Recently I received approval at my university, University of Northern Iowa, to teach an experimental course called vBusiness Entrepreneurial Strategy using Linden Lab's Second Life virtual world. My BI friends know how busy I am so I am planning to get help from my new friends in Second Life. We all have much to learn about operating and conducting business in a virtual world. The 3 credit course starts Tuesday, May 13 and meets for 7 weeks on Tuesdays and Thursday from 2pm-3:15pm PDT. Following each lecture/discussion workshop, students will take a tour, make a site visit, conduct an interview and/or meet with their mentor. The course includes writing a vBusiness Plan that must be reviewed and approved, executing it for 6 weeks and writing an analysis of the vBusiness successes, challenges and results. Final projects are due August 1, 2008.
My students will be virtual business owners. They will experience operating a business in Second Life and they may have a real life link. For example, a student might sell Iowa post cards or memorabilia in Second Life and also offer to mail a post card from Iowa in real life with the sender's message for a fee and collect the payment in Second Life in the local exchange called Lindens.
What does this project have to do with decision support? Students will need to use the Second Life reporting tools and find software to track visitors. Also, they will use and perhaps create decision support tools. In general, I think innovative decision support will help vBusinesses succeed.
So what are the keys to entrepreneuring in a virtual world? I am still learning so this is a preliminary list:
1. Relationships are the key to success in a virtual business, so find a global network of partners, build customer relationships using a Second Life group. Give people who help a stake in your success. Always remember a virtual world is a complex social network. Participate and build a friends list!
2. Target a customer/product niche that can be identified. Know who will buy from you, why and when? A virtual world allows extensive segmentation, just make sure the niche is large enough to generate sufficient revenue.
3. Keep focused on 2-3 short range goals. Virtual worlds are changing rapidly as the technology improves. Get in quick, sell what you can, move on or grow. Remember franchising and formula facilities. Help newcomers.
4. Prepare a written business plan like you would for any start-up business. vBusiness is real business. Your goal is to make money. Make a plan!
5. A vBusiness should operate 24/7/365. Automate some operations, but in many cases you need to staff globally to keep the traffic coming. Find and hire people who have social networks and who are in different time zones.
6. Reward the people who make your vBusiness a success. Consider franchising or bonuses. Virtual worlds are expanding and good friends who help make a business a success are the future of any vBusiness. Strive to create stable relationships in the fast changing virtual world.
7. Start-up is reasonably inexpensive in a virtual world like Second Life, but cash management is important. The medium of exchange, Lindens, fluctuates and taking money "out of the game" may be difficult. Project cash needs and have a plan to get cash in and out. Good accounting and forecasting is still needed in a vBusiness!
8. Find a competitive edge or advantage that you can exploit. The vBusiness advantage may be a "hard to imitate" inworld product or service, quick response with delivery of real world solutions, entertainment tie-ins with copyrighted materials or ... ? let your imagination guide you to new sources of sustainable advantage. Everything in a virtual world is not free and easy to copy. Learn about permissions and ownership in virtual worlds.
9. Take calculated risks and be prepared to bail out if serious loses occur. Business in a virtual world remains fragile and problematic for some goods and services. Just because you can show a product to people in a virtual world doesn't mean there will be a real world or in world demand. Also, prices are generally low for products in virtual worlds. Of course once the product is created, production costs are also very low. The time spent creating a virtual product is a "sunk cost" so price accordingly. Premium pricing only works if the product is hard to imitate.
10. Change, adaptability and uncertainty are the reality of vBusiness. Entrepreneurs hoping to cash in on a virtual world marketplace need to learn about the rapidly changing market and become part of the relevant "community" targeted for the product or service. A day is 4 hours long in Second Life and sometimes it seems that given the global audience, one day in Real Life is six days of change in Second Life.
Contact me if you want more information on vBusiness Entrepreneuring.
Posted March 30, 2008 1:50 PM
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