Def_Business Model
A business model describes the rationale of how an organization creates, delivers, and captures value
The starting point for any good discussion, meeting, or workshop on business model innovation should be a shared understanding of what a business model actually is. We need a business model concept that everybody understands: one that facilitates description and discussion. We need to start from the same point and talk about the same thing. The challenge is that the concept must be simple, relevant, and intuitively understandable, while not oversimplifying the complexities of how enterprises function.
In the following pages we offer a concept that allows you to describe and think through the business model of your organization, your competitors, or any other enterprise. This concept has been applied and tested around the world and is already used in organizations such as IBM, Ericsson, Deloitte, the Public Works and Government Services of Canada, and many more.
This concept can become a shared language that allows you to easily describe and manipulate business models to create new strategic alternatives. Without such a shared language it is difficult to systematically challenge assumptions about one’s business model and innovate successfully.
We believe a business model can best be described through nine basic building blocks that show the logic of how a company intends to make money. The nine blocks cover the four main areas of a business: customers, offer, infrastructure, and financial viability. The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems.
The 9 Building Blocks
An organization serves one or several Customer Segments.
It seeks to solve customer problems and satisfy customer needs with value propositions.
CH Channels
Value propositions are delivered to customers through communication, distribution, and sales Channels.
Customer relationships are established and maintained with each Customer Segment.
Revenue streams result from value propositions successfully offered to customers.
Key resources are the assets required to offer and deliver the previously described elements . . .
. . . by performing a number of Key Activities.
Some activities are outsourced and some resources are acquired outside the enterprise.
The business model elements result in the cost structure.
