Business Model Design
What is a Business Model?
A business model is more than how an organization makes money, but rather represents an explicit architecture of value delivery and exchange. As such, a successful business is a function not only of the amount of intrinsic value (e.g., product and service attributes) the organization delivers through its model, but also the degree to which the model aligns with consumer perceptions of value.
Fundamentally, a business is a set of activities, both internal and external, which support the creation, delivery and realization of value. The specific make-up of those activities comprises the business model, or more accurately, the value architecture.
Materially, the business model or value architecture can be deconstructed into the following components or building blocks:
Internal Components:
• Key Activities: Production, etc.
• Key Resources
• Cost Structure
• Partner/Supplier Network
External Components:
• Brand
• Customer Segments
• Customer Relationships
• Distribution/Sales Channels
• Revenue Flows
• Value Proposition
Business Model Design
Business design engineering is the process of constructing a new or modifying an existing business model or value architecture to optimize the delivery of value to consumers and the realization of value by the organization. It is a consumer-insight-driven process that potentially impacts the components, arrangement and characteristics of all the internal and external organizational components that create, deliver and realize value.
