tag:blogger.com,1999:blog-53578845631128556032024-03-14T19:49:24.754+01:00The Business Model Database (tbmdb.com) - A blog about business modelsBusiness models collected from different industries and ways to design new business models are discussed in this blog together with news and links relating to business models and business model innovation.Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.comBlogger166125tag:blogger.com,1999:blog-5357884563112855603.post-14145410620161308012019-09-10T23:22:00.000+02:002019-09-10T23:22:18.982+02:00Nine Business Models and Most Relevant Metrics <div dir="ltr" style="text-align: left;" trbidi="on">
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In this very informative video, YC Continuity Partner Anu Hariharan exemplifies nine business models and important metrics for each of them - including mistakes to avoid.<br />
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Business Models:<br />
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<li>Enterprise - 1:07</li>
<li>SAAS - 3:29</li>
<li>Subscription - 8:03</li>
<li>Transactional - 10:55</li>
<li>Marketplace - 14:04</li>
<li>E-Commerce - 18:24</li>
<li>Advertising - 20:35</li>
<li>Hardware - 22:33</li>
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The session includes a good Q&A session, starting at 25:00.</div>
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For more information including slides, see <a href="https://www.startupschool.org/videos/66">https://www.startupschool.org/videos/66</a></div>
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Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-8386617557078677192018-12-08T22:51:00.001+01:002018-12-08T22:51:22.068+01:00Online Business Models in China<div dir="ltr" style="text-align: left;" trbidi="on">
Although China’s internet penetration is just over 50%, it is home to 772 million internet users, 753 million mobile internet users and 527 mobile payment users…<br />
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As many people where too poor to afford computers decades ago, they skipped the PC and credit card era and jumped directly to smart phones. With mobile first, giants such as Baidu, Alibaba and Tencent, but also other companies in China, have developed interesting online business models that are less focused on advertising.<br />
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In this well delivered and very interesting presentation, venture capital firm a16z General Partner, Connie Chan, provides several examples how books, podcasts, video and music, are consumed and monetized.<br />
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<b>Business Models for Digital Books</b><br />
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In the examples of digital books, Connie compares Chinese services to Amazon, showing how users are given more information before they make a purchase in China. In addition to traditional reviews, users can see how much friends have been reading, search and sort by which books that were read from front to back. Users can buy books by every 1000 characters, by every chapter, read first half for free and pay for second half or only pay for the last chapter. Users can also tip authors and instead of one-off payments, there are often elements of social, gamification and micro-transactions.<br />
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One interesting example mentioned is a book with more than 10,000 chapters that is still being written. Based on real time feedback, authors can change the story plot to keep their readers engaged and earn revenues continuously instead of in one-time transactions.<br />
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<b>Business Models for Podcasts</b><br />
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Connie compares the US and China podcast market showing the US podcast market to be worth $314M in 2017 in comparison to $3-5B in China. While revenue from US blogs are primarily based on advertising, the Chinese market uses multiple revenue models. Again, combining elements of social, gamification, microtransactions, tipping creators and paid for bundles of podcasts.<br />
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In one example, two professors, with 250K listeners and 175K listeners, are shown to generate millions of dollars each...<br />
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<b>Business Models for Video</b><br />
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For video the pattern is similar to previous areas providing users with more information before buying and more options to spend their money. Instead of relying on movie trailers, users can watch a portion of a movie for free to then pay to unlock the rest. Users can pay to upgrade resolution or sound and pay for premium content associated to the movie. While watching, users can interact with their friends watching, get coupons, buy skins to their phone/app, join VIP memberships, purchase merchandise or other related products, gain points and register for events.<br />
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<b>Business Models for Music</b><br />
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In the music category, Connie shares parts of Tencent Music business model. Instead of buying a song or record once, there is a leader board showing how many times someone has purchased a music album and how many times they have gifted it. When a user has purchased an album multiple times, different VIP features, merchandise and events become available separating the average listeners to the true fans. Also here users can buy skins for the app, purchase merchandise and other products, share material with friends, buy tickets and see streamed live content.<br />
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The platform also allows users to make money by creating their own online radio stations, where other users can give tip or gifts.<br />
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Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-18311700261389797062014-10-14T19:30:00.000+02:002014-10-14T19:30:32.038+02:00Paul Polman, CEO of Unilever, discussing the company's change of business model <div dir="ltr" style="text-align: left;" trbidi="on">
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An interesting interview with Paul Polman, CEO of Unilever, on a business model that is better to society and the environment, and still profitable. The company has set out an ambitious target to double its sales while reducing its environmental impact by 50%.<br />
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<i>"Business models that responds to the needs of society are going to be successful... We have looked at all of our products, and did an impact assessment, across the total value chain, from sustainable sourcing, to our own factories and offices, to the consumer... ...we have built it into our R&D programs, into our brand programs..."</i><br />
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<i>"The future will only tell. I think you can only judge the CEO, not by the results they are getting when they are there, but really what happens to the company after they leave."
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Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-81248884068266477062013-10-04T20:54:00.000+02:002013-10-04T20:54:45.770+02:00David Teece on business models, entrepreneurship and Silicon Valley<div dir="ltr" style="text-align: left;" trbidi="on">
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Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-64179710308321036212012-04-19T22:41:00.004+02:002012-04-19T22:54:38.684+02:00Trading items of unequal value<div style="text-align: justify;">In my recent post <a href="http://tbmdb.blogspot.se/2012/04/value-of-non-moneterized-transactions.html" style="font-size: 100%; ">The value of non-moneterized transactions</a><span style="font-size: 100%; ">, I wanted to illustrate that value can be created but also captured without money changing hands. Most often of course it is a combination; your first paying customer may also be your best reference customer, your proof of concept towards investors, your valuable partner in understanding the market and so on. The cost for your customer to agree to being a reference customer or provide you with data, may be close to zero, while the value for you may be substantial. When designing business models, it is important to understand what you have that may be valuable for others, and what others have that may be valuable to you. </span></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In his excellent book on negotiation <a href="http://www.amazon.com/gp/product/0307716899/ref=as_li_ss_tl?ie=UTF8&tag=thebusmoddat-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=0307716899">Getting More: How to Negotiate to Achieve Your Goals in the Real World</a><img src="http://www.assoc-amazon.com/e/ir?t=thebusmoddat-20&l=as2&o=1&a=0307716899" width="1" height="1" border="0" alt="" style="border-top-style: none !important; border-right-style: none !important; border-bottom-style: none !important; border-left-style: none !important; border-width: initial !important; border-color: initial !important; border-image: initial !important; margin-top: 0px !important; margin-right: 0px !important; margin-bottom: 0px !important; margin-left: 0px !important; " />, Stuart Diamond presents twelve major strategies, tools that support them, and specific applications and examples. One of the twelve strategies is the concept of trading things of unequal value, something that I also see as an important concept in designing value propositions and business models.</div><div style="text-align: justify;"><span><br /></span></div><i><div style="text-align: justify;"><i><span>"All parties value things differently, and often unequally. Once you find out what they are, you can trade them."</span></i></div></i><div style="text-align: justify;"><span><br /></span></div><span><div style="text-align: justify;"><i><span><span style="font-size: 100%;">"Find out what each party cares and doesn't care about, big and small, tangible and intangible, in the deal or outside the deal, rational and emotional. Then trade off items that one party values but the other party doesn't."</span></span></i></div></span><div style="text-align: justify;"><br /></div><span><div style="text-align: justify;"><i><span><span style="font-size: 100%;">"One of the more remarkable business success stories of expanding the pie involves Brad Oberwager, the founder and CEO of Sundia Corporation of Oakland, California, producer of high-quality fruit cups… …several years ago he approached ten of the twenty largest watermelon growers in North America. He offered them part of his planned fruit cup business if they would simply let him put "Sundia" stickers on the watermelons they sold in stores. It cost the growers nothing. For two years store owners saw the stickers. Then, one day, Brad, with the growers' support, started making calls to the stores. He offered a fruit cup with higher value added with the brand they had come to know: Overnight we represented thirty-two percent of the market." </span></span></i></div></span><div style="text-align: justify;"><span><br /></span></div><span><div style="text-align: justify;"><span style="font-size: 100%; "><b>Think broadly about value creation</b></span></div><div style="text-align: justify;"><span style="font-size: 100%; ">So when designing business models, think broadly about value creation and value capture. Think broadly about which actors exists around your company, around your customers, or even around your physical office space. And when you have decided to go for a partner, supplier, or customer think broadly about what you can provide them with besides your direct products, services, or payments, and what they could provide you with, to get the best return on your assets by trading items of unequal value. </span></div></span>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com3tag:blogger.com,1999:blog-5357884563112855603.post-88113679158134192942012-04-14T19:11:00.004+02:002012-04-14T19:23:33.214+02:00Is there a need for customer value creation models?<div style="text-align: justify;"><a href="http://tbmdb.blogspot.se/2010/09/evolution-of-business-model-concept.html" style="font-size: 100%; ">All business model frameworks</a><span style="font-size: 100%; "> have the customer and the value proposition, or offer, as key elements. The value proposition is described as the products or services offered to different customers segments, and is a function of key resources and key processes (or activities) given to the input from suppliers (or partners). In some of the frameworks, partners are also included as an element to provide external resources and activities to enable the company to provide its value propositions. One of the things I'm missing in these frameworks is the perspective of co-creation of value. Value creation from the customers' perspective is not necessarily sequential, all captured in one company's value propositions, but in many cases parallel, offered simultaneously by different actors.