Business Models – Part 1

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The Business Model Canvas gives a clear overview of how the business works in every aspect of its operation. Furthermore, the canvas serves as an inspirational template for entrepreneurs when building new ventures.

A business model is broadly defined as: the way any organisation or company delivers value and through this delivery captures value. Business models vary from company to company, and are specifically tailored to deliver a value proposition to the target audience. This definition is considered as the basics of a business model: how the company generates revenue. Although each company has its own business model, there are overall trending models such as Freemium (Skype), Bait and Hook (Gillette) and a Double Sided Business Model (Google). Osterwalder & Pigneur have created a framework, known as The Business Model Canvas that not only shows the revenue stream but also maps the underlying operations involved in generating the revenue. These underlying operations would be: key partners, key resources, cost structure – all involved in delivering the value to the customers. Every building block in The Business Model Canvas impacts the overall business performance, and cannot be disregarded or marginalised. The Business Model Canvas gives a clear overview of how the business works in every aspect of its operation. Furthermore, the canvas serves as an inspirational template for entrepreneurs when building new ventures.

 

But…

When a company has built, tested and successfully implemented a business model, and spent considerable resources doing so, it will be tempting to stick with that model. If successful, a company will pursue the same opportunity in order to become superior in that particular activity. However there is a danger. Relying on the same pattern and the same model of operation assumes that everything will remain unchanged – but consistency is not what this world offers. New competitors emerge with better business models, new disruptive technologies change the competitive landscape, customers change their needs faster than ever before, and financial crisis comes and goes.

 

 

So what…?

Think of a car. The various components that make up this object will eventually wear off, and have to be replaced at some point. Tiers will be changed depending on seasons or when their grip has been reduced to a point where safety is a concern. New technologies, like GPS, enhance the driving experience and driving efficiency.

Business models also have to be updated so they don’t become out-dated. The building blocks of The Business Model Canvas must be regarded as components that must be updated according to changing; customers, competitors, markets, policies etc. Treat your company’s business model like a car – change what needs to be changed in order to stay ahead of the competition.

 

The Three Projects

The three research projects in this cluster have all explored the business model concept in three very different fields of practise. The first project is exploring how academic institutions seek new opportunities in not only delivering value but also commercialising the artistic and scientific findings. The second project looks at innovation consultancies specialised in developing business models, however at same time arguing that consultancies should innovate their own business model in order to validate their own advice. The third project investigates the impact of the financial crisis on venture capital, and suggests a new business model and a new approach for funding entrepreneurs while delivering returns to investors.

 

Meet other experts on the topic, and check out their ideas in the following video: http://bit.ly/19kDyYC

 

Interested in finding out more about building a creative economy? Be sure to attend the MA Innovation Management Grad Show June 19-23 at Central St. Martins College of Arts & Design.