Business Model Demands Patience

Author and entrepreneur Steve Blank describes the business start-up process as having two phases.

In the first, entrepreneurs learn about their customers and what they want. This can be thought of as a series of experiments with real customers. It eventually leads to a business model that can be used to build a sustainable venture.

Once we learn what our business model needs to be, we can begin the second phase, which includes attracting more and more customers and building a company.

It is essential that we take our time before moving to the second phase to make certain we're building our company around a business model that can lead to successful growth.

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Key Questions to Ask to Develop a Business Model

It takes a good deal of courage to honestly ask questions to oneself to develop a well designed business model. This presentation on slideshare highlights issues and a framework to develop these questions:

Business Model Key Questions

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Online Repository on Business Models

A repository of 31 Academic Papers on Internet Business Models, a few successful web-based business models and links to a few books.

(To browse through the website, please click here)

Harvard Business Review: Business Model Innovation

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Zipping to a New Business Model: Focussing More on Car Rental Than Car Ownership

Not many companies can genuinely claim to have invented a new business model. Car-sharing service Zipcar, which saw its stock soar on its Nasdaq debut Thursday, is one of them.

The company’s initial share price shot up from $18 to $28. But the IPO gain, interesting for investors, may not be as interesting as the company itself. Zipcar isn’t making money, but it is expanding, and it is gaining revenue. And as importantly, it has caught the imagination of many in the areas where it operates. Concentrated in large cities and college towns, Zipcar allows its members to easily check in and out of parked cars, said chairman and CEO Scott Griffith.

 

“It’s a very different business model than the traditional car-rental business,” Griffith tells CNN in the interview. “We really see our competition as car ownership rather than car rental.”

(To read on www.portfolio.com, please click here)

Business Model Presentation: Guide and Template

Frequently, making and presenting a business model is quite a daunting task for anyone who has heard the term for the first time. However, is not has to be so. This presentation on Slideshare has the minimum few slides to ensure that a model can be made and presented. 

Business Plan Highlights Template

 

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10 New Business Models for this Decade

10 New Business Models for this Decade

Using the Alex Ostwalder framework for Business Models and fantastic graphics, this presentation outlines 10 types new Business Models for this Decade, as follows:

1. Localized Low-Cost Business Model
2. One-Off Experience Business Model
3. Beyond Advertising Business Model
4. Markets Are Conversations Business Model
5. Low-Budget Innovation Business Model
6. Community-Funded Business Model
7. Sustainability-Focused Business Model
8. Twisted Freemium Business Model
9. Unlimited Niches Business Model
10. In-Crowd Customers Business Model

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Business Model Lessons in Creating Slideshare

This presentation aptly captures www.slideshare journey in becoming the worldwide leader and "youtube" of power point presentations even though it was started in 2006 and is run by a 14 member team based in India. 

It stresses the manner in which a howconducting a Market Study & Developing the Business Model helps in creatinga good business.

 

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Sloan School of Management, MIT: Do Some Business Models Perform Better?

MIT Center for Coordination Science Working Paper No. 226

Despite its common use by academics and managers, the concept of business model remains seldom studied. This paper begins by defining a business model as what a business does and how a business makes money doing those things. 

Then the paper defines four basic types of business models (Creators, Distributors, Landlords and Brokers). Next, by considering the type of asset involved (Financial, Physical, Intangible, or Human), 16 specialized variations of the four basic business models are defined. Using this framework, we classify the revenue streams of the top 1000 firms in the US economy in fiscal year 2000 and analyze their financial performance. 

The results show that business models are a better predictor of financial performance than industry classifications and that some business models do, indeed, perform better than others. Specifically, selling the right to use assets is more profitable and more highly valued by the market than selling ownership of assets. Unlike well-known concepts such as industry classification, therefore, this paper attempts to describe the deeper structure of what firms do and thereby generate novel insights for researchers, managers and investors.

(To read the article on http://ccs.mit.edu, please click here)

Seeds of a New Business Model: Organic Thai Rice

Business executive Peetachai Dejkraisak leads a new company that aims to promote organic Thai rice, sustainability and corporate responsibility

Peetachai Dejkraisak, the CEO of Siam Organic Co and a second year student at Sasin's MBA programme, recently led a team of four students from Sasin Graduate School at Chulalongkorn University to first prize in the top Bangkok Business Challenge competition beating 65 teams from 21 countries. As the winner of the competition, Siam Organic's business plan focuses on promoting its "jasberry" brand of nutritious, healthy and certified organic rice. Jasberry is a blend of Thailand's renowned Jasmine fragrant rice and berries, which have a high antioxidant content. 

"We have Bt1-million registered capital focussing on the marketing and exporting of this special rice variety. Our product is certified as 100 per cent organic. "With a fully-integrated supply chain, we aim to access consumers worldwide and develop one a premium branded organic rice from Thailand. "We are also seeking fresh funds to further expand our business, which is ahead of the competition in terms of product readiness," says Peetachai.

Siam Organic will first tap into US consumers who are health conscious. A recent online survey shows that consumers are prepared to pay a slightly higher price of, say, US$10 (Bt305), per kilogram for premier organic rice. Most buying decisions are made by women and housewives who want their kids to consume organic rice at least once a week.