</span></div><div style="text-align: justify;"><span><br /></span></div><span><div style="text-align: justify;"><span style="font-size: 100%; ">The business model concept takes its starting point in how an organization creates and captures value. Since the 1960s, different frameworks have been presented to capture the building blocks of value creation. Almost all frameworks take their starting point in the organization, or the firm, and what is being provided as output from within the organizational boundaries. This made sense when competition was based on one company's dominance of some asset or mastery of production, but I don't know if it is sufficient to innovate business models today. To clearly describe or analyze Google's business model for Android, without including what other companies such as handset manufacturers or app developers provide the same customers, is impossible. (Great guest post: <a href="http://tbmdb.blogspot.se/2010/04/is-android-evil.html">Is Android Evil?</a>)</span></div></span><div style="text-align: justify;"><br /></div><span><div style="text-align: justify;"><span style="font-size: 100%; "><b>When designing business models, do not limit your thinking to the value you are creating or potentially could create</b> combining external resources and activities, but include complementary values that others could provide, in the business model equation. Perhaps there should be business model frameworks taking the starting point in customer value creation, not limited to what one business can provide? </span></div><div style="text-align: justify;"><span style="font-size: 100%; "><b><br /></b></span></div><div style="text-align: justify;"><span style="font-size: 100%; "><b>Is there a need for customer value creation models? Are there any good ones out there?</b></span></div></span>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com7tag:blogger.com,1999:blog-5357884563112855603.post-23384105892842493932012-04-14T01:12:00.008+02:002012-04-14T01:25:20.344+02:00The value of non-moneterized transactions<div style="font-weight: normal; text-align: justify; "><span style="font-size: 100%; ">Would you be willing to continuously provide services to Ferrari for free, just to be able to tell other potential clients you have Ferrari as a reference customer? Would you be willing to provide your technology and IP to one company, free of charge for exclusive use in their industry, just to get rights to the improvements they plan to make on your technology through investments in R&D? How much would the brand awareness be worth if the logotype of your new technology was seen on some customers' products - enough to get the technology for free? If access to one of your customers' customer data would help you improve your products and services towards all your customers, should you really charge for your products towards that customer? If a company provides you with substantial market data in exchange for your anonymized customer data, who is creating most value for whom? If you help develop other companies' key resources do you think they could reduce the price for you or provide you with more support? If you grow the market for other companies could you get something in return? If you provide tons of non-monetary value to your employees would they be happy with lower or even no salaries?</span></div><div style="font-weight: normal; text-align: justify; "><span><br /></span></div><span><div style="text-align: justify; "><span style="font-size: 100%; "><b>It would be a great mistake to believe that the revenue streams are the only measure of potential or existing value creation.</b> It merely records the netting after barter has taken place. </span></div><div style="font-weight: normal; text-align: justify; "><span style="font-size: 100%; "><br /></span></div><div style="text-align: justify; "><span style="font-size: 100%; "><b>When designing business models, do not limit your thinking to customer value creation and revenue streams.</b></span></div></span>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com3tag:blogger.com,1999:blog-5357884563112855603.post-27648022594519186132012-04-06T14:28:00.007+02:002012-04-06T14:51:50.978+02:00Neil Harris on Game Design & Business Models<div style="font-style: normal; text-align: justify; "><span style="font-size: 100%; ">Neil Harris, with more than 20 years in online games, explores the topic of business models, trade-offs such as time vs money and revenue vs fairness. He illustrates gamer market segmentation, and </span><a href="http://tbmdb.blogspot.se/2009/03/value-proposition-versioning.html" style="font-size: 100%; ">value proposition versioning</a><span style="font-size: 100%; ">, to maximize value from gamers. </span></div><div style="font-style: normal; text-align: justify; "><span style="font-size: 100%; "><br /></span></div><div style="text-align: left; "><i>"Never fall in love with your business model... they are fickle and will leave you broke and broken hearted" Neil Harris</i></div><div style="font-style: normal; "><br /></div><div style="font-style: normal; "><iframe width="400" height="233" src="http://www.youtube.com/embed/mIDhBQc_Y8s?rel=0" frameborder="0" allowfullscreen=""></iframe><br /><div><br /></div><div><div style="width:400px" id="__ss_12136864"> <object id="__sse12136864" width="400" height="340"> <param name="movie" value="http://static.slidesharecdn.com/swf/ssplayer2.swf?doc=neilharriscce2012-120323231120-phpapp02&rel=0&stripped_title=game-design-and-business-models-neil-harris-cce2012&userName=rafalszulczewski"> <param name="allowFullScreen" value="true"> <param name="allowScriptAccess" value="always"> <param name="wmode" value="transparent"> <embed name="__sse12136864" src="http://static.slidesharecdn.com/swf/ssplayer2.swf?doc=neilharriscce2012-120323231120-phpapp02&rel=0&stripped_title=game-design-and-business-models-neil-harris-cce2012&userName=rafalszulczewski" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" wmode="transparent" width="400" height="340"></embed> </object> <div style="padding:5px 0 12px"><br /></div></div></div><script src="http://b.scorecardresearch.com/beacon.js?c1=7&c2=7400849&c3=1&c4=&c5=&c6="></script></div><script src="http://b.scorecardresearch.com/beacon.js?c1=7&c2=7400849&c3=1&c4=&c5=&c6="></script><script src="http://b.scorecardresearch.com/beacon.js?c1=7&c2=7400849&c3=1&c4=&c5=&c6="></script><script src="http://b.scorecardresearch.com/beacon.js?c1=7&c2=7400849&c3=1&c4=&c5=&c6="></script><script src="http://b.scorecardresearch.com/beacon.js?c1=7&c2=7400849&c3=1&c4=&c5=&c6="></script><script src="http://b.scorecardresearch.com/beacon.js?c1=7&c2=7400849&c3=1&c4=&c5=&c6="></script><script src="http://b.scorecardresearch.com/beacon.js?c1=7&c2=7400849&c3=1&c4=&c5=&c6="></script><script src="http://b.scorecardresearch.com/beacon.js?c1=7&c2=7400849&c3=1&c4=&c5=&c6="></script><script src="http://b.scorecardresearch.com/beacon.js?c1=7&c2=7400849&c3=1&c4=&c5=&c6="></script>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com2tag:blogger.com,1999:blog-5357884563112855603.post-21175111914984031942011-12-07T08:31:00.005+01:002011-12-07T08:44:20.054+01:00Alex Osterwalder "From Business Plan to Business Model"<div style="text-align: justify;"><a href="http://alexosterwalder.com/">Alex Osterwalder</a> author of <a href="http://www.amazon.com/gp/product/0470876417?ie=UTF8&tag=thebusmoddat-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=0470876417">Business Model Generation</a> (<a href="http://tbmdb.blogspot.com/2009/12/business-model-generation-2009.html">My review</a>) giving a lecture about business models at<a href="http://aaltoes.fi/summer-of-startups/"> Summer of Startups 2011</a> a summer entrepreneurship program for students and researchers with an early-stage business idea from all around the Baltic Sea and the world.</div><br /><iframe width="399" height="203" src="http://www.youtube.com/embed/jMxHApgcmoU?rel=0" frameborder="0" allowfullscreen=""></iframe><br /><br /><div><a href="http://tbmdb.blogspot.com/2009/04/table-of-contents.html">See the table of contents for more videos</a></div>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-71293665463118282152011-12-03T22:54:00.018+01:002011-12-07T08:27:31.110+01:00Adding a dimension to existing business model frameworks<div style="text-align: justify;">In one of my early blog posts in February 2009, I explained what I called the <a href="http://tbmdb.blogspot.com/2009/02/value-proposition-hierarchy-explorer.html" style="text-align: justify; ">Value Proposition Explorer</a><span class="Apple-style-span" style="text-align: justify; ">. The basic idea was to provide a concept to see </span><a href="http://tbmdb.blogspot.com/2009/02/what-is-value-proposition.html" style="text-align: justify; ">value propositions</a><span class="Apple-style-span" style="text-align: justify; "> on different hierarchical levels.</span></div><div style="text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPT0SEjNTFDpSmpjyk4b9KW1g1ASzlpeCJKFIacqmgELBLeeK5D-SGQw6EHjw13bKroABCUPBhCW6ua-g8gW9oqa_6EEcJEA6ZyExniJHfV_jdPmDfqeI7_HiRLlkwB1JU9wNFJjhRQ5c/s400/value+proposition+explorer.gif" style="text-align: left; " onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPT0SEjNTFDpSmpjyk4b9KW1g1ASzlpeCJKFIacqmgELBLeeK5D-SGQw6EHjw13bKroABCUPBhCW6ua-g8gW9oqa_6EEcJEA6ZyExniJHfV_jdPmDfqeI7_HiRLlkwB1JU9wNFJjhRQ5c/s400/value+proposition+explorer.gif" alt="" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 10px; margin-left: auto; text-align: center; cursor: pointer; width: 400px; height: 243px; " border="0" /></a></div><div><div style="text-align: justify;"><span class="Apple-style-span" style="font-style: italic; ">To give an example, say that you have developed software that can efficiently manage energy in electrical vehicles. Should you then try to sell the software? Combine it with hardware to provide energy management solutions? Or provide components of the software, such as the core algorithms for energy management, in a more narrow value proposition? </span></div><div style="text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2yw6OghkLuIi5q7Mbp7-A493gOkqvBkl3MmjR2nd4-tKCG_6UuBi7cuig84tNBrfbkipd8ZHuLp5Kl-qzxvcBn0T78R1GbtAnuVVJAmLU0EZ_YVWyJE1sixMPRZx-ZN5JXocFfAgE83E/s1600/Business+model+tree+1.png" style="text-align: left; " onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"><br /></a></div><div style="text-align: justify;"><b>Applying the same concept broader<br /></b></div><div style="text-align: justify;">To choose which hierarchical level to position your value propositions is of course a function of many variables, in the end where you can create and capture the most value, and maintain a competitive advantage for the future. This is not just a question of value propositions, but a question involving all components of the business model.</div><div style="text-align: justify;"><br /></div></div><div style="text-align: justify;"><div>There are <a href="http://tbmdb.blogspot.com/2010/09/evolution-of-business-model-concept.html">many business model frameworks</a>, with Alex Osterwalder’s Business Model Canvas being the most popular one. We can ask ourselves questions in relation to each of his business model framework elements and each hierarchical level.<br /></div><br /><span style="font-weight: bold;">Customer Segments </span>–Who are our different potential customers in different levels? How will they use what we provide? What are their different hierarchical levels and on what level can we provide value for them? Where do they have their own resources and capabilities? What are their plans for the future, if they are moving up in hierarchy where are they going?<br /><br /><span style="font-style: italic;">Would someone be interested in the algorithms alone? Are the companies providing energy management solutions developing their own software? What companies could be interested in a larger energy management solution? What if we combined our energy management solution with an energy storage solution – what customer segments could we then target? </span><br /><br /><span style="font-weight: bold;">Value Propositions </span>– What should we provide based on what we have? Based on what we can get access to? Based on what we can provide together with partners? Should we have value propositions on more than one level, providing products, components, technologies, and intellectual property? How should we package our value propositions to hinder non-intended use of our technology?<br /><br /><span style="font-style: italic;">Should we provide energy management solutions, software or algorithms? Can we combine our energy management solution with energy storage solutions? Should we provide exclusivity on some levels to one customer/partner? Should we include rights for the customer to further develop our technology within certain levels?</span><br /><span style="font-style: italic;"> </span><br /><span style="font-weight: bold;">Channels </span>– What will be the objects for transactions and delivery? What channels could we use depending on customer segment and value proposition? What channels exists for each level and what channels could be created?<br /><br /><span style="font-style: italic;">What would be the objects for transactions the software code? Physical components? Integrated energy management systems? Energy management solutions would have physical components, software and algorithms could be delivered in physical or digital format. </span><br /><br /><span style="font-weight: bold;">Customer Relationships </span>– What different customer relationships are possible given the customer segment and channel? What different customer relationships should we have in relation to the different value propositions we provide?