Business model thinking is on the rise. A lot of organizations, big and small, are documenting and reviewing their business models with a view to gaining competitive advantage. From my observation, however, the concept of a business model is mainly understood at a superficial level. Many people are quick to start filling boxes on their business model without understanding the fundamentals of business model thinking and design. This article introduces a unique approach that solves that problem. This article introduces the concept of the "Business Model Story," a simple-to-understand, lively, and entertaining way to have business model conversations as well as business model reinventions.
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What is a BUSINESS MODEL? First, ReInvent Your Story. Then, Document and ReInvent Your Business Model
1. What is a Business Model? First, ReInvent Your Story.
Then, Document and ReInvent Your Business Model
By Rod King, Ph.D.
There are myriad definitions of a business model. Many definitions of a business
model are abstract, static, and boring. In today's world of transient competitive
advantage, the last thing an entrepreneur, a startup, an organization, or executive
wants is an abstract, static, and boring description of its business model.
Employees and other stakeholders would also like to be engaged in business
model conversations that are simple-to-understand, lively, and entertaining.
For me, a business model is like a 3-legged stool that tells the story of how an
organization creates, delivers, and shares value with regard to a protagonist. The
first leg of a business model story is the Value Creation Act. The second leg is the
Value Proposition and Delivery Act. The third leg is the Value Sharing (Profit) Act.
The protagonist (hero) of the story is a customer who is struggling to get a most
important task or job done amidst obstacles, constraints, and barriers in his/her
environment. The protagonist has fears, uncertainties, and doubts. Nevertheless,
2. the protagonist (hero) wants to minimize the pain while maximizing the delight of
getting the job done. No doubt, the protagonist has higher goals and aspirations.
In the business model story, the enterprise is one of several competitors that offers
the protagonist a tool (product/service) to cost effectively overcome the obstacles
and get the job done. Like for the enterprise, the protagonist has choices and trade-
offs to make in order to achieve the desired outcome. So, what does the enterprise
know about the situation of the protagonist and in particular, how the protagonist
lives, thinks, and acts? What are risks and rewards in the life of the protagonist?
The enterprise may have to "get out of the building" while asking, testing, and
validating answers to several questions. For instance, what are the protagonist's
critical problems and constraints? What job does the protagonist most struggle to
get done? How would a competing enterprise make its case to the protagonist ... in
no time? What would be the enterprise's Magnetic Value Proposition (MVP) as well
as strategy for the protagonist's success? How does the protagonist measure
success? How would the protagonist be reached or communicated with? What sort
of relationship should the enterprise have with the protagonist? What would be the
best tool for the protagonist? Which tool (product/service) would the protagonist
eventually "hire" to get the job done? Why?
In short, what would be the value or delight/pain ratio of the protagonist's selected
tool? How would the selected tool (product/service) be similar to but different from
competing tools (products/services)?
A business model (story) cannot stand or function if any leg is missing. However,
the riskiest part of a business model is its second leg: the Value Proposition and
Delivery Act. While the Value Creation Act is largely within the control of the
enterprise and takes place "inside the building," the Value Proposition Act is not.
The Value Proposition Act is largely unpredictable and takes place "outside the
building" in an environment that is increasingly volatile, uncertain, complex, and
ambiguous. So, always first address the Value Proposition Act that directly speaks
to the problems, concerns, and fears of the protagonist (customer or hero). The
survival of the enterprise depends on its second leg, the Value Proposition Act. The
survival and happiness of the protagonist also depend on the second leg of the
business model. To quickly document, test, and validate as well as reDesign the
Value Proposition Act of a business model, you may wish to take a look
at: http://goo.gl/AFLCl
Rod.
July 10, 2013.
http://businessmodels.ning.com & rodkuhnhking@gmail.com & http://twitter.com/RodKuhnKing