Key factors (USPs) are nutritional value, taste and price. In terms of nutrition, "jasberry" rice has more antioxidants than blueberry or green tea, while its taste and after-taste suit many US consumers. In addition, the rice has less sugar content compared to white rice and other rice in general.

In terms of social responsibility, he says, the production of "jasberry" is friendly to the environment because no chemical pesticides or fertilisers are used, so it helps protect the eco-system.

The use of organic fertilisers and pesticides also lowers the farmers' production costs, resulting in better income for them.

According to Peetachai, chemicals and seeds generally account for 70 per cent of farmers' production costs, resulting in a vicious cycle of farmers' indebtedness.

(To read the article on www.nationmultimedia.com in detail, please click here)

The EBMIF Business Model Design Framework

Business models are not stand alone. They can function well only in a well thought out Business Model environment - handling challenges as they come.

Business modelinnovation is regarded already today as the major driver of value creation andgrowth. In a few years, it will be the main source of competitive advantage.

Competitive advantagebased purely on product advantage will at best be only short-term. The wayproducts are created, delivered, and maintained will make the greatestdifference in the future. How companiesdo business will often be more important than what they do. Consequently,companies will have to continuously review and reconfigure their businessmodels.

In the processof business model innovation, the challenge is to balance stability and reliability with innovation andchange. Without a systemic approachto ensure that all involved internal and external parties work ‘in concert’to develop and implement one consistent business model and can leverageexisting assets and that is aligned with the markets, success will not be achieved. 

Business model innovation needs to be turned into a systematic process thatenables organisations to execute it with operational excellence and to repeatit successfully again and again.

Organisationsthat start to think about to work on business model innovation and to institutionalizethe process soon discover that they haveto find new answers for a whole range of questions and have to struggle withmany challenges.

The EBMIF Business Model Design Framework

The intention ofthe European Business Model Innovation Forum, co-founded by Juergen H. Daum, isto leverage the collective intelligence and experience of a group ofprofessionals – cross-company, cross-industry, and cross-country – toaccelerate the process of developing a ‘best practice business model innovationprocess guideline’ and to facilitate learning and new insights that help theparticipating companies to successfully implement business model innovation intheir organisations. 

Output desired: Specifically this should enable them to avoid the cost offailure and implement change without jeopardizing the existing business, tocreate real differentiation and to beat competitors, to overcome resistance tochange and increase speed, to boost productivity and reduce down time, and tomeasure the impact of change.

(To read the article on www.iioe.eu, please click here) 

Creating Breakthrough Business Models

Led by Langdon Morris of UPenn, this project plans to develop an asimulation/ edutainment software tool to enable managers model the development of breakthrough businesses in their own companies.

 

Langdon Morris

Definition: A "Business Model" is a description of the business game and a firm's relationship to it.

The process of business modeling is the process of understanding how existing market structures, technologies, and business processes define the game as it is played in a particular industry or market, how these elements are changing, and what new possibilities are emerging. The project therefore examines the complex linkages between the evolution of the market, new technologies, the development of organizational strategy, the design of operations, the management of engineering, R&D and innovation, and the roles they play in the creation of new breakthrough businesses.

Need to be addressed: The purpose of this project is to support the development of sustainable competitive advantage for the sponsoring companies by enabling their executives to understand the principles, systems, and methods by which existing companies create new business breakthroughs. 

Activities planned with timelines: The project team is developing the thesis through a series of workshops that are held inside the sponsoring companies. During the first year of the project, the team will refine and test the thesis and articulate it as a coherent system of thinking and practical methods that can be applied consistently across different industries and geographies. Development of the software tool will take place in years 2 and 3.  

Output desired: The output of the project will be a simulation / edutainment software tool that enables managers to model the development of breakthrough businesses in their own companies.

(To read the article on www.acasa.upenn.edu, please click here)

Business Model Warfare: White Paper by UPenn

"Business Model Warfare" is an InnovationLabs White Paper, on the Strategy of Business Breakthroughs. It is authored by Langdon Morris, Senior Practice Scholar, Ackoff Center for the Advancement of Systems Approaches (A-CASA), University of Pennsylvania and prepared and published jointly with A-CASA.

Written in a lucid manner and in a conversational style, its contents on Business Model discuss Creative Destruction, Innovation and its dimensions, Competition and Business Models, Understanding Systems and Business Models, Winning and Losing at Business Model Warfare, Understanding Customers and a concluding summary of Business Model Warfare.