<br /><br /><span style="font-style: italic;">Should we keep close collaborations with customers on some levels such as optimizing some sub parts of the core algorithms? Other components in our software? Should we provide some software components online for customer download? Do we need to establish trust through personal relationships to enable access to the customer’s system to optimize the energy storage algorithms? </span><br /><br /><span style="font-weight: bold;">Revenue Streams </span>– Can we generate revenues from more than one level? Can we provide components or generate license revenues from others including competitors? Can we generate indirect revenues through partnerships on some levels?<br /><br /><span style="font-style: italic;">What revenue models are possible for algorithms? Software? Energy management solutions? What kind of revenue streams would it generate? Would it be one-time transactions of code or recurring revenues resulting from continuous improvements and support? How much more can we charge for a license where the customer gets the rights to do further development of the code? Should we provide something for free on some levels to build the markets on higher levels?</span><br /><br /><span style="font-weight: bold;">Key Resources </span>–In what levels will it be an advantage to have internal resources? Where do we have our current assets and capabilities? Where do we need to have internal resources? Where do we have intellectual property rights?<br /><br /><span style="font-style: italic;">How will the area of energy management solutions for electrical vehicles develop? What resources do we have to keep up with the big players? Should we acquire or create a joint-venture with a hardware company to get access to complementary resources? Where should we develop brand assets? Should we brand the algorithms? Technology? Software? On what level should we develop intellectual property rights? For the system? Software? Specific algorithm?</span><br /><br /><span style="font-weight: bold;">Key Activities </span>– In what levels should we have strong positions? What activities should we have within the different levels? Where should we have product development? Where should we conduct more basic research? In-licensing? Out-licensing? Collaborations? What activities are needed?<br /><br /><span style="font-style: italic;">Should we continue to develop the core algorithms, a larger software or an energy management solution including hardware? Should we create specifications for hardware manufacturers to further improve energy management? Or should we start to develop hardware? Should we try to gather data from the use of the energy management solution? From our software? Should we provide training for customers that wants closer collaboration and further develop our algorithms, software or management solution?</span><br /><br /><span style="font-weight: bold;">Key Partnerships </span>– On which levels should we have collaborations and partnerships? Where do we need to strengthen our positions and where do we need to combine our assets and capabilities with the ones of a partner to provide something on a higher level?<br /><br /><span><i>On what levels should we use external organizations to provide assets and capabilities? What levels in their hierarchy are we strengthening? What assets and capabilities should we provide collaboration partners with and at what level? On what level should we share development plans? Technical details? Specifications? Should partnerships be exclusive in some levels but not in others? </i></span><br /><br /><span style="font-weight: bold;">Cost Structure </span>– Which levels are more expensive to have in-house? What are the cost structure for the resources and activities needed? What will be needed in terms of investments to keep up with competition in each level? Can we share any of the costs with a supplier, partner or customer?<br /><br /><span style="font-style: italic;">Is it possible to become a player also in hardware providing full energy management solutions in-house? Will we be able to fund software scale-up to meet the requirements of being a software provider? What will be the costs of closer collaborations on an algorithm level?</span><br /><br /><span style="font-weight: bold;">To be continued</span>...<br />The Value Proposition Explorer is a great tool in developing value propositions on different hierarchical levels. The main idea with this post was to illustrate how the concept of hierarchical levels can be used for all parts of a business model. I plan to explore this further in posts to come.<br /></div>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-22386905010353671582011-05-15T12:23:00.009+02:002011-05-15T14:35:53.369+02:00The Business Model of Intellectual Ventures<div style="text-align: justify;">Perhaps one of the more controversial participants of <a href="http://www.cipforum.org/">CIP Forum 2011</a> is <a href="http://www.intellectualventures.com/Home.aspx">Intellectual Ventures</a>, founded in 2000 by Nathan Myhrvold and Edward Jung of Microsoft, Peter Detkin of Intel and Grogory Gorder of Perkins Coie. The company has been referred to as a patent troll (see separate post on <a href="http://tbmdb.blogspot.com/2011/05/business-models-of-non-practicing.html">Non-Practicing Entities</a>) and Nathan Myhrvold as <a href="http://monehttp//www.blogger.com/img/blank.gify.cnn.com/magazines/fortune/fortune_archive/2006/07/10/8380798/index.htm">the most feared man in Silicon Valley</a>. The company and its founders claim to invest in “pure invention”.<br /><br />The firm is the owner of one of the world’s largest and fastest-growing patent portfolios, and they have reportedly raised over $5 billion from companies including Microsoft, Intel, Sony, Nokia, Apple, Google, SAP, Nvidia and eBay plus investment firms. It generates revenues from licensing and technology and rights, and according to Joff Wild of the <a href="http://www.iam-magazine.com/">IAM Magazine</a>, in the spring of 2010, Intellectual Ventures claimed its purchasing activity had sent $315 million to individual inventors and $848 million to small and medium size enterprises “to commercialize their inventions”. According to <a href="http://www.nytimes.com/2010/02/18/technology/18patent.html">an article </a>in The New York Times in 2010 the company says it has returned $1 billion to investors and collected more than $1 billion in license fees.<br /><br />Since 2009 Intellectual Ventures also operates a prototyping and research laboratory where it employs scientists, engineers and patent attorneys, “to work on new inventions to help solve some of the world’s biggest problems”. To do this, the company has hired prominent scientists including Robert Langer of MIT, Leroy Hood of the Institute for Systems Biology, Ed Harlow of Harvard Medical School, Danny Hillis of Applied Minds, and Sir John Pendry of Imperial College. Intellectual Ventures claims the company files about 450 patents a year, in areas from vaccine research to optical computing.<br /><br />Intellectual Ventures is constantly building its library of inventions and rights, analyzing industry trends and identifying market opportunities for the use of the inventions. Commercialization can be not only through patent licensing but through open source, joint-ventures, venture creation or sale of portfolios.<br /><br />On December 8, 2010, Intellectual Ventures filed their first lawsuit, accusing Check Point, McAfee, Syamtec, Trend Micro, Elpida, Hynix, Altera, Lattice and Microsemi of patent infringement. The company has also been accused of hiding behind shell companies for earlier lawsuits.<br /><br />Below is a few videos with Nathan Myhrvold and others at Intellectual Ventures presenting their business model and fascinating inventions from their research laboratory.<br /></div><br /><br /><iframe src="http://www.youtube.com/embed/eg4Nac_1p6k?rel=0" allowfullscreen="" frameborder="0" height="330" width="400"></iframe><br /><br /><br /><iframe src="http://www.youtube.com/embed/V1xXa17IzCY?rel=0" allowfullscreen="" frameborder="0" height="227" width="399"></iframe><br /><br /><iframe width="399" height="227" src="http://www.youtube.com/embed/RrKVJIWwDuE?rel=0" frameborder="0" allowfullscreen></iframe><br /><br /><iframe src="http://www.youtube.com/embed/0_G9R3DL4jI?rel=0" allowfullscreen="" frameborder="0" height="227" width="399"></iframe><br /><br /><iframe src="http://www.youtube.com/embed/s946vhAvPIc?rel=0" allowfullscreen="" frameborder="0" height="227" width="399"></iframe>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com3tag:blogger.com,1999:blog-5357884563112855603.post-26143362105308949732011-05-15T10:16:00.023+02:002011-05-15T12:45:58.887+02:00Business Models of Non-Practicing Entities<div style="text-align: justify;">With the upcoming <a href="http://www.cipforum.org/" target="_blank">CIP Forum 2011</a> the focus will once again be on growth from innovation and innovation-based business models.<br /></div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrul59R3kioMZL2rf-dy2DDX9-hDKKERXjwIH74PZkA7e0hbLOGRjc6HUigrkFLQZ2M3_FXkpGJy6FN1r7JB0TG06byz9nT0kfa8Z_3jW1fWLmTvGqF9UA5XfjsNkWNfsZ89nSjonoRgc/s1600/a+patent+troll.png"><img style="float: right; margin: 0pt 0pt 10px 10px; cursor: pointer; width: 131px; height: 161px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrul59R3kioMZL2rf-dy2DDX9-hDKKERXjwIH74PZkA7e0hbLOGRjc6HUigrkFLQZ2M3_FXkpGJy6FN1r7JB0TG06byz9nT0kfa8Z_3jW1fWLmTvGqF9UA5XfjsNkWNfsZ89nSjonoRgc/s320/a+patent+troll.png" alt="" id="BLOGGER_PHOTO_ID_5606854833317961842" border="0" /></a><br /><div style="text-align: justify;">In the discussion of organizations that provide technology or patent rights to others, Non-Practicing Entities or as some of them are called "Patent trolls" are always debated. My objective with this post is to introduce the concepts and explain the frequently disputed business model.<br /></div><br /><span style="font-weight: bold;">A few words about patents</span><br /><div style="text-align: justify;">A patent is an exclusive right to prevent others from making, using, selling or distributing an invention that is considered new, non-obvious and useful or industrially applicable. A patent does not give the proprietor of the patent the right to use the patented invention, should it fall within the scope of an earlier patent. Patents per se has nothing to do with the business model used by the patent holder or the pricing of products; Skype, Google, and other firms known for providing free services to their users, is still developing and filing patents to claim their rights to inventions, primarily to keep competitors away.<br /></div><div style="text-align: justify;"><br />A patent is a limited right (often 20 years from the filing date) that the government offers to inventors in exchange for their agreement to share the details of their invention with the public. The patent system incentivizes organizations to invest in research and development, and to disclose instead of keeping inventions secret in exchange for exclusivity. Being able to keep competitors away for a limited time, gives the inventor the chance to recover their up-front investment in making the invention. For a new pharmaceutical drug this investment can be billions of dollars. In contrast to some granted patents covering software or business methods, the investment can in some cases be close to zero excluding the costs of patent filing. Like any other property right, a patent may be sold, licensed, mortgaged, assigned or transferred, given away or abandoned.<br /></div><br /><span style="font-weight: bold;">Monetizing innovations</span><br /><div style="text-align: justify;">A university researcher or single inventor can chose to start a company to manufacture and sell products based on its research outcome, or chose to use the exclusive right status of a patent to become a licensor. This allows the inventor to accumulate capital from licensing the invention so the inventor's time and energy can be spent on pure innovation, allowing others to concentrate on manufacturability and marketing of downstream products. This can be seen as a straight forward application of Adam Smith's division of labor that having a group of people focus exclusively on inventing new things.<br /><br />There are numbers of research-based companies that develop new technology or pharmaceutical drugs just to license it to other firms to commercialize. The object for transaction can be just the right to exclude someone, or it can be drawings, data, relating non-patented inventions, knowledge in different forms, knowhow etc.<br /><br />This ability to assign ownership or rights increases the liquidity of patents as property. Third parties can license or acquire patents and the same rights to prevent others from exploiting the inventions, as if they had originally made the inventions themselves. Small companies or individual inventors that don't have the funds to claim their rights against multinational companies can sell their patents to companies willing to enforce them against infringers.