Business model archetypes

How familiar are you with different business model archetypes or patterns, such as the 'free' model? Do you always start with a blank sheet when designing a new canvas or would/should you reuse existing models? Or when you analyse an exiting model, would/should you look at what is unique or what it has in common with other models?

Whatever your approach, it is good to be familiar with the individual archetypes that have been identified so far and the classifications (in the form of lists or typologies) used to describe multiple archetypes. Most of this started with trying to describe and understand different e-business models, for example Timmers (1998), Rappa (2000) and Weill & Vitale (2001). Later the specific focus on e-business models became less, although many of the newer models are still associated with the Internet as driver or enabler. Osterwalder & Pigneur (2010) and Johnson (2010) are examples of newer lists that are not e-business focussed.

Next to presenting different lists or typologies and their underlying criteria, some authors also address the application of business model archetypes for business model design and management via, for example,business model composition (Weill & Vitale, 2001), business model decision-making (Morris et al.,2005) and business model maturity (Chesbrough, 2006).

For a more detailed description and discussion see the whitepaper ‘Understanding business models.'

Business model frameworks

How familiar are you with different business model frameworks? What framework will suit your needs best?

Selecting the right framework may depend upon, amongst others, the purpose (e.g. communication, brainstorming, business plan, system development), the setting (e.g. start-up or established company, organization or network, social or technical) and the type of support required (e.g. modelling language, visualisation, templates, tool support, etc.).

Below you find a list of some of the more well-known and published frameworks:

• The Business Model Canvas (Osterwalder & Pigneur)
• The Four-Box Business Model (Johnson)
• The STOF model (Bouwman, De Vos & Haaker)
• Business Model Schematics (Weill & Vitale)
• Technology/market mediation (Chesbrough & Rosenbloom)
• Entrepreneur’s business model (Morris, Schindehutte & Allen)
• e3-value (Gordijn & Akkerman)

For a more detailed description and discussion see the whitepaper ‘Understanding business models.'.

A business model definition

A business model describes the value logic of an organization in terms of how it creates and captures customer value (Fielt, 2011).

The definition is related to Osterwalder and Pigneur (2010), but with 'customer' value and without 'delivering' value. The definition is well aligned with Chesbrough (2006), Johnson (2010), and Teece (2010).

While most authors are not very explicit about what they mean with value, most definitions seem to refer to mean 'customer value' (i.e. value for the customer). We excluded 'delivering' value from the definition as we see delivering value as part of creating value. Customer value implies use value, which cannot be created without being delivered.

We see the identification of the different elements of a business model, such as the value proposition, resources or revenues, not as part of the business model definition, but as part of the business model framework. A framework operationalizes the definition and makes it more concrete and specific. This creates some flexibility as there can be multiple, different specific frameworks while adhering to a single, generic definition. This caters for the use of the concept for multiple purposes and in different contexts, and the development of the concept over time.

While the business model has a specific organization as its focus, we want to make explicit that often this focal organization operates in an organizational network and that the organizational network can play a prominent role in creating and capturing value. If this is the case then the network will be included in the business model. However, the network will still be from the perspective of the focal organization.

An organization can have multiple business models, either in time (sequentially) or at the same time (simultaneously). While outside the scope of the current discussion, this requires understanding of synergies and conflicts between business models and creates a need for business model portfolio management and business model lifecycle management.

We also leave open the possibility that the organization is a profit or non-profit organization. Capturing value will often be about financial revenue models that contribute to the monetary bottom-line of the organization. However, we do not want to exclude a broader perspective than profitability including also social responsibility and environmental sustainability.

See the 'Understanding business models' whitepaper (pdf here) for more information.

References

Chesbrough, H. (2006). Open business models: How to thrive in the new innovation landscape. Boston, MA: Harvard Business School Press.
Fielt, E. (2011). Understanding business models (Business Service Management whitepaper volume 3). Brisbane, Australia: Smart Services CRC. Available via: http://eprints.qut.edu.au/41609/
Johnson, M. W. (2010). Seizing the white space: Business model innovation for growth and renewal. Boston, MA: Harvard Business Press.
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: A handbook for visionaries, game changers, and challengers: (self-published).
Teece, D. J. (2010). Business Models, Business Strategy and Innovation. Long Range Planning, 43(2-3), 172-194.

What do we mean with business model?

While the growing attention for business models and business model innovation is a positive development, it also stresses the need for better understanding what we mean with the business model concept. This is not straight-forward as business models are still not well comprehended and the knowledge about business models is fragmented over different disciplines, such as information systems, strategy, innovation, and entrepreneurship. We need to further develop our conceptualisation of business models by discussing and synthesising business model definitions, frameworks and archetypes from different disciplines.

I tried to contribute to this development by the whitepaper ‘Understanding business models.' After reading this whitepaper, the reader will have a well-developed understanding about what business models are and how the concept is sometimes interpreted and used in different ways. It will help the reader in assessing their own understanding of business models and that and of others. This will contribute to a better and more beneficial use of business models, an increase in shared understanding, and making it easier to work with business model techniques and tools.