots stand for. And it is true. Entrepreneurship is an essential part of the Kaospilots program, but equally important is designing the life around one’s passion. We were inspired to work with these great people on some of our assignments.

Above is an example of graphic recording by one of the Kaospilots. Recognize the style? Wonderful to record your meetings like that.

Thanks, Kaospilots, for a wonderful week (incl. Peter Froberg). You rock!

What does Iceland have to do with business modeling one might ask? I’ll explain.

In 1918 Iceland became independent from Denmark. Iceland was recognized as fully-sovereign state. Now Iceland needed to become a sustainable state on its own. The problem was how to get the economy going in a small country (population is 300.000).

An opportunity came from the US. They requested Iceland to build large military bases in order to create a hub for Asia in times of war. In October 1946, the Icelandic and United States’ governments agreed to terminate U.S. responsibility for the defense of Iceland, but the United States retained certain rights at Keflavík, such as the right to re-establish a military presence there, should war threaten.The immediate post-war period was followed by substantial economic growth, driven by industrialisation of the fishing industry, foreign income through the military bases and Marshall aid. (picture below of the spectators in Tallinn).

The Americans left Iceland far after the cold war in 2006 whereas 2000 people lost their jobs. Now in the former military base there is a university campus. But how could Iceland find itself a new business model? The government offered the low energy prices and started negotiations with big corporations. Interest came from high energy consumers. Iceland became the largest aluminum producer in Western Europe, after allowing US based aluminum manufacturer Alcoa to built their plants in Iceland. To power the plant, the government started the largest mega project in the history of Iceland by building the largest dam in Europe. Alcoa could use now cheap electricity for an aluminum smelter in the rugged east fjords of Iceland. This model was bringing a lot of new jobs to Iceland. Alcoa became the new provider of prosperity but also the threat to the environment.

The financial crisis…

The financial crisis had hit Iceland hard. All three banks went bankrupt. Iceland took huge loans to cover the deficits from IMF, Nordic countries and Poland. It relied on few industries incl. aluminum sales to pull it out of the worst recession. The price of aluminum dropped and Iceland needs to look for new options. Options which don’t pollute the country and destroy the unique nature. Many options. Because it can’t rely on only one. Iceland should know now.

Besides our work on visualization of business models, as you can see here the BM of Sendsteps, BMInc. is developing now a tool in cooperation with Cantouch where you can build your visualized business model yourself. The tool includes more than 200 symbols/icons. And not only through a web-tool, but also through a multi-touch Cantouch table. That’s awesome. You can stand around this table with your team and work on your model together. It just feels like working together on a large Iphone. We will use this table during our training courses and strategy/ business model sessions. More to information about our release at the end of this month.

We met wonderful people from all over the world. We worked for new relations, organized workshops, did speeches for clients and events and really enjoyed it a lot! Time for a small party! We will organize it at Cafe Willemspark, Willemsparkweg in Amsterdam, The Netherlands. Our host, barman and DJ is our Italian friend Luigi. Let us know if you drop by. RSVP. Would be cool.