<br /><br /></div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihkGYMO4-7_Tk4fX2FHCrhKjJqlsqplfJXfIou5Wkob13rmd6fsnlogV-af5yF5tBlCrlHRAQIyf9SdVnrImKspneaAY1KnrYysLpkBqkj0m8dh7udDZ06PmydWzWm6kZEMwOdv8G1yLg/s1600/American+Bell+Telephone+Company+patent+licensing.png"><img style="float: right; margin: 0pt 0pt 10px 10px; cursor: pointer; width: 99px; height: 99px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihkGYMO4-7_Tk4fX2FHCrhKjJqlsqplfJXfIou5Wkob13rmd6fsnlogV-af5yF5tBlCrlHRAQIyf9SdVnrImKspneaAY1KnrYysLpkBqkj0m8dh7udDZ06PmydWzWm6kZEMwOdv8G1yLg/s320/American+Bell+Telephone+Company+patent+licensing.png" alt="" id="BLOGGER_PHOTO_ID_5606857449594975090" border="0" /></a><div style="text-align: justify;">Licensing of patents is nothing new. In 1894, American Bell Telephone Company's R&D department licensed 73 patents from outside inventors, developing only 12 inventions from its own employees.<br /></div><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpRXAK2GRrtJeosWjA8wKEycOC5Rr9Ynrz3QHNySgIeDExMqNxFksq-ps_jhiMRz4DY7g_GosQKur4FiFpPcetS9w4D-f21WzsCJAeahU7HQPDoekvQjnjQAg4Y0OsuC4WImhzaR8GA18/s1600/American+Bell+Telephone+Company+patent+licensing.png"><br /></a><span style="font-weight: bold;">Cross-licensing of patent rights</span><br /><div style="text-align: justify;">It is common for companies engaged in complex technical fields to enter into license agreements associated with the production of a single product. Scott McGregor, President & CEO of Broadcom, has said that "a cell phone these days can have hundreds of devices that are part of it; each one of those can have hundreds of aspects to it. You could literally have a million or more patents that would apply to a single handset". It is therefore common that even competitors license patents to each other under cross-licensing agreements in order to share the benefits of using each other's patented inventions and reduce the risk of being sued by the other party.<br /></div><br /><div style="text-align: justify;">When one company sues another (<a href="http://www.businessweek.com/technology/ByteOfTheApple/blog/archives/2009/10/nokia_sues_apple_for_patent_infringement_over_iphone.html">Nokia vs Apple</a>) the other company often countersues the first one (<a href="http://www.engadget.com/2009/12/11/apple-countersues-nokia-for-infringing-13-patents/">Apple vs Nokia</a>) and the litigation process often results in that the parties come to an agreement, cross license patents, and pay licensing fees to the company with a stronger case. Counter-assertion is an important stabilizing force in many patent disputes.<br /></div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBj6Xphg629tDvFmIhjmvqNNth882SN_kTdh6r5tdMZxc-WclnssWUvVYkgbIMYPnvQGxtSFo04f_bBOAQSG9kmpcHIi5iaCP5wsdxGIHwUPKhp5liXs_UxLdLooFKPPIxGTHUClIoxYo/s1600/cross-licensing+of+technology+and+intellectual+property.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 106px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBj6Xphg629tDvFmIhjmvqNNth882SN_kTdh6r5tdMZxc-WclnssWUvVYkgbIMYPnvQGxtSFo04f_bBOAQSG9kmpcHIi5iaCP5wsdxGIHwUPKhp5liXs_UxLdLooFKPPIxGTHUClIoxYo/s400/cross-licensing+of+technology+and+intellectual+property.png" alt="" id="BLOGGER_PHOTO_ID_5606855367714883906" border="0" /></a><span style="font-weight: bold;">Non-Practicing Entities - a question of value proposition</span><br /><div style="text-align: justify;">A non-practicing entity (NPE) is a patent owner who does not manufacture or use patented inventions but rather than abandoning the rights to exclude, an NPE seeks to license the rights to others. The value proposition is thus not a product or service, but the rights to an invention with or without supporting knowledge and know-how. A single inventor, a university, a research institute, an SME, a multinational company or an investment fund, can all be non-practicing entities, depending on their choice of business model.<br /><br />The term patent troll is sometimes used for NPEs that enforce its patents against one or more alleged infringers in an aggressive or opportunistic manner. The general idea of these firms is to develop a large patent portfolio and to license these patents to companies that infringe on them or potentially filing lawsuits against these companies if they refuse to take a license. In some cases the NPE analyze popular products on the market to find remote patents that could be infringed, and approach the patent holder to acquire or get a license to sue.<br /><br />In some cases these firms have as their business model to purchase patents, often cheaply from technology companies forced by bankruptcy to auction its patents, with the sole purpose to sue and enforce it against companies that manufacture or market products, potentially infringing any of the patents. Some of those accused of being patent trolls argue that they are the modern incarnation of Robin Hood helping smaller companies and inventors against large companies who have stolen their ideas.<br /></div><br /><span style="font-weight: bold;">Legal extortion or value proposition?</span><br /><div style="text-align: justify;">To seek to derive income from the enforcement of patent rights is perfectly legal but it sometimes has troubling implications for the makers and sellers of products and services. As the entity is not selling products or services, almost by definition it does not infringe on the patent rights contained by others, thus they are essentially invulnerable to counter-assertion.<br /></div><div style="text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_UGj2uxxyYao8H2wtESj6zex6C0yZrwoBPQtcjcoFvJE4A8I3PC7t7-g6lRgqswtWOjrpu4G8f8xWdlqMCVzt66cVybrxT6lOQIn3BoZ-DxK9y1V4Oo-AtWIAtQv7DS6EfYeFYptfTNQ/s1600/licensing+of+technology+and+intellectual+property.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 90px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_UGj2uxxyYao8H2wtESj6zex6C0yZrwoBPQtcjcoFvJE4A8I3PC7t7-g6lRgqswtWOjrpu4G8f8xWdlqMCVzt66cVybrxT6lOQIn3BoZ-DxK9y1V4Oo-AtWIAtQv7DS6EfYeFYptfTNQ/s400/licensing+of+technology+and+intellectual+property.png" alt="" id="BLOGGER_PHOTO_ID_5606855156871137282" border="0" /></a>This gives NPEs a position to negotiate licensing fees that could be argued to be out of alignment with their contribution to the alleged infringer's product or service. As a result, a patent held by an NPE is often considered more threatening to industry participants than the same patent held by a competitor. As a result of that, there are operating companies that sell their patents to NPEs to assert the patents without the operating company being involved.<br /><br />The more dubious NPEs can see even a weak patent as a lottery ticket hoping the alleged infringer chose to pay up without completing a lawsuit. If the defendant chooses to litigate then both sides must absorb heavy litigation costs no matter who wins. As even a successful litigant must pay the costs of defending its case, and that the cost can run into the millions, operating companies may chose to pay up even though they probably would win if they take the case all the way through trial, to avoid the time, expense, and uncertainty. This is something that the more dubious NPEs take into consideration when they approach operating companies.<br /></div><br /><span style="font-weight: bold;">Revenue model of Non-Practicing Entities</span><br /><div style="text-align: justify;">NPEs generate revenues through licensing agreements or damages awarded by a court. Licensing agreements can include up-front license fees, milestone payments contingent upon achieving certain goals, and royalty revenue from the commercialization of the licensed technology. Damages are awarded on the basis of how much value the defendant is obtaining as a result of its infringing activity.<br /></div><br /><span style="font-weight: bold;">Activities performed by Non-Practicing Entities</span><br /><div style="text-align: justify;">All NPEs have to manage their patent portfolios, and identifying existing or potential application areas. Independent of being a single inventor, a university or a patent holding company, activities also involve finding potential licensees, negotiating terms and conditions and collecting license fees. Most NPEs also have internal research and development and patent filing and maintenance activities. There is a continuum from organizations that are doing substantial investments in R&D to generate inventions and patents, and organizations focusing on acquiring and aggregating others' patents.<br /></div><br /><span style="font-weight: bold;">The good guys and the bad guys</span><br /><div style="text-align: justify;">The business model of Non-Practicing Entities is widely debated and there are firms with dubious motifs. Companies that do not manufacture or intend to manufacture anything are often seen as profiting from others in a negative way (at least in the media). At the same time companies outsource or move production to low cost countries, leaving the western world to be “the innovators” where the output is innovation and intellectual property.<br /><br />Good guys can be found in both ends of the scale, providing valuable inventions, knowledge, data, instructions or knowhow to manufacturing companies, or just aggregating and providing the rights reducing the time and cost for manufacturing companies to find all relevant patents covering a technology area. Without the existence of entities willing to buy patents as a last resort there’s no credible threat a single inventor can make towards a large company. A rational defendant will simply carry on knowing the patent can’t be successfully enforced, and inventors at the margins may not undertake their research in the first place.<br /><br /><span style="font-weight: bold;">Related posts:</span><br /><a href="http://tbmdb.blogspot.com/2011/05/business-model-of-intellectual-ventures.html">The Business Model of Intellectual Ventures</a><br /></div>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-13807819631208450542011-02-09T17:47:00.005+01:002011-02-09T17:52:30.939+01:00Alex Osterwalder on Designing Business Models using Prototype Thinking<object width="400" height="400" codebase="http://fpdownload.macromedia.com/get/flashplayer/current/swflash.cab"><br /><param name="FlashVars" value="dataSourceUrl=http://www.klewel.com/conferences/lift11/conference.xml&talkID=8&autoplay=false" /><br /><param name="movie" value="http://www.klewel.com/flash/webplayer/1.2alpha/MainView.swf" /><br /><param name="quality" value="high" /><br /><param name="bgcolor" value="#869ca7" /><br /><param name="allowScriptAccess" value="always" /><br /><embed width="400" height="400" src="http://www.klewel.com/flash/webplayer/1.2alpha/MainView.swf" quality="high" name="MainView" align="middle" FlashVars="dataSourceUrl=http://www.klewel.com/conferences/lift11/conference.xml&talkID=8&autoplay=false" play="true" loop="false" quality="high" allowScriptAccess="always" type="application/x-shockwave-flash" allowFullScreen="true" pluginspage="http://www.adobe.com/go/getflashplayer"><br /></embed><br /></object>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com1tag:blogger.com,1999:blog-5357884563112855603.post-68233731991931092132010-12-18T08:11:00.011+01:002010-12-18T10:33:42.966+01:00Casadesus-Masanell and Ricart 's Business Model Framework<div style="text-align: justify;"><span style="font-weight: bold;">Short description of framework:</span> A framework illustrating how value is created and captured by an organization through the decisions made and the resulting consequences, illustrated in causal loops.<br /><br /><span style="font-weight: bold;">Main strengths:</span> The framework captures what an organization is trying to do, key values the management wants to create, and the incentives for suppliers, partners, and customers. It also illustrates if management is stringent in its decisions and if different choices results in consequences that reinforce each other or not.<br /><br /><span style="font-weight: bold;">Background</span><br />Casadesus-Masanell and Ricart based their framework on the four major categories common to most business model definitions uncovered by Shafer, Smith and Linder in their article The Power of Business Models, from 2005.<br /></div><div style="text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCcAQZ54HneX5cPSpiNmNP9us3J2ryDH4r7JtKLOcOeyk9w91JDmbGUtY4j5D2IEPeWLimjVMV8daJ7QX-6Le15ijArNPQqgvHdVv576BgHeD61ZNdO-754Hc-mLYId_NoUXY9KS1lsYg/s1600/Shafer+business+model+framework.png"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 400px; height: 218px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCcAQZ54HneX5cPSpiNmNP9us3J2ryDH4r7JtKLOcOeyk9w91JDmbGUtY4j5D2IEPeWLimjVMV8daJ7QX-6Le15ijArNPQqgvHdVv576BgHeD61ZNdO-754Hc-mLYId_NoUXY9KS1lsYg/s400/Shafer+business+model+framework.png" alt="" id="BLOGGER_PHOTO_ID_5551917899589719538" border="0" /></a>Casadesus-Masanell and Ricart argue that “consistent with the intuitive view of the concept, a business model is defined by strategic choices, sometimes made by a network of organizations, that explain value creation and value capture by the focal organization” and conclude that one important component of business models are the concrete choices made by management. To connect the choices to value creation and value capture, Casadesus-Masanell and Ricard include consequences in their definition of a business model.<br /></div><div style="text-align: justify;"><br /><span style="font-weight: bold;">Framework details</span><br />Casadesus-Masanell and Ricart define the business model as (i) the set choices and (ii) the set of consequences derirved from those choices. They distinguish between three different types of choices: policies, assets, and governance. Consequences are classified into flexible and rigid.