I bet that the phrase “business model” pops up in your life every day. But have you ever asked yourself a question what in fact a business model is? What differentiates a business model from organizational or financial one? In times called the era of business model generation it seems to be reasonably sound to have a clue what we refer to when talking about business models. Especially if you currently work on your own one.
– Select its customers
– Define and differentiate its products
– Create value for customers
– Acquire and keep customers
– Produce goods or services
– Lower the costs
– Deliver goods and services to the market
– Organize activities within the company
– Configure the resources
– Achieve and sustain high level of profitability
– Grow the business over time
– Key resources (every physical, financial, intellectual resources you need,
considering owning, leasing, subcontracting, or outsourcing them)
– Key activities (everything that engages customers and turns into profit)
– Key partnerships (everything that reduces your costs or gives you access to
resources you need)
– Costs structure (every fixed or variable expense that may occur)
– Customer segments (every customer type you are going to reach
remembering that mass market or market niches require different approaches
– Customer relationships (everything you will do to serve distinct customer
– Channels (every “customer touch points” are you going to use
– Revenue streams (every monetization mechanism, which will build your
business – “one-off deals”, licenses, subscriptions)
Centre (the most important part):
– Value proposition (what will led customers to do business with your
company,rather than with your competition)
Thinking about business model is pretty big thing. Sometimes it’s good to take a step back and ask oneself the question “why do you want to do this”. ?
As Simon Sinek points out, the answer to this makes the whole difference and has tremendous impact on everything what comes next.
Whitehead once said that whole European philosophy is a series of footnotes to Plato. Having studied hundreds of books on contemporary management one may came to a conclusion that they consist of footnotes to Peter Drucker, and his intellectual output encapsulated in “Management” from 1970’s.
Drucker is not only father of remark that business has two, and only two basic functions: marketing and innovation, but also other essential principles on managing teams and delivering work in productive way, which is the first test of management’s competence.
Drucker gives a lot of clues on how to make wise decision. Becoming part of top management you’ll constantly need to ask yourself the question “What is our business, and what is not?”.
Drucker describes illuminating decision making stories, incl. those when Sloan Jr said at one of GM top committees “Gentlemen I take we are all in complete agreement to the decisions here – then I propose we postpone further discussion on this matter until our next meeting, to give ourselves time to develop disagreement or perhaps gain some understanding of what the decision is all about”.
Drucker will explain you that spirit of performance in a human organization is in fact an act of creation of energy, as company’s energy output is larger than the sum of efforts put in, and that the purpose of organization is to enable ordinary people to do extraordinary things.