This is a summary of the five business models presented in Business Model Generation. These models are: Un-bundled, long tail, multi-sided, free and open. Have also included a quick intro to Treacy and Wiersema from their 1993 HBR article. Reference: Osterwalder, A. & Pigneur, Y., 2010. Business Model Generation. Hoboken, N.J: John Wiley & Sons.

1. Business Models
in
Business Model Generation
(2010)

2. Unbundling Business Model

3. http://www.mckinsey.com/Client_Service/Marketing_and_sales/Profiles
Marc Singer & John Hagel III
developed the concept in 1999.
http://www.we-magazine.net/we-volume-03/what-the-west-can-learn-from-the-east/

4. Previous work (HBR, 1993)
by Michael Treacy and Fred Wiersema
http://www.amazon.com/Fred-Wiersema/e/B003O5727C
http://www.speakinc.com/keynote-speakers/michael-treacy/

5. Treacy and Wiersema came up
with the concept
of concentrating on
one of three value disciplines:
- Operational Excellence
- Product Leadership
- Customer Intimacy

6. Unbundling the corporation
This concept highlights that most companies today
are an unnatural bundle of three very different types
of businesses:
• infrastructure management businesses
• customer relationship businesses
• product innovation and commercialization.
Each of these businesses has very different economics,
skill-sets and cultures.
Hence, companies should unbundle them.
http://www.businessmodelalchemist.com/category/unbundling-the-corporation

7. Separate the business as each
of the three businesses need different
requirements.
Trade-offs and conflicts can be minimised
through separation.
Osterwalder, A. & Pigneur, Y, 2010: 58

8. Product Customer Relationship Infrastructure
Innovation Management Management
Economics
High cost of customer
Early market entry enables High fixed costs make large
acquisition makes it
charging premium prices and volumes essential to achieve
imperative to gain large wallet
acquiring large market share; low unit costs; economies of
share; economies of scope
speed is key scale are key
are key
Culture
Battle for talent; low barriers Battle for scope; rapid Battle for scale; rapid
to entry; many small players consolidation; a few big consolidation; a few big
thrive players dominate players dominate
Competition
Highly service orientated; Cost focused; stresses
Employee centred; coddling
customer-comes-first standardization, predictability,
the creative stars
mentality and efficiency
Hagel, J. & Singer, M. (1999) in Osterwalder, A. & Pigneur, Y, 2010: 59

9. Examples:
- Johnson & Johnson (Acuvue)
Product Innovation
- Charles Tyrwhitt
Customer Relationship
- Private Banking
Infrastructure

10. Long Tail Business Model

11. http://www.123-reg.co.uk/blog/interviews/chris-anderson-free-long-tail/
by Chris Anderson (2004)
Concept was first applied
to the media industry

12. traditional business model =
sell lots of units of a small number
of hit products.
long tail = sell lots of smaller units
of greater number of products.

13. Units Mass market
Long tail
Products

14. Examples:
• eBay
• Lulu
• Buckingham English (failed?)

15. Multi-sided Platform

16. Multi-sided platforms
work by bringing together two
or more distinct but interdependent
groups of customers.
Osterwalder, A. & Pigneur, Y, 2010: 78

17. Key questions are:
Can we attract sufficient numbers of customers
for each side of the platform?
Which side is more price sensitive?
Can that side be enticed by a subsidized offer?
Will the other side of the platform
generate sufficient revenues
to cover the subsidies?
Osterwalder, A. & Pigneur, Y, 2010: 79

18. Sample of Multi-sided Businesses

19. Examples:
• Metro (newspaper)
• Aps
• Google

21. http://www.123-reg.co.uk/blog/interviews/chris-anderson-free-long-tail/
Chris Anderson (again)
Free: The Future
of a Radical Price
(2008)
Free!
Why $0.00 is the Future of Business
(2008)
Both in Wired Magazine

22. Podcast on
Knowledge @ Wharton
in
2009

23. Three free models to consider:
1) free offer =
based on multi-sided platforms
2) freemium = free basic services with
optional premium services
3) bait and hook =
free / inexpensive initial offer
lures customers into repeat purchases
Osterwalder, A. & Pigneur, Y, 2010: 90

24. Examples:
• Metro / Lady Nights
multi-sided
• Economist
free + premium
• Vistaprint
‘free’ offers

25. Open Business Models
http://findinggeri.wordpress.com/2011/10/13/open-doors/

26. Main thinker on topic:
Henry Chesbrough

27. Open is reliant on collaboration.
Enterprise
Inside-out
Enterprise
Outside-in

28. Osterwalder, A. & Pigneur, Y, 2010: 111
Principles of Innovation
Closed Open
We need to work with smart people
The smart people in our field work for us.
both inside and outside our company.
To profit from R&D, we must discover it, External R&D can create significant value:
& ship it ourselves. internal R&D is needed to claim some portion of that.
If we conduct most of the best research in the industry We don’t have to originate the research
we will win. to benefit from it.
If we create most of the best ideas in the industry, If we make the best use of internal and external ideas,
we will win. we will win.
We should profit from others’ use of our innovations,
We should control our innovation process,
and we should buy others’ (IP) whenever it advances
so that competitors don’t profit from our ideas.
our own research.

29. Examples:
• Proctor & Gamble
Pharma
• GlaxoSmithKline
• Business Model Generation
• Bionicbuzz

31. References
Evans, D.S. (2003) Managing the Maze of Multisided Markets [www]. Strategy + Business, # 32. pp. 1-5
Available from: http://www.strategy-business.com/media/file/03301.pdf [Accessed 07/01/12].
Hagel, J. & Singer, M. (2000) Unbundling the Corporation. The McKinsey Quarterly, #3. pp. 148-161
Available from: http://www.strategyworld.org/unbundling.pdf [Accessed 07/01/12].
knowledge@wharton, (n.d.) How About Free? The Price Point That Is Turning Industries on Their Heads [www]
Wharton University of Pennsylvania.
Available from: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2169 [Accessed 07/01/12].
n.n. (n.d.) Business Models and Open Innovation. MunkholmPlusRisgaard.
Weblog [Online] 10th October 2011.
Available from: http://munkholmplusrisgaard.dk/2011/10/10/business-models-and-open-innovation/.
[Accessed 07/01/11].
Osterwalder, A. & Pigneur, Y. (2010) Business Model Generation. Hoboken, N.J.: John Wiley & Sons Inc.
Osterwalder, A. (n.d.) Podcast with John Hagel, Co-Chairman of the Deloitte Center for Edge Innovation.
Business Model Alchemist. Weblog [Online] 25th January 2008.
Available from: http://www.businessmodelalchemist.com/category/unbundling-the-corporation
[Accessed 07/01/12] [sic].
Treacy, M. & Wiersema, F. (1993) Customer Intimacy and Other Value Disciplines [www]
Harvard Business Review, (January/February), pp. 83-93.
Available from: http://www.priconsult.nl/mediapool/77/770108/data/TreacyWiersema.pdf [Accessed 07/01/12]