<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiq3Ti0j-iNsUXn9B0U0rp3BpZ_5d7uH2Zb8rRfKxqQujkEKM-lFGfZNmBYR1yBK5rqbH7iE5O9W31dV2at3o7uGD7OSqKNY-au7_-DV26ICTIXjtSpcXD5Mn0m2tL01Epd2wTAtjjrJqg/s1600/Casadesus-Masanell+and+Ricart+business+model+framework.png"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 400px; height: 176px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiq3Ti0j-iNsUXn9B0U0rp3BpZ_5d7uH2Zb8rRfKxqQujkEKM-lFGfZNmBYR1yBK5rqbH7iE5O9W31dV2at3o7uGD7OSqKNY-au7_-DV26ICTIXjtSpcXD5Mn0m2tL01Epd2wTAtjjrJqg/s400/Casadesus-Masanell+and+Ricart+business+model+framework.png" alt="" id="BLOGGER_PHOTO_ID_5551918076404935026" border="0" /></a></div><ul><li><span style="font-weight: bold;">Policies (Choices)</span> Choices regarding the courses of action adopted by the firm regarding all aspects of its operation</li><li><span style="font-weight: bold;">Assets (Choices) </span>Choices regarding tangible resources such as manufacturing facilities.</li><li><span style="font-weight: bold;">Governance (Choices)</span> Choices regarding the structure of contractual arrangements that confer decision rights regarding policies or assets.</li><li><span style="font-weight: bold;">Flexible (Consequences)</span> Consequences that are sensitive to the choices that generate it</li><li><span style="font-weight: bold;">Rigid (Consequences)</span> Consequences that does not change rapidly with the choices that generate it.</li></ul><span style="font-weight: bold;">Example using the framework</span><br /><div style="text-align: justify;">Casadesus-Masanell and Ricart uses a causal loop diagram, linking choices and consequences by arrows, to represent a business model. As one could make the effort of listing every choice made by management and all consequences of those choices Casadesus-Masanell and Ricart realizes the impracticality and reduces their business model framework to represent (i) choices (generally a subset of all choices), (ii) consequences (generally a subset of all consequences), and (iii) theories. The third element are suppositions on how choices and consequences are related, not a part of the business model, but theories of causality that are believed to be true by the business model designer or analyst.<br /><br />In the example below Casadesus-Masanell and Ricart illustrates the business model of Ryanair using bold and underlined to indicate choices, with rigid consequences in boxes, and flexible consequences in plain text.<br /></div><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKYCk8Hcsa2NN_nfkkdOqQvEQMGzd2UIBD8R_H2ADeKBSESDDGGgDqJCBIaDgb3gY0aTGwATgI8q6akGR3AQYRe69JX03JQYIkBXGVAHUb3Fleb8YRkGa7kO7UewCyd_snYF2WRu5lygA/s1600/Casadesus-Masanell+and+Ricart+Ryanair+business+model+causal+loop+1.png"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 400px; height: 303px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKYCk8Hcsa2NN_nfkkdOqQvEQMGzd2UIBD8R_H2ADeKBSESDDGGgDqJCBIaDgb3gY0aTGwATgI8q6akGR3AQYRe69JX03JQYIkBXGVAHUb3Fleb8YRkGa7kO7UewCyd_snYF2WRu5lygA/s400/Casadesus-Masanell+and+Ricart+Ryanair+business+model+causal+loop+1.png" alt="" id="BLOGGER_PHOTO_ID_5551918278909373138" border="0" /></a><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjc9hVLoOezgpE1ikRDqzga7S5L505ek5L51f-d-LtyFZJ_ZwbYad-1ef_9SPvvx0U2SXxyc9sWZzRGK-rMG5GYYK1sN7gZsLGAORA35Sao4h5snLvBGuzRlW9poF5-eXDPG9fChyjjx0U/s1600/Casadesus-Masanell+and+Ricart+Ryanair+business+model+causal+loop+2.png"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 400px; height: 317px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjc9hVLoOezgpE1ikRDqzga7S5L505ek5L51f-d-LtyFZJ_ZwbYad-1ef_9SPvvx0U2SXxyc9sWZzRGK-rMG5GYYK1sN7gZsLGAORA35Sao4h5snLvBGuzRlW9poF5-eXDPG9fChyjjx0U/s400/Casadesus-Masanell+and+Ricart+Ryanair+business+model+causal+loop+2.png" alt="" id="BLOGGER_PHOTO_ID_5551918400602056610" border="0" /></a><span style="font-weight: bold;">Video illustrating the framework:</span><br /><ul><li>N/A<br /></li></ul><span style="font-weight: bold;">Tools for using the framework:</span><br /><ul><li><a href="http://www.gliffy.com/">Gliffy</a> and other diagram software<br /></li></ul><span style="font-weight: bold;">Related publications of interest:</span><br /><ul><li>Linder, J., & Cantrell, S. (2000). Changing business models: Surveying the landscape. Accenture Institute for Strategic Change<br /></li><li>Casadesus-Masanell, R., & Ricart, J. E. (2007). Competing through Business Models. Working paper. </li><li>Casadesus-Masanell, R., & Ricart, J. (2010). From Strategy to Business Models and onto Tactics. Long Range Planning .</li><li>Seelos, C. (2010). Theorizing and Strategizing with Models: Generative Models of Business Models. Working paper . Barcelona, Spain.</li></ul>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-49924146185549037142010-12-15T08:33:00.001+01:002010-12-15T08:33:35.155+01:00De Mey and De Ridder's Business Model Framework<div style="text-align: justify;"><span style="font-weight: bold;">Short description of framework</span>: A framework illustrating how value is created and captured in the interaction between organizations through relationships and transactions.<br /><br /><span style="font-weight: bold;">Main strengths:</span> The framework captures relationships, monetary and non-monetary transactions between organizations, and provides a snapshot of the interactions and dependencies on certain external actors. Transactions between several organizations in multiple steps can be illustrated, enabling a good understanding for the different revenue streams.<br /><br /><span style="font-weight: bold;">Background</span><br />The framework was originally created by De Mey and De Ridder (<a href="http://www.boardofinnovation.com/">www.boardofinnovation.com</a>) in 2009 to create a common visual language and consisted of 10 framework elements initially focusing on the sales side of a business with the only actors being the company itself and its client. The remaining 8 framework elements was items that can be transferred between the company and its client; product, service, experience, reputation, exposure, attention, money and less money.<br /></div><div style="text-align: justify;"><div style="text-align: justify;"><br /></div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXIWwwPA9fdCe9oiN-xh5BkWAqOwwzlcbiuAnm3YOF_8z1voTEl3vWetFzGYIY3ysUrqjlfTXNrEtWIZQnLj-mJhD7yzvEWsnTcvaskDCX8x0TOl1CR-73_cAK72cSO4jafaaOZ69HzAQ/s1600/Old_icons.png"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 320px; height: 118px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXIWwwPA9fdCe9oiN-xh5BkWAqOwwzlcbiuAnm3YOF_8z1voTEl3vWetFzGYIY3ysUrqjlfTXNrEtWIZQnLj-mJhD7yzvEWsnTcvaskDCX8x0TOl1CR-73_cAK72cSO4jafaaOZ69HzAQ/s320/Old_icons.png" alt="" id="BLOGGER_PHOTO_ID_5549716896081584722" border="0" /></a></div><div style="text-align: justify;"><div style="text-align: justify;">In 2010 the business model framework was revisited and updated to include 16 framework elements to capture more aspects of a business case. Still, De Mey and De Ridder argues that they prefer not to include what they call secondary stakeholders, showing the supplier side of a business case.<br /></div><br /><span style="font-weight: bold;">Framework details</span><br />The 2010 version contains 16 framework elements, divided into players and objects to exchange further described below. De Mey and De Ridder do not provide their own definitions of the framework elements, so the definitions below are of the general meaning of the terms, based on how the objects are used by De Mey and De Ridder.<br /><br /><div style="text-align: left;"><img src="file:///C:/Users/anderss/AppData/Local/Temp/moz-screenshot.png" alt="" /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKugkW-CMrsS9v2lJieGlfjuO3xMB1DDeXmtW31SkBksGpeoaQFdn8HcF2lp5uqQUjGhbsx2duPF1t2UEvRStfC6wKLRL10aJBd88bje7Q59ZPxiNyDzvBcr_PHk1GFfZJpJq-C9lrTfU/s1600/My_Company.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 41px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKugkW-CMrsS9v2lJieGlfjuO3xMB1DDeXmtW31SkBksGpeoaQFdn8HcF2lp5uqQUjGhbsx2duPF1t2UEvRStfC6wKLRL10aJBd88bje7Q59ZPxiNyDzvBcr_PHk1GFfZJpJq-C9lrTfU/s200/My_Company.png" alt="" id="BLOGGER_PHOTO_ID_5549713409512801122" border="0" /></a><span style="font-weight: bold;">My Company</span> - The element represents the organization being described, often at the center of the illustration.<br /><br /><span style="font-weight: bold;">Compan</span><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSJ8ifDuChxfjfXwM8Iq_qv2gLgksI5JjshPDxbzYE0SWMZQT8fcV0G-nX3ZAQ47tXaEAeSthn2zhu1-kLqa9oFLMGwZLozF26ZD34oVKL3B9DhEoxPGqt-gEU1NGRU83foLn2mdfMHGc/s1600/Company.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSJ8ifDuChxfjfXwM8Iq_qv2gLgksI5JjshPDxbzYE0SWMZQT8fcV0G-nX3ZAQ47tXaEAeSthn2zhu1-kLqa9oFLMGwZLozF26ZD34oVKL3B9DhEoxPGqt-gEU1NGRU83foLn2mdfMHGc/s200/Company.png" alt="" id="BLOGGER_PHOTO_ID_5549712090941571762" border="0" /></a><span style="font-weight: bold;">y</span> - The element represents an external for-profit organization, often the customer in a business-to-business business model.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivlYIzTWLLg0azyUAxWPGJnF3wIxlmKH8eTC76y7hD0_cPYM3Bt7qRGvhiP4suV5VgE7Lew-ZEi6IqcJ3_EFeyahog_l1SS-TL3QBLY1L-M90qW77SRMpOFHlM6Cc5gh-CtYsRMrxFxfw/s1600/Consumer.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivlYIzTWLLg0azyUAxWPGJnF3wIxlmKH8eTC76y7hD0_cPYM3Bt7qRGvhiP4suV5VgE7Lew-ZEi6IqcJ3_EFeyahog_l1SS-TL3QBLY1L-M90qW77SRMpOFHlM6Cc5gh-CtYsRMrxFxfw/s200/Consumer.png" alt="" id="BLOGGER_PHOTO_ID_5549712097003644626" border="0" /></a><span style="font-weight: bold;">Consumer</span> - The element represents any individuals or households that use products and services.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdpZkjaWZFI0Lxi0azatedek2Z0e935B1NvR00eVo-ju9UgrmxZEJ-TNmbTuLXag43qV02M9GJvPOqemwzigF991wZCfb000f0CpIRJ0u-iiCaL8kLAtd4nHHXwMaiaL-HugvI0AcZz8k/s1600/Supplier.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdpZkjaWZFI0Lxi0azatedek2Z0e935B1NvR00eVo-ju9UgrmxZEJ-TNmbTuLXag43qV02M9GJvPOqemwzigF991wZCfb000f0CpIRJ0u-iiCaL8kLAtd4nHHXwMaiaL-HugvI0AcZz8k/s200/Supplier.png" alt="" id="BLOGGER_PHOTO_ID_5549714115050137378" border="0" /></a><span style="font-weight: bold;">Supplier</span> - The element represents any product or service provider to the organization being described.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1DucvOto-QZUcK-qA-RPxmaiETJTPViYJF2gkogHDjmFFSQ5RKkt3Hx5wvjyEZgKNRqKf20nQBEejoE9lClOGYQk3_yD6w4ChDKiiSySaJeIaeD-wWeuvrrTDUBHz5UkLY0mBkJ0hCZk/s1600/Non-profit.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1DucvOto-QZUcK-qA-RPxmaiETJTPViYJF2gkogHDjmFFSQ5RKkt3Hx5wvjyEZgKNRqKf20nQBEejoE9lClOGYQk3_yD6w4ChDKiiSySaJeIaeD-wWeuvrrTDUBHz5UkLY0mBkJ0hCZk/s200/Non-profit.png" alt="" id="BLOGGER_PHOTO_ID_5549714656594577106" border="0" /></a><span style="font-weight: bold;">Non-profit</span> - The element represents organizations such as charity organizations that have an impact on the business model being described.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgntZ8kv4UiQhAW4qw1j2tsqNkgH7O9wwBeZeTvv8MR7crhnqlURfAq5wgYk-KMjGETJ8n-YOZ7IVF0S3gh3KSFh809rywH6FHFTQBqI6KvXahmvN07J2m5OFS0D1DXl9jI4w4ZrJavlb8/s1600/Government.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgntZ8kv4UiQhAW4qw1j2tsqNkgH7O9wwBeZeTvv8MR7crhnqlURfAq5wgYk-KMjGETJ8n-YOZ7IVF0S3gh3KSFh809rywH6FHFTQBqI6KvXahmvN07J2m5OFS0D1DXl9jI4w4ZrJavlb8/s200/Government.png" alt="" id="BLOGGER_PHOTO_ID_5549713401318513522" border="0" /></a><span style="font-weight: bold;">Government</span> - The element represents an organization or agency, through which a political unit exercises its authority, controls and administers public policy.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEih7_6-7VdTCkJOQWygVNpDDVdcxEdo7EHacZoQfwgWoIVOisxPEPxzhW3Lrn2_LBwlBEG6wYB6jQ-tSh-HhLEAGVsjKxHKaiHqUZ3Z3KU5NGAFRK6LIt2XuGt6MkgAZ5OUkzikDpiI7Vg/s1600/Product.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEih7_6-7VdTCkJOQWygVNpDDVdcxEdo7EHacZoQfwgWoIVOisxPEPxzhW3Lrn2_LBwlBEG6wYB6jQ-tSh-HhLEAGVsjKxHKaiHqUZ3Z3KU5NGAFRK6LIt2XuGt6MkgAZ5OUkzikDpiI7Vg/s200/Product.png" alt="" id="BLOGGER_PHOTO_ID_5549714661061623410" border="0" /></a><span style="font-weight: bold;">Product</span> - The element represents any physical or digital thing produced by labor or effort.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfudUPt57a10DmUgERsDgmVH7Hg3rGg_0fRyiAT5jIAupcWM8I89UHle3PFxKFnY2UVh0mQHRWiBPFsBBNmkPMmf0Uax6VY6CeM5grXKNUIlrM3kvJBJZBagIPj3-B3tzvkkfAKhvjsfY/s1600/Service.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfudUPt57a10DmUgERsDgmVH7Hg3rGg_0fRyiAT5jIAupcWM8I89UHle3PFxKFnY2UVh0mQHRWiBPFsBBNmkPMmf0Uax6VY6CeM5grXKNUIlrM3kvJBJZBagIPj3-B3tzvkkfAKhvjsfY/s200/Service.png" alt="" id="BLOGGER_PHOTO_ID_5549714111814003474" border="0" /></a><span style="font-weight: bold;">Service </span>- The element represents the act of providing utility without the transfer of ownership.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7ncEMObxYkqQDnqQO1jDdfojd3Q6fj7cID4R9LWLmDPZ74apNHHpmcVdCqxh_wgmyIyvHFXM6r_JUvoHy-7Rxd8IDduGP7K1FHlvQxvQCaW2Xt6sPDLiNO8eLsaLXgyt1meGMKt4bazA/s1600/Experience.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 41px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7ncEMObxYkqQDnqQO1jDdfojd3Q6fj7cID4R9LWLmDPZ74apNHHpmcVdCqxh_wgmyIyvHFXM6r_JUvoHy-7Rxd8IDduGP7K1FHlvQxvQCaW2Xt6sPDLiNO8eLsaLXgyt1meGMKt4bazA/s200/Experience.png" alt="" id="BLOGGER_PHOTO_ID_5549712100009056370" border="0" /></a><span style="font-weight: bold;">Experience</span> - The element represents the event of undergoing an emotional feeling.