 I recently had the opportunity to talk to a group of entrepreneurs about the role of business models in value creation. I started with Amit and Zott’s (2010) academic definition of the business model: a system of interdependent activities connecting customers, partners, and suppliers to create and appropriate value. The last two words there are quite important; they mean we make money. I went on to the business model canvas tool popularized by Osterwalder and Pigneur (2010). They describe the business model as the rationale for how organizations create, deliver, and capture value. Very similar!
From there, my plan was to go into some example business models. I did a quick literature review to see what was new beyond the ten or so I had in mind. How many business models do you think I found? Before reading on, please take a guess. So, here’s my list: Brick & Mortar, Bricks & Clicks, Direct Sales, Rental, Subscription, Managed Service, X as a Service, Premium, Freemium, Franchise, OEM, Value Added Reseller, White Label, Bespoke, Long Tail, Bundled, Unbundled, Razor & Blades (same as Printers & Ink), Advertiser, Integrator, Honest Broker, Retail, Wholesale, Fractional Ownership, Time Share, Revenue Share, Brokerage, Commission, Self Service, Pay As You Go, Pay What You Can, Open Source, Crowd Based, and Auction. In case you weren’t counting, that’s 34 business models. And there are plenty more. Each of these models is really a pattern that can be replicated and blended across different industries. How about a bespoke, value added reseller, subscription model in the entertainment industry? We would stream custom tailored Netflix episodes based on you or your family's interests or demographics for only another $30/month. Or maybe there’s a need for white-labeled, self-service fast food. You walk into the sandwich shop, make your own favorite subs, and wrap them in paper printed with your company’s logo for the client meeting at lunchtime. The business model list is really endless. So, the next time you’re debating the features or pricing of your new product or service, remember to debate the business model too. You may just find more flexibility and value there. |