How to Build Risk into Your Business Model

by Karan Girotra and Serguei Netessine

IN EARLY 2008 four entrepreneurs in Paris started MyFab, an internet-based furniture retailer that is doing more to change the industry than any other company since IKEA. Instead of building large stocks of furniture, as its competitors do, MyFab provides a catalog of potential designs. Customers vote on them, and the most popular ones are put into production and shipped to buyers directly from the manufacturing sites—with no retail outlets, inventories, complicated distribution, or logistics networks.

The engagement and social aspects of the voting attracted customers in droves, but they most loved the prices. By simplifying its supply chain and producing only ...

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