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhY7UZqWNOAlMYy1VW-L6ZcbnsbGehzBpWr5ap52y6WMWuRfbzu88NlGz19W5oxe9pBHdl-FqdPdAkVg01YAwA_XvsrkkHwim1x9h8kMYUuRalH2bD7_8epbyzBfm8-ooSvUXJbqe5EcTI/s1600/Exposure.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhY7UZqWNOAlMYy1VW-L6ZcbnsbGehzBpWr5ap52y6WMWuRfbzu88NlGz19W5oxe9pBHdl-FqdPdAkVg01YAwA_XvsrkkHwim1x9h8kMYUuRalH2bD7_8epbyzBfm8-ooSvUXJbqe5EcTI/s200/Exposure.png" alt="" id="BLOGGER_PHOTO_ID_5549713389285204706" border="0" /></a><span style="font-weight: bold;">Exposure/Attention</span> - The element represents the event of concentrating on some features of the environment.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFlpQiz5Ins3EvqCbo_z5GMJqvWiSM2OXGf47mxkx8HKsoSYbho0KnufvnEougHMyLHeb6N-7bMcd0pE4P3FndZCGWigR66An1QKH8MZN1fvLqsXWJbr5H6_KMoZ4VYfLQwCt6Irb8gFM/s1600/Reputation.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFlpQiz5Ins3EvqCbo_z5GMJqvWiSM2OXGf47mxkx8HKsoSYbho0KnufvnEougHMyLHeb6N-7bMcd0pE4P3FndZCGWigR66An1QKH8MZN1fvLqsXWJbr5H6_KMoZ4VYfLQwCt6Irb8gFM/s200/Reputation.png" alt="" id="BLOGGER_PHOTO_ID_5549714099029644610" border="0" /></a><span style="font-weight: bold;">Reputation</span> -The element represents a social evaluation of a person or organization.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHTHH_pmc88t91QzrgYsy8mb3nZxWYZw-Klx1YdRQ5o63bD92n34aoeXwbdCeCMru4OCr26ks9yR9GRh3xBaYJWIwoO-t9-6lpgTWgYA5vuCpJ9ToeNGoTYfiC0Yji_T6InfBWzdQ8XiY/s1600/Money.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 41px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHTHH_pmc88t91QzrgYsy8mb3nZxWYZw-Klx1YdRQ5o63bD92n34aoeXwbdCeCMru4OCr26ks9yR9GRh3xBaYJWIwoO-t9-6lpgTWgYA5vuCpJ9ToeNGoTYfiC0Yji_T6InfBWzdQ8XiY/s200/Money.png" alt="" id="BLOGGER_PHOTO_ID_5549713406357490306" border="0" /></a><span style="font-weight: bold;">Money</span> - The element represents anything that is generally accepted as payment for products and services.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4U-pG6_u38DuieZ2mOQGbL556mS72P2uxfJbbE1966arGRX_FW70wuiegTZy4Lvfoc0c2jX-ZBw0oegQEtE_ZW7y9uzPsWZsZTLypD8Whjq19bL2uASKiKk_fl0runG38T7euD5bmyNY/s1600/Less_Money.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4U-pG6_u38DuieZ2mOQGbL556mS72P2uxfJbbE1966arGRX_FW70wuiegTZy4Lvfoc0c2jX-ZBw0oegQEtE_ZW7y9uzPsWZsZTLypD8Whjq19bL2uASKiKk_fl0runG38T7euD5bmyNY/s200/Less_Money.png" alt="" id="BLOGGER_PHOTO_ID_5549713400594925746" border="0" /></a><span style="font-weight: bold;">Less Money</span> -The element represents a lower amount of money than the main money object.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgymo9dNYFHDEEHwlS4MUYWNadTAF1kzHr1cOLZhqr-fW2dh4XIsSZNQXuWOZZewyrPTrY2AYXoY7Pe-bRwztivPjYO7qTfRVzBAEUE_2tCqN_Q72SeTxvOd27vDkzQmK2ko1HyxuagCg/s1600/Credits.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgymo9dNYFHDEEHwlS4MUYWNadTAF1kzHr1cOLZhqr-fW2dh4XIsSZNQXuWOZZewyrPTrY2AYXoY7Pe-bRwztivPjYO7qTfRVzBAEUE_2tCqN_Q72SeTxvOd27vDkzQmK2ko1HyxuagCg/s200/Credits.png" alt="" id="BLOGGER_PHOTO_ID_5549712094341671650" border="0" /></a><span style="font-weight: bold;">Credits</span> - The element represents a fictional currency that can be used as payment for certain products and services.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4SvBdK4NVA3PH5wTrBotKO_ak2zetjtb-0tqPn5qvpByt7QwUG1_JDWvLBAB6dDJb748F_gwJHc9flgEXKQO4IQvo7vekZFUjxLsdQ_JjF1MusfAKIUNacpsgF7wbcDJi_JGTegj7mww/s1600/Data.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4SvBdK4NVA3PH5wTrBotKO_ak2zetjtb-0tqPn5qvpByt7QwUG1_JDWvLBAB6dDJb748F_gwJHc9flgEXKQO4IQvo7vekZFUjxLsdQ_JjF1MusfAKIUNacpsgF7wbcDJi_JGTegj7mww/s200/Data.png" alt="" id="BLOGGER_PHOTO_ID_5549712097071603666" border="0" /></a><span style="font-weight: bold;">Data </span>- The element represents information such as content, data and knowledge.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixtBsxhchE3dFY5Pwn3FUJBYt_BUgihRD4v9j_SWrM7_mp7zAUgUYLD7XyWCAWNAzldbYdgMFAbwSIY5D-yHar-B7hpmcZUrPYeylZBqXKIp_Jti7VPb_-p_OQbQXTzgYP6A9n6RMpa6U/s1600/Right.png"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 40px; height: 40px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixtBsxhchE3dFY5Pwn3FUJBYt_BUgihRD4v9j_SWrM7_mp7zAUgUYLD7XyWCAWNAzldbYdgMFAbwSIY5D-yHar-B7hpmcZUrPYeylZBqXKIp_Jti7VPb_-p_OQbQXTzgYP6A9n6RMpa6U/s200/Right.png" alt="" id="BLOGGER_PHOTO_ID_5549714108134145394" border="0" /></a><span style="font-weight: bold;">Rights </span>- The element represents a legal freedom to act or refrain from acting.<br /></div><br /><br /><span style="font-weight: bold;">Example using the framework</span><br />In the illustration below De Mey and De Ridder illustrates the business model of Niiu, a German start-up providing customized physical newspapers. Niiu will provide personalized and customized newspapers based on content from a variety of different news companies enabling the consumer to combine different sections from different newspapers. By using print-on-demand technology Niiu will create a unique paper version and deliver to each subscriber. The reader will pay for the newspaper and be exposed to targeted advertising based on their content preferences.<br /></div><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBqI6jO0tONgJtjaFZdkTePwdgFWmrzQfQWotEmHalpjcL7HaEjK-aF9Ywk97OORQuo4e7u3SsxkGCiWPXG7Y5xy1pdkr53_qmXHcTInWe6IAjZ6_iXNwCzuo1PGW0qeaAtOeSR150HhQ/s1600/Niiu_business_model.png"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 400px; height: 215px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBqI6jO0tONgJtjaFZdkTePwdgFWmrzQfQWotEmHalpjcL7HaEjK-aF9Ywk97OORQuo4e7u3SsxkGCiWPXG7Y5xy1pdkr53_qmXHcTInWe6IAjZ6_iXNwCzuo1PGW0qeaAtOeSR150HhQ/s400/Niiu_business_model.png" alt="" id="BLOGGER_PHOTO_ID_5549718013941599410" border="0" /></a><span style="font-weight: bold;">Video illustrating the framework:</span><br /><iframe src="http://player.vimeo.com/video/17368060" width="400" frameborder="0" height="265"></iframe><br /><br /><span style="font-weight: bold;">Tools for using the framework:</span><br /><ul><li><a href="http://www.boardofinnovation.com/templates/business_model_template.ppt">Powerpoint template</a></li><li><a href="http://www.slideshare.net/boardofinnovation/business-model-template-design-with-blocks">Slideshare</a></li><li><a href="http://www.boardofinnovation.com/">Google Drawer</a></li><li><a href="http://www.boardofinnovation.com/">Magnetic kits, vector based files, etc. sold at </a><a href="http://www.boardofinnovation.com/">Board of Innovation webpage</a></li></ul><span style="font-weight: bold;">Related publications of interest:</span><br /><ul><li>Weill, P., & Vitale, M. (2001). Place to space: migrating to ebusiness models. Boston: Harvard Business Press.</li><li>Gordijn, J., & Akkermans, H. (2001). Designing and Evaluating E-Business Models. Intelligent E-Business .</li><li>Poel, M., Renda, A., & Ballon, P. (2007). Business model analysis as a new tool for policy evaluation: policies for digital platforms. Research Paper . Emerald Group Publishing Limited.</li></ul>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-37568411730064538852010-12-12T11:57:00.002+01:002010-12-15T08:25:58.387+01:00List of Key Terms<div style="text-align: justify;">The term ‘business model’ has historically been defined differently by different academics and consultants, with no common consensus being established. It is not until the last few years that a common definition of what a ‘business model’ is has started to emerge, with an increasing number of authors emphasizing the concepts of value creation and value capture as central to the definition.<br /><br />One challenge is that frameworks developed from the perspective of enabling business model innovation, are often equated with a definition of the concept of the business model itself. This creates considerable confusion in terms of the differences between the business model of a company, the business model concept as such, and ways of describing business models by adopting different perspectives and frameworks.<br /><br />In order to provide posts that are easy to follow and to reduce the risk of misunderstandings and confusion, I use the definitions below:<br /><ul><li><span style="font-weight: bold;">Business model</span> – the way an organization creates and captures value</li><li><span style="font-weight: bold;">Business model concept</span> – the general idea of illustrating how value is created and captured</li><li><span style="font-weight: bold;">Business model element</span> – a component of how value is created and captured by an organization</li><li><span style="font-weight: bold;">Business model framework</span> – an abstraction to describe and represent different business models</li><li><span style="font-weight: bold;">Business model framework element </span>(or framework element) – a component of a business model framework</li><li><span style="font-weight: bold;">Business model innovation</span> – an innovative business model or the process of innovating a business model</li><li><span style="font-weight: bold;">Business modeling</span> – the process of testing and simulating different business models</li></ul>Please consult the list above when confused about my use of any of the terms.<br /></div>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-30660027111740404542010-11-18T23:22:00.004+01:002010-11-18T23:32:25.913+01:00Evan Williams on the Business Model of Twitter<div style="text-align: justify;">A very interesting conversation with Evan Williams, co-founder Twitter, on how they are trying different revenue models. “There’s a million ways to make money with Twitter... We’ll probably try a few more... We're surprised it's doing better than expected.”<br /></div><br /><object width="400" height="250"><param name="movie" value="http://www.youtube.com/v/c4xZtTYhCDA?fs=1&hl=en_US&rel=0"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/c4xZtTYhCDA?fs=1&hl=en_US&rel=0" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="400" height="250"></embed></object>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-11095016186567293112010-11-18T22:04:00.005+01:002010-11-18T22:33:44.602+01:00Thoughts on New Business Models for NewsSome interesting thoughts on the future of news at the ReThink News summit held in Newport, Rhode Island, a summit sponsored by The School of Journalism at Michigan State University.<br /><br />TED founder Richard Saul Wurman<br /><iframe src="http://player.vimeo.com/video/13628824?title=0&byline=0&portrait=0" width="400" frameborder="0" height="265"></iframe><br /><br />Jim Kennedy, director of strategic planning for the Associated Press<br /><iframe src="http://player.vimeo.com/video/13630080?title=0&byline=0&portrait=0" width="400" frameborder="0" height="265"></iframe><br /><br />Visual communicator David Gray, founder of Xplane<br /><iframe src="http://player.vimeo.com/video/13631000?title=0&byline=0&portrait=0" width="400" frameborder="0" height="265"></iframe><br /><br />New York Times Multimedia Editor Andrew Devigal<br /><iframe src="http://player.vimeo.com/video/15898890?title=0&byline=0&portrait=0" width="400" frameborder="0" height="220"></iframe><br /><br />Chris Finlay of the Business Innovation Factory<br /><iframe src="http://player.vimeo.com/video/15901207?title=0&byline=0&portrait=0" width="400" frameborder="0" height="220"></iframe><br /><br />Media entrepreneur Brooks Bell<br /><iframe src="http://player.vimeo.com/video/16111136?title=0&byline=0&portrait=0" width="400" frameborder="0" height="225"></iframe><br /><br />Visual communicator and designer Nigel Holmes<br /><iframe src="http://player.vimeo.com/video/16111532?title=0&byline=0&portrait=0" width="400" frameborder="0" height="225"></iframe><br /><br /><span style="font-weight: bold;"><br />Related videos:</span><br /><ul><li><a href="http://tbmdb.blogspot.com/2009/04/eric-schmidt-on-news-newspapers-real.html">Eric Schmidt on news, newspapers and real time content</a></li><li><a href="http://tbmdb.blogspot.com/2009/03/tim-oreilly-on-open-publishing.html">Tim O'Reilly on Open Publishing</a></li><li><a href="http://tbmdb.blogspot.com/2009/05/interview-with-steve-rubel-on-business.html">Interview with Steve Rubel on business models for newspapers and online communities</a></li><li><a href="http://tbmdb.blogspot.com/2010/04/jeff-jarvis-on-new-business-models-for.html">Jeff Jarvis on New Business Models for News</a></li><li><a href="http://tbmdb.blogspot.com/2009/10/nick-bilton-on-new-technology-that-will.html">Nick Bilton on new technology that will enable interesting business models for news</a></li></ul>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-4617394825842293822010-10-23T23:47:00.007+02:002010-10-24T00:47:24.572+02:00Mike Maples on pivoting business models<div style="text-align: justify;">In this presentation Mike Maples, a business angel with previous investments in ngmoco, Chegg, Digg and Odeo/Twitter, talks about developing and pivoting business models, at a Founder Institute event. Mike shares his experiences and provides interesting examples on ngmoco's pricing pivot, Chegg's product pivot, Odeo's company pivot into Twitter.