(To read the article on www.acasa.upenn.edu, please click here)

Brothels and Business Models: Wikipedia

Brothels are considered infamous and evoke strong emotions across large parts of the world. They represent the oldest known profession known to mankind. It is interesting to note that they also have a business model in operation - as succinctly pointed out by  Wikipedia

• In the regulated brothels in Nevada, the prostitutes are contract workers who split their earnings with the house and are often expected to "tip" support staff (cleaners, limo drivers, etc.); they receive no benefits, such as health insurance, and no withholding for Social Security taxes. 
• In others, the prostitutes are employees, receiving a small fixed salary and a portion of the money spent by the customer. In this situation, sometimes known as Maison close (French for "closed house") the brothel owner receives the rest of the payment for services. 
• In still others, the prostitutes pay a fee for use of the facilities, with the brothel owner not being involved in the financial transaction between prostitute and client. This may be known as maison de passe, French for "trick house". In cases of illegal brothels, this arrangement provides some level of plausible deniability to the facility owner, who often (thinly) disguises the brothel as a massage parlor, bar, strip club or similar business. 

To read the article in http://en.wikipedia.org, please click here)

Somalia Sea Pirates: Fascinating Business Model

UN Security Council investigators to Somalia document the fascinating business model of the Somalia Sea Pirates in an UN Dispatch.

A basic piracy operation requires a minimum eightto twelve militia prepared to stay at sea for extended periods of time, in thehopes of hijacking a passing vessel.

Each team requires a minimum of two attackskiffs, weapons, equipment, provisions, fuel and preferably a supply boat. Thecosts of the operation are usually borne by investors, some of whom may also bepirates.

To be eligible for employment as a pirate, avolunteer should already possess a firearm for use in the operation. For this‘contribution’, he receives a ‘class A’ share of any profit. Pirates whoprovide a skiff or a heavier firearm, like an RPG or a general purpose machinegun, may be entitled to an additional A-share. The first pirate to board avessel may also be entitled to an extra A-share.

At least 12 other volunteers are recruited asmilitiamen to provide protection on land of a ship is hijacked, In addition,each member of the pirate team may bring a partner or relative to be part ofthis land-based force. Militiamen must possess their own weapon, and receive a‘class B’ share — usually a fixed amount equivalent to approximately US$15,000.

If a ship is successfully hijacked and brought toanchor, the pirates and the militiamen require food, drink, qaad, freshclothes, cell phones, air time, etc. The captured crew must also be cared for.In most cases, these services are provided by one or more suppliers, whoadvance the costs in anticipation of reimbursement, with a significant marginof profit, when ransom is eventually paid.

When ransom is received, fixed costs are the firstto be paid out. These are typically:

• Reimbursement of supplier(s)

• Financier(s) and/or investor(s): 30% of theransom

• Local elders: 5 to 10 %of the ransom (anchoringrights)

• Class B shares (approx. $15,000 each):militiamen, interpreters etc.

The remaining sum — the profit — is divided betweenclass-A shareholders.

(For source of picture, click here)

(For reading the article on http://www.undispatch.com/, please click here)

The Business Model Institute: A One Stop Shop

Started by Jim Muehlhausen, this website has several resources for the avid business modeler

From becoming the youngest franchisee in Meineke Discount Muffler history (1987-1991) to founding an automotive aftermarket manufacturing concern, Ji has achieved recognition from Michael Porter of the Harvard Business School and Inc. Magazine in the IC 100 Fastest Growing Businesses. He has also served as an adjunct professor of business at the University of Indianapolis teaching Organizational Behavior, Management & Sales.

Mr. Muehlhausen is a well known business speaker and over nine years has personally coached hundreds of business owners in nearly 4,000 face-to-face coaching sessions and has clients in North America, Europe, Asia, Africa, and the Middle East.

Aside from his book “The 51 Fatal Business Errors...and How to Avoid Them”, Mr. Muehlhausen has been published in various publications including Inc., The Small Business Report, Entrepreneur, the Indianapolis Business Journal, Undercar Digest, Digitrends, and NAICC Journal.

(To read in detail on http://businessmodelinstitute.com, please click here)

Business Model: Organic Contract Farming by ACIL

Vadodara based ACIL Cotton Industries has startedorganic contract farming in hundreds of acres across several districts inGujarat and is also entering the retail sector. In a statement to the Bombay Stock Exchange (BSE) ACILmentioned that it had already piloted farming in various districts of Gujaratsince the last six months, and has harvested BT cotton, tuver (split pigeonpea), jira (cumin) and some herbs.

ACIL's businessmodel has several components as follows: 
Land

- Plans to acquire 2500 acres, near finalization of 450 acres in Ahmedabad and Bhavnagar districts

- Approx 600 acres taken in Ahmedabad and Surendranagar districts on lease/contract

Technology provider: Looking at sourcing technology from Israel. The long term plan is to set up a research and developmentcenter near Anand, Gujarat.

Support provided to farmers – ACIL provides all facilities like irrigation system,technical assistance, quality seeds, organic fertilizer and Labors (ifrequired) to farmers for better yields after agreement.

Marketing support provided to farmers - ACIL will buy all the crop harvested for sale through its planned retail chain. ACIL's retail chain haspresence across all agro-commodities in all the sectors of trading, import,export, and retailing.

Value proposition to end customers - Retailing only in Agro Commodity with amotto to provide a combination of quality, authentic, good services at best andhard to find rates with a pleasant atmosphere and with the warm feeling.

(To read the article on www.business-standard.com, please click here)

(To read in detail on www.moneycontrol.com, please click here)

(People interested in an earlier entry on Business Standard can click here)