Business Model Silvia Rita Sedita [email protected].

Business Model

Silvia Rita [email protected]

Definition

• A business model describes the rationale of how an organization creates, delivers, and captures value– A business model is a conceptual tool containing a set

of objects, concepts and their relationships with the objective to express the business logic of a specific firm.• Therefore we must consider which concepts and

relationships allow a simplified description and representation of what value is provided to customers, how this is done and with which financial consequences.

The origin of the concept

Source: Ostenwalder A., Pigneur Y., Tucci C.L. (2005) Clarifying Business Models: Origins, Present, and Future of the Concept. Communications of AIS, 15 (1): 1-40

Search criteria: titles, abstracts, keywords, full texts of all articles in the Business Source Premier database of scholarly business journals for the word string "business model". The search included several variations of the original term like "e-business model", "new business model" or "Internet business model".

the popularity of the term "business model“ is a relatively young phenomenon

Business model and technology

Source: Ostenwalder A., Pigneur Y., Tucci C.L. (2005) Clarifying Business Models: Origins, Present, and Future of the Concept. Communications of AIS, 15 (1): 1-40

the number of times the term "business model" appeared in a business journal (peer-reviewedand non-peer reviewed) follows a pattern that resembles the shape of the NASDAQ market index.

“Part of the relationship between technology and business models stems from the business model concept’s roots in transaction cost economics (TCE). The sharp rise in cheap information technology, bandwidth, and communication possibilities made it much easier for companies to work in so-called value webs because coordination and transaction costs fell substantially [Tapscott, Ticoll et al. 2000; Amit and Zott, 2001)”

Figure 1. Occurrences of the Term "Business Model" Compared to NASDAQ Fluctuations

The Business Triangle

Source: Ostenwalder A., Pigneur Y., Tucci C.L. (2005) Clarifying Business Models: Origins, Present, and Future of the Concept. Communications of AIS, 15 (1): 1-40

“we understand the business model as a building plan that allows designing and realizing the business structure and systems that constitute the operational and physical form the company will take. We call this relation between strategy, organization, and systems the business triangle that is constantly subject to external pressures, like competitive forces, social change, technological change, customer opinion and legal environment”

The business model canvas

http://www.youtube.com/watch?v=QoAOzMTLP5s&feature=player_detailpage

A shared visual language to sketch out existing or new business models

The 9 building blocks - 0

The 9 building blocks - 1

• Mass market• Niche market• Segmented• Diversified• Multi-sided platforms• …

Mass market

Segmented…enough?

Segmented - customized

Niche market

Diversified

B2C B2B

Multi-sided platforms -1/2

Multi-sided platforms - 2/2

The 9 building blocks - 2

• Newness• Performance• Customization• Design• Brand/Status• Price• Accessibility• …

The 9 building blocks - 3

• Own Channels• Direct

• in house sales force• web sales

• Indirect• own stores

• Partner Channels• Indirect

• partner stores• Wholesalers• Web sites

The 9 building blocks - 4

• Personal assistance• Dedicated personal assistance• Self-service• Automated services• Communities• Co-creation

The 9 building blocks - 5

• Asset sale• Usage fee• Subscription fee• Lending/renting/leasing• Licensing• Brokerage fees• Advertising

The 9 building blocks - 6

• Key resources– Physical– Intellectual– Human– Financial

The 9 building blocks - 7

• Production• Problem solving• Platform/network

The 9 building blocks - 8

• Why?• Economy of scale• Risk reduction• Access to critical resources

The 9 building blocks - 9

• Cost structure– Cost-driven– Value-driven

• Characteristics– Fixed costs– Variable costs– Economies of scale– Economies of scope

The 9 building blocks

From a nice picture to a useful tool

Here is the canvas!

How to work with this?

Start playing with post-it…

…and populate the canvas

…with a dynamic approach…

…exploring a variety of solutions…

And now DIY…download your canvas!

http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf

Business Model Theatre

http://www.youtube.com/watch?feature=player_detailpage&v=LLKqthJOdN8

How can companies embed values in their business

models?