<br /></div><br /><object width="400" height="225"><param name="allowfullscreen" value="true"><param name="allowscriptaccess" value="always"><param name="movie" value="http://vimeo.com/moogaloop.swf?clip_id=16098382&server=vimeo.com&show_title=1&show_byline=1&show_portrait=1&color=&fullscreen=1&autoplay=0&loop=0"><embed src="http://vimeo.com/moogaloop.swf?clip_id=16098382&server=vimeo.com&show_title=1&show_byline=1&show_portrait=1&color=&fullscreen=1&autoplay=0&loop=0" type="application/x-shockwave-flash" allowfullscreen="true" allowscriptaccess="always" width="400" height="225"></embed></object><br /><br />Mike shares Steve Blanks and several others’ view that <span style="font-style: italic;">“A start-up exists to do one and only one thing and that is to find a business model”. “Once a start-up has achieved a scalable and profitable business model, they are ready to transition from being a start-up to a real company”</span>. Mike represents the business model concept with the following illustration, I believe was developed by Steve Blank and Ann Miura-Ko:<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRC8Kqgc0a5yUaYXkCxyMhPt238Q8YigkLIgylwuj4v0RUQVkQfTCzc0S-PjwSZpoZipE6Fk1ZQvTyDNAWKDfRSdBvJ13nzvhl7kUZalOJbAARobT7sCK4ihiKqHDwSDZwSdB8Bygnz4A/s1600/business+model+template.jpg"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 400px; height: 286px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRC8Kqgc0a5yUaYXkCxyMhPt238Q8YigkLIgylwuj4v0RUQVkQfTCzc0S-PjwSZpoZipE6Fk1ZQvTyDNAWKDfRSdBvJ13nzvhl7kUZalOJbAARobT7sCK4ihiKqHDwSDZwSdB8Bygnz4A/s400/business+model+template.jpg" alt="" id="BLOGGER_PHOTO_ID_5531371243694875922" border="0" /></a>The arrows represent monetary flows in and out from the company. The pivoting starts from formulating hypothesis for each flow, testing assumptions to validate and improve the business model. This approach is very similar to the one presented in <a href="http://tbmdb.blogspot.com/2010/01/getting-to-plan-b-2009.html">Getting to Plan B</a> by John Mullins and Randy Komisar.Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com0tag:blogger.com,1999:blog-5357884563112855603.post-86434207974148291632010-09-30T16:26:00.006+02:002010-09-30T16:45:18.155+02:00Tom Hulme on How to Visualize your Business Model<div style="text-align: justify;">Tom is a Design Director at IDEO in London, where he uses the innovation and design process to develop new business opportunities. In these videos he presents a way, very similar to The Business Model Canvas, on how to visualize a business model including the elements of growth- and competitive strategy.<br /></div><br /><iframe src="http://player.vimeo.com/video/13888824?title=0&byline=0&portrait=0" frameborder="0" height="225" width="400"></iframe><br /><br /><iframe src="http://player.vimeo.com/video/11792031?title=0&byline=0&portrait=0" width="400" height="225" frameborder="0"></iframe><br /><br /><span style="font-weight: bold;">Related posts:</span><br /><a href="http://tbmdb.blogspot.com/2009/10/alexander-osterwalder-on-nets-next.html">Alexander Osterwalders on the Business Model Canvas</a><br /><a href="http://tbmdb.blogspot.com/2010/09/evolution-of-business-model-concept.html">The Evolution of the Business Model Concept </a>Anders Sundelinhttp://www.blogger.com/profile/10744902263118677960noreply@blogger.com10tag:blogger.com,1999:blog-5357884563112855603.post-60947787737924270272010-09-07T16:48:00.004+02:002010-09-07T17:04:01.795+02:00Charles Baden-Fuller on why business models are so important for business success<div style="text-align: justify;">Professor Charles Baden-Fuller talks about the difference between value creation and value capture, robustness, sustainable competitive advantage today and tomorrow, and scalability.<br /><br />In his recent article in Long Range Planning, Business Models as Models, Charles explores the question "Are Business Models useful?" where he points out that they act as various forms of model: "to provide means to describe and classify businesses; to operate as sites for scientific investigation; and to act as recipes for creative managers".<br /></div><br /><object width="400" height="240"><embed src="http://www.youtube.com/v/_AB1s4pc48k?fs=1&hl=en_US&rel=0" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="400" height="240"></embed></object>Unknownnoreply@blogger.com4tag:blogger.com,1999:blog-5357884563112855603.post-58658929631390768592010-09-05T16:02:00.005+02:002010-09-05T16:30:33.497+02:00The Evolution of the Business Model Concept<div style="text-align: justify;">Below is a second iteration representing the evolution of the business model concept, including graphical representations, significant publications and books on the subject. Thank you everyone for your input, comments and emails with additional models and publications.<br /></div><br /><div style="text-align: justify;">Which business model concepts are you still missing? Which significant publications? Comment below or send feedback to <a href="mailto:anders@tbmdb.com">anders@tbmdb.com</a><br /></div><div style="text-align: justify;"><br />Thanks,<br />Anders<br /><br />Version 2:<br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://www.affarsmodeller.se/Business-Model-Timeline.gif" target="_blank"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 400px; height: 4400px;" src="http://www.affarsmodeller.se/Business-Model-Timeline.gif" alt="" border="0" /></a></div>Unknownnoreply@blogger.com12tag:blogger.com,1999:blog-5357884563112855603.post-4236623669989034362010-08-23T23:19:00.010+02:002010-09-05T16:28:55.839+02:00The Evolution of the Business Model Concept (version 1)<div style="text-align: justify;">Thank you for the input to <a href="http://www.affarsmodeller.se/The-Evolution-of-the-Business-Model-Concept.png">Version 1</a> of The Evolution of the Business Model Concept. An updated and extended version of can be found <a href="http://tbmdb.blogspot.com/2010/09/evolution-of-business-model-concept.html">here</a>.<br /></div>Unknownnoreply@blogger.com16tag:blogger.com,1999:blog-5357884563112855603.post-11464858832579998662010-07-02T21:16:00.021+02:002010-07-05T23:51:41.939+02:00The Design of Business (2009)<div style="text-align: justify;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqpmKm7QuYjQWSk4y21u8V2L6DwVQdpTMTB-OlOSg33ddZuLYpILykShFuy2D1TqFtc8iBjZHBh3JGGC_BF_gB7qsC6N_zD8KEI6u_s5Pey_zBpsi8cjeeI5pkCBC3BOP78wmJgfNq5gM/s1600/design-of-business.jpg"><img style="float: right; margin: 0pt 0pt 10px 10px; cursor: pointer; width: 80px; height: 120px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqpmKm7QuYjQWSk4y21u8V2L6DwVQdpTMTB-OlOSg33ddZuLYpILykShFuy2D1TqFtc8iBjZHBh3JGGC_BF_gB7qsC6N_zD8KEI6u_s5Pey_zBpsi8cjeeI5pkCBC3BOP78wmJgfNq5gM/s200/design-of-business.jpg" alt="" id="BLOGGER_PHOTO_ID_5489395522621227938" border="0" /></a><a href="http://www.amazon.com/gp/product/1422177807?ie=UTF8&tag=thebusmoddat-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=1422177807">The Design of Business: Why design thinking is the next competitive advantage</a>, by Roger Martin was a positive surprise as it was a quick read, well structured, delivered several interesting concepts and some in depth cases on design thinking and business model innovation.<br /></div><div style="text-align: justify;"><br />Even though several of the cases are familiar for many readers (such as P&G, Apple, Cirque du Soleil, McDonalds and RIM) Roger, who is dean of the Rotman School of Management at the University of Toronto, professor of strategic management, and author of the book <a href="http://www.amazon.com/gp/product/1422139778?ie=UTF8&tag=thebusmoddat-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=1422139778">The Opposable Mind</a>, adds interesting perspectives and sometimes information from behind the scenes working as a consultant and advisor. The book is an extension of Roger's popular article (<a href="http://www.rotman.utoronto.ca/rogermartin/DesignofBusiness.pdf">free download</a>) from 2004 with the same name.<br /></div><div style="text-align: justify;"><br />The book in three bullet points:<br /></div><ul style="text-align: justify;"><li>It introduces and explores the concept of the "Knowledge Funnel" describing how knowledge advances from mystery to heuristic, to algorithm for businesses to gain efficiency and lower costs, and the activities of moving across the knowledge stages (exploration) and operating within each knowledge stage (exploitation).</li><li>To accelerate the pace at which knowledge advances through the Knowledge Funnel, it presents the concept of design thinking as the necessary balance between analytical thinking using deductive and inductive reasoning (with the need for reliability and the ability to produce consistent and predictable outcomes), and intuitive thinking (with the need for validity and to produce outcomes that meet a desired objective). </li><li>It discusses challenges (primarily the results of proof-based analytical thinking) faced by organizations, CEOs and individuals within organizations, to build structures and processes that foster, support and reward a culture of design thinking, and how different CEOs have used different approaches to generate successful outcomes.<br /></li></ul><div style="text-align: justify;">A brief summary of the different chapters:<br /><br /><span style="font-weight: bold;">1. The knowledge funnel: How discovery takes shape</span><br />The introductory chapter starts with a story about McDonalds journey from mystery (how and what did Californians want to eat) to algorithm (stripping away uncertainty, ambiguity, and judgment from almost all processes). It briefly discusses analytical thinking, intuitive thinking and design thinking, to solve mysteries and advance knowledge, and the fine balance between exploring new knowledge and exploiting existing one.<br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBQ7OAn3JowMPw-qtIpoqXwTuoi97NnS3zHLWtxXbineYerOUK5D8wWbm7WUY96zSindeFue4c-ocar1vdgDQ_OExp89OoYJ4_Z_qE8borX2KFczd2XvFNX9CS__ve9mlP8_8ejbBtyns/s1600/The+Knowledge+Funnel.png"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 400px; height: 279px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBQ7OAn3JowMPw-qtIpoqXwTuoi97NnS3zHLWtxXbineYerOUK5D8wWbm7WUY96zSindeFue4c-ocar1vdgDQ_OExp89OoYJ4_Z_qE8borX2KFczd2XvFNX9CS__ve9mlP8_8ejbBtyns/s400/The+Knowledge+Funnel.png" alt="" id="BLOGGER_PHOTO_ID_5489405862089857986" border="0" /></a>It introduces and explores the concept of the "Knowledge Funnel" describing how knowledge advances from mystery to heuristic, to algorithm for businesses to gain efficiency and lower costs. This is explored also in later chapters: "Mysteries are expensive, time consuming, and risky; they are worth tackling only because of the potential benefits of discovering a path out of the mystery to a revenue-generating heuristic", "The algorithm generates savings by turning judgment… …into a formula or set of rules that, if followed, will produce a desired solution" and “Computer code – the digital end point of the algorithm stage – is the most efficient expression of an algorithm”.<br /><br />It also addresses the need for organizations to re-explore solved mysteries, even the founding ideas behind the business, and not get too comfortable focusing on the "administration of business" running an existing algorithm.<br /><br />In addition, the first chapter presents abductive logic, and some ideas originated by philosopher Charles Sanders Peirce; that it is not possible to prove a new thought concept, or idea in advance and that all new ideas can be validated only through the unfolding of future events. To advance knowledge we need to make a "logical leap of the mind" or an "inference to the best explanation" (or "Leaps of Faith" that John Mullins and Randy Komisar calls it in the book <a href="http://www.amazon.com/gp/product/1422126692?ie=UTF8&tag=thebusmoddat-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=1422126692">Getting to plan B </a>see <a href="http://tbmdb.blogspot.com/2010/01/getting-to-plan-b-2009.html">review/summary</a>) to imaging a heuristic for understanding a mystery. <a href="http://www.thinkers50.com/book_extracts/martin.pdf">Free preview of Chapter 1</a><br /><br /><span style="font-weight: bold;">2. The reliability bias: Why advancing knowledge is so hard</span><br />The second chapter focus on the distinction between reliability (produce consistent, predictable outcomes by narrowing the scope of a test to what can be measured in a replicable, quantitative way) and validity (produce outcomes that meet a desired objective, that through the passage of time will be shown to be correct, often incorporating some aspects of subjectivity and judgment to be achieved). Roger's main point in the chapter (or even in the book) is that today's business world is focusing too much on reliability (due to three forces: demand for proof, an aversion to bias and the constraints of time), with algorithmic decision-making techniques using various systems (such as ERP, CRM, TQM, KM) to crunch data objectively and extrapolate from the past to make predictions about the future. "What organizations dedicated to running reliable algorithms often fail to realize is that while they reduce the risk of small variations in their businesses, they increase the risk of cataclysmic events that occur when the future no longer resembles the past and the algorithm is no longer relevant or useful" With the turbulent times we live in, where new mysteries constantly spring up that reliable systems won't address or even acknowledge, businesses risk being outflanked by new entrants solving old and new mysteries developing new heuristics and algorithms. "Without validity, an organization has little chance of moving knowledge across the funnel. Without reliability, an organization will struggle to exploit the rewards of its advances… the optimal approach... is to seek a balance of both"<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4e0ouBFNsQASpcAj9kfIW1TtfUiImkRiCoL1h4a6lMoIf0m-rcvDBeXD6XcrWTGPXVUULP0Fek0AYCL8Hi8Oh6oWCnBMgSR6l8Qc34qICUv-Xhjz_bsOogGmBerozYaS1Pn6dWCHf6K0/s1600/The+predilection+gap.png"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 400px; height: 204px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4e0ouBFNsQASpcAj9kfIW1TtfUiImkRiCoL1h4a6lMoIf0m-rcvDBeXD6XcrWTGPXVUULP0Fek0AYCL8Hi8Oh6oWCnBMgSR6l8Qc34qICUv-Xhjz_bsOogGmBerozYaS1Pn6dWCHf6K0/s400/The+predilection+gap.png" alt="" id="BLOGGER_PHOTO_ID_5489393655342872066" border="0" /></a><span style="font-weight: bold;">3. Design thinking: How thinking like a designer can create sustainable advantage</span><br />Chapter three starts with an interesting case of Research In Motion (RIM) that leads into the discussion of what is really design thinking. Roger uses the quote by Tim Brown of IDEO, "a discipline that uses the designer's sensibility and methods to match people's needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity" and adds himself "a person or organization instilled with that discipline is constantly seeking a fruitful balance between reliability and validity, between art and science, between intuition and analytics, and between exploration and exploitation". That designers live in the world of abductive reasoning, actively look for new data points, challenge accepted explanations to posit what could possibly be true (in contrast to the two dominant forms of logic - deduction and induction, with the goal to declare a conclusion to be true or false).