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Harvard Business Review On Business Models Article
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8 ball model/pyramid model
from:A business model is a kind of formal or informal framework that exists in an organization to create social, economic and other forms of value and intends to represent some strategic aspect of business like trading practices, operational processes, infrastructure establishment or other policies and practices.
Pyramid Business model is one such example of business model which comes in the category of non sustainable business model. It involves exchange of money amongst o people by enrolling them into the scheme. In such a process no product or service is delivered. This model is illegal in many countries.
8- Ball model is an off shoot of the pyramid business model. This is bit more sophisticated and intricate than the conventional pyramidal business model.
This model begins by initial assumption that enrolling a large number of people in the scheme can be quite a challenge. To overcome this challenge a special strategy is used that requires each person to recruit two others, who in their turn must recruit to others so on and so forth in order to earn money.
“Airplane Game” is one such popular instance of this business model. This has four tiers. Starting from the top, the first tier is that of a captain followed by the co-pilot, crew and the passenger tier. The captain was paid only when eight passengers arrive at the bottom of the pyramid.
Another instance of the pyramid was “the original dinner party”. The analogy here was made with the four courses of the meal. The four tiers were “the dessert", "main course", "side salad", and "appetizer" with “dessert" at the top of the tree. There have been other variants to this like “Treasure Traders”, in which terms from gemology were used to represent the four tiers.
The business model tried to down play its pyramid structure by calling itself a “gifting circle”, where money is gifted to other members. Scams like “Women empowering women” have euphemistically been tried to advance this model by luring women, the joiners of this scheme were told that "gifting" is a way to skirt around tax laws.
One unit of 8 pin model involves fifteen people (1+2+4+8=15). Each person at the bottom tier or the passenger contributes $1000 to join the pyramid. As soon as there are eight passengers, the captain leaves the pyramid by taking $8000. Now the pyramid splits into two with each co-pilot now becoming a captain of each individual pyramid.
During a wave of pyramid activity , many people join the scheme often after hearing the windfall of $8000 over a person ,but they often overlook the fact that if the scheme collapses early ,as large as eight percent of the people can stand to lose cent percent of their money.
Many such schemes have hit society from time to time and conned innocent people of their hard earned money. The government should henceforth educate the people about the mere shallowness and futility of such schemes so that people remain clear of such fraudulent schemes.
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