• 07 Jul

    Symbiotic Versus Parasitic Business Models

    Dictionary.com defines "symbiotic" as "any interdependent or mutually beneficial relationship between two persons, groups, etc."

    It defines "parasitic" as the behaviour of a parasite, which it goes on to define as: "a person who receives support, advantage, or the like, from another or others without giving any useful or proper return, as one who lives on the hospitality of others."

    These are useful terms in describing different business models - a business model, in this case, being a description of the nature of the interaction between organisations regarding particular transactions.

    On one had you have "parasitic" business arrangements where there isn't equaility between what a business charges and the results that the customer enjoys. An example of a parasitic business model might be a sales or marketing organisation that charges a fee for delivering a marketing or sales service regardless of the outcome for their customer i.e. if the customer receives no new business they still have to pay the fee. It does not necessarily mean that the customer doesn't benefit from the service but there is no natural alignment between the goals and objectives of the customer and the goals and objectives of the provider.

    On the other hand, a symtiotic business model is one where all businesses concerned with a particular transaction mutually profit from a positive outcome.

    Our invoice finance brokerage is a good example of this. The service is free to the customer so they lose nothing by using it to find a better invoice finance deal, there are no up front fees or charges that would put the customer at a disadvantage if we were unable to find them an improved deal.

    We then receive a commission from the invoice finance company, but only in respect of business that they successfully acquire, and our income is always proportionate to their income. In this way our income is linked to their success so we have mutual interests in successfully helping the customer.

    This creates a mutually beneficial arrangement where it is in all parties interests to seek a successful outcome - for the customer, the invoice finance company and ourselves as the intermediary.

    The benefits of a symbiotic business model are:


    • Mutual alignment of objectives between organisations

    • Improved levels of co-operation & trust between organisations

    • Improved harmony between organisations


    Parasitic business models can result in:

    • Distrust between parties that don't share common objectives

    • One party profiting whilst another loses out leading to resentment

    By Glenn Blackman

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igf
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kriya
giant finance
acg
bibby