<br /><br />The chapter ends with the first discussion on roadblocks to design thinking (many more to come), with one being the corporate tendency to settle at the current stage in the knowledge funnel, and another how "highly paid executives or specialists with knowledge, turf and paychecks to defend” has the company's heuristics in their heads with no interest in advancing to the algorithm stage, making the executives less important. This leads nicely into the forth chapter about the transformation of Procter & Gamble.<br /><br /><span style="font-weight: bold;">4. Transforming the corporation: The design of Procter & Gamble</span><br />A.G. Lafley's transformation of Procter & Gamble from an incumbent in crisis to an innovative and efficient organization in just a few years has been widely covered in the business literature. As a student some years back I made an internship in P&G's Connect & Develop (connect with innovators outside the company and develop their ideas for P&G products), and have since been reading up on everything I can find about the transition and why other companies have not been able to make the same transition. Roger adds interesting perspectives, from his work with the company and its first vice president of innovation strategy and design, Claudia Kotchka, to develop "a comprehensive program that would provide practical experience in design thinking to P&G leaders". One of the top-down efforts being to drive brand-building from heuristic (in the minds of scarce and costly senior executives) toward algorithm, providing less senior employees the tools needed to do much of the work previously done by high-cost elites who then could then focus on the next mystery in order to create the next brand experience. The chapter also covers the Connect & Develop initiative and how it bulked up P&G's supply of ideas in the mystery-heuristic transition where it was thin, enabling it to feed more opportunities into its well-developed heuristics and algorithms of development, branding, positioning, pricing and distribution.<br /><br />Another highly interesting topic covered in the chapter is the change of processes within P&G, including the strategy review, at P&G. Lafley recognized that the existing processes was a recipe for producing reliability, not validity, "so risky creative leaps were out of the question". A transition from annual reviews with category managers pitching, "with all the inductive and deductive proof needed to gain the approval of the CEO and senior management" to "forcing category managers to toss around ideas with senior management… to become comfortable with the logical leaps of mind needed to generate new ideas".<br /><br /><span style="font-weight: bold;">5. The balancing act: How design-thinking organizations embrace reliability and validity</span><br />The chapter focuses on the need to balance reliability and validity, and the challenges to do so (foremost all structures, processes and cultural norms tilted towards reliability). "Financial planning and reward systems are dramatically tilted toward running an existing heuristic or algorithm and must be modified in significant ways to create a balance between reliability and validity". Roger presents a rough rule of thumb "when the challenge is to seize an emerging opportunity, the solution is to perform like a design team: work iteratively, build a prototype, elicit feedback, refine it, rinse, repeat… On the other hand, running a supply chain, building a forecasting model, and compiling the financials are functions best left to people who work in fixed roles with permanent tasks". The chapter feels somewhat repetitive, in the uphill battle for validity, and more obstacles of change are presented:<br /><ul><li>Preponderance of Training in Analytical Thinking</li><li>Reliability orientation of key stakeholders</li><li>Ease of defending reliability vs. validity</li></ul>In this chapter, Roger also discusses how design-thinking companies have to develop new reward systems and norms, with an example of how to think about constraints. "In reliability-driven, analytical-thinking companies, the norm is to see constraints as the enemy", whereas when validity is the goal "constraints are opportunities" and "they frame the mystery that needs to be solved".<br /><br /><span style="font-weight: bold;"> </span> <span style="font-weight: bold;">6. World-class explorers: Leading the design-thinking organization</span><br />In chapter six several interesting cases, and approaches of different CEOs, are presented, one being the widely covered case of Guy Laliberté, and his Cirque du Soleil. Again Roger adds to the existing body of knowledge with the twist of reliability vs. validity in creating a new market, and the knowledge funnel taking a one-off street festival into an unstoppable international $600 million-a-year business with four thousand employees. Laliberté has reinvented Cirque's creative and business models time and time again, "usually over protests that he was fixing what was not broken and that he could destroy the company". Other CEOs and cases covered in the chapter are James Hackett of Steelcase, Bob Ulrich of Target, and Steve Jobs of Apple.<br /><br />The role of the CEO and different approaches to build design-friendly organizational processes and norms into companies are discussed referring to the different cases presented.<br /><br />Again, Roger returns to the reliability vs validity battle, now from a CEO perspective with terms such as "resisting reliability", "those systems-whether they are for budgeting, capital appropriation, product development…", and "counter the internal and external pressures toward reliability".<br /><br /><span style="font-weight: bold;">7. Getting personal: Developing yourself as a design thinker</span><br />In the final chapter the focus is on how a non-CEO can function as a design thinker and develop skills to individually produce more valid outcomes even in reliability-oriented companies. Roger refers back to his previous book The Opposable Mind, and the concept of a personal knowledge system as a way of thinking about how we acquire knowledge and expertise. The knowledge system has three components:<br /></div><ul style="text-align: justify;"><li><span style="font-weight: bold;">Stance:</span> "Who am I in the world and what am I trying to accomplish?" </li><li><span style="font-weight: bold;">Tools:</span> "With what tools and models do I organize my thinking and understand the world?"</li><li><span style="font-weight: bold;">Experiences: </span>"With what experiences can I build my repertoire of sensitivities and skills. </li></ul><div style="text-align: justify;">Roger then presents the design thinker's stance, key tools (observation, imagination, and configuration), and how to obtain experiences by trying new things and test their boundaries.<br /><br />Roger also presents five things that the design thinker needs to do to be more effective with colleagues at the extremes of the reliability and validity spectrum:<br /></div><ul style="text-align: justify;"><li>Reframe extreme views as a creative challenge</li><li>Empathize with your colleagues on the extremes</li><li>Learn to speak the languages of both reliability and validity</li><li>Put unfamiliar concepts in familiar terms</li><li>When it comes to proof, use size to your advantage</li></ul><div style="text-align: justify;"><br />This is a great book and I recommend business developers and business model innovators to <a href="http://www.amazon.com/gp/product/1422177807?ie=UTF8&tag=thebusmoddat-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=1422177807">buy it</a>, as it is a quick read with several important concepts and interesting cases to learn from. I believe design thinking has the potential to help managers break out from the Matrix they live in and again realize the real world behind the existing algorithms.<br /><br />If you find this book review/summary helpful, <a href="http://www.amazon.com/gp/redirect.html?ie=UTF8&location=http%3A%2F%2Fwww.amazon.com%2Freview%2F1422177807%3Fie%3DUTF8%26ref_%3Dcm%5Fcr%5Fpr%5Frecent%26showViewpoints%3D0%26sortBy%3DbySubmissionDateDescending&tag=thebusmoddat-20&linkCode=ur2&camp=1789&creative=390957">please go to the Amazon book review page and rate my identical review "Helpful"</a> Thanks!<br /><br /><span style="font-weight: bold;">Disclaimer:</span> I read the book at the beautiful cliffs of Vernazza in Italy, and was in a very good mood. I actually read the book twice.<br /><br /><span style="font-weight: bold;">Other book reviews/summaries: </span><br /><a href="http://tbmdb.blogspot.com/2009/12/business-model-generation-2009.html">Business Model Generation (2009)</a><br /><a href="http://tbmdb.blogspot.com/2010/01/getting-to-plan-b-2009.html">Getting to Plan B (2009)</a><br /><a href="http://tbmdb.blogspot.com/2010/03/seizing-white-space-2010.html">Seizing the White Space (2010)</a><br /></div>Unknownnoreply@blogger.com9tag:blogger.com,1999:blog-5357884563112855603.post-316961884339539322010-06-14T17:58:00.006+02:002010-07-05T23:39:11.287+02:00Alexander Osterwalder on the story behind the Business Model Generation book<div style="text-align: justify;">Alexander Osterwalder presents the interesting project that resulted in the <a href="http://www.amazon.com/gp/product/0470876417?ie=UTF8&tag=thebusmoddat-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=0470876417">Business Model Generation book</a> (see <a href="http://tbmdb.blogspot.com/2009/12/business-model-generation-2009.html">review/summary</a>). He covers several examples and topics such as the importance of getting customers involved through conversations and to launch products with new business models.<br /></div><br /><br /><object height="240" width="400"><param name="movie" value="http://www.youtube.com/v/XpboEp_Ha3Y&hl=sv_SE&fs=1&rel=0"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/XpboEp_Ha3Y&hl=sv_SE&fs=1&rel=0" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" height="240" width="400"></embed></object><br /><br /><object height="240" width="400"><param name="movie" value="http://www.youtube.com/v/9ywJgzD56IQ&hl=sv_SE&fs=1&rel=0"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/9ywJgzD56IQ&hl=sv_SE&fs=1&rel=0" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" height="240" width="400"></embed></object><br /><br /><object height="240" width="400"><param name="movie" value="http://www.youtube.com/v/QS6jdAASQiA&hl=sv_SE&fs=1&rel=0"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/QS6jdAASQiA&hl=sv_SE&fs=1&rel=0" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" height="240" width="400"></embed></object><br /><br /><object height="240" width="400"><param name="movie" value="http://www.youtube.com/v/WP7XU-BJ3RI&hl=sv_SE&fs=1&rel=0"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/WP7XU-BJ3RI&hl=sv_SE&fs=1&rel=0" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" height="240" width="400"></embed></object><br /><br /><span style="font-weight: bold;">Related videos:</span><br /><ul><li><a href="http://tbmdb.blogspot.com/2009/10/alexander-osterwalder-on-nets-next.html">Alexander Osterwalder on The Net's Next Business Models</a></li><li><a href="http://tbmdb.blogspot.com/2009/04/alexander-osterwalder-on-business.html">Alexander Osterwalder on Business Models</a></li></ul><span style="font-weight: bold;">Related posts:</span><br /><ul><li><a href="http://tbmdb.blogspot.com/2009/12/business-model-generation-2009.html">Book review: Business Model Generation (2009)</a></li><li><a href="http://tbmdb.blogspot.com/2009/04/business-model-canvas-powerful-tool.html">The Business Model Canvas</a></li></ul>Unknownnoreply@blogger.com0