Sunday, June 07, 2009

Towards a business model definition

Coming up with a good definition is hard, and for a body of knowledge as immature and abstract as 'business model' thinking (logic? theory?) it is even harder. Two particular, related, problems I have come across are:

  1. Whether a definition refers to a business model of an organization (actor) or of an initiative (network).
  2. Whether a definition refers to a (more or less) abstract innovation logic (e.g. open), or to offering and delivering a specific value proposition.

Trying to reconcile this, here is an attempt to define what a business model is and what this means for business model management.

A business model describes the value rational for the application of resources by one or more business actors. A business model can be described from the business actor and/or the business initiative perspective. A business actor can participate in one or more business initiative. A business initiative can involve one or more business actors.

From the business actor perspective, the value rational comprises the fundamental value logic of a business actor. From the business initiative perspective , the value rational comprises the value creation, configuration and capture of a business initiative.

The core challenge of business model management is to ensure that the value rational is viable and sustainable. This requires governing the value rational, aligning the value rational at a moment in time (including nourishing synergies and handling conflicts), and evolving the value rational over time.

No comments: