I attended yet another great Metanomics forum about doing business in virtual environments (more specifically, in Second Life). How does one measure business success in Second Life? Are those measurements the same in a virtual environment compared with the usual, “real world” metrics and procedures? What about non-profit ventures?
Professor Robert Bloomfield was in the audience, disguised as a gorilla, but his disguise did not work out as he reacted immediately hearing the word “accountancy”. Our gorilla eloquently explained the balanced scoreboard approach of analyzing business performance.
In this approach organizations measure, in addition to financial outputs, those factors which influence the financial outputs. For example, process performance, market share / penetration, long term learning and skills development, and so on (Wikipedia).
This part of the discussion was rather typical for the session: in my humble opinion there is not much difference between doing business in a virtual environment and business outside that environment.
Some participants remarked that the amounts involved (on both cost and revenue side) are so limited that sophisticated performance measurement seems to be almost ridiculous. While this may be true for many people who are considering “doing business” in Second Life as being just a hobby, others are involved in more ambitious ventures.
Business issues which are typical for the internet economy also apply here in this Second Life context. There was quite some discussion about the reselling of virtual goods, and how it is not self-evident to monitor those flows.
A related topic is the integration of auto-update mechanisms in virtual (or digital) goods, in order to assure that broken stuff gets fixed or that better versions find their way to the customers, but also in order to keep track of the goods and customers.
Quite some participants stressed the importance of the face-time, being there for your customers and community in order to get feedback, to help people out and to see the opportunities. As you see, things which are also very applicable outside a virtual worlds context.
Joel Foner once again did a great job leading this gathering.
Metanomics Community Forum is held every Thursday at 12PM PST/SLT (9 pm CET).
Here are some important links suggested by the Metanomics team, providing background for this session (I will update this later with more links, as soon as I can get hold of the chat logs):
Bill Gurley on the “Free” Business Model (Very fresh: July 15, 2009!)
http://abovethecrowd.com/2009/07/15/bill-gurley-on-the-free-business-model/
Bill offers interesting commentary on the dynamics of “free” as part of a business model, both as a disruptive force and a strategy. This blog post also has many pointers to on-going discussions on the topic around the web.
Kiva Micro-Lending
http://www.kiva.org/
Key Success Factors of Your Small Business (by Steve Ma. Reyna)
http://www.powerhomebiz.com/vol95/key.htm
Small Business Success Factors (blog post by Jim Blasingame)
http://www.smallbusinessadvocate.com/small-business-articles/small-business-success-factors-152
Nonprofit Commons – NPSL: Nonprofits in Second Life
http://nonprofitcommons.org/
Managing Operating Budgets and Cash Flow for Non-Profits
http://managementhelp.org/finance/np_fnce/np_fnce.htm#anchor1762966
Nonprofits: Ensuring that bigger is better (discussion of use of the federation organizational structure for non-profits from McKinsey&Company Quarterly)
http://www.mckinseyquarterly.com/Nonprofit/Nonprofits_Ensuring_that_bigger_is_better_1419
Time to Stop Laughing: Selling Virtual Goods, Zynga Profits on Revenues Close to $50 Million
http://www.businessinsider.com/2009/1/time-to-stop-laughing-selling-virutal-goods-zynga-profits-on-50-million-revenues, and a short post with some videos at CrunchBase: http://www.crunchbase.com/company/zynga
Common Business Analysis Ratios and Formulas
http://www.businesstools.org/analysis/analysis.html
How To Do A Cash Flow Analysis
http://bizfinance.about.com/od/cashflowanalysis/ht/howcashflow.htm
UDT Europe 2009 Video Brief (6:14)
http://www.youtube.com/watch?v=v2woYgbffXo
(This one may seem off-topic, but is a great video, and raises a related question: “How would we measure the success of this venture?”) Virtual Naval Undersea Warfare Center – a great review of the application of virtual worlds for remote meetings for project collaboration, rapid prototyping and design, training and education, and immersive learning. Here is that video:
There is yet another link which I would like to add: In-World Business Models and Second Life (Dusan Writer’s Metaverse)
Roland Legrand