Is it Time to Improve Your Business Model?

Blog

 

Barry Horwitz shares a post to help you define and improve your business model. 

According to Mark Johnson, co-founder of Innosight, a business model is simply this: “The way a business creates and delivers value for a customer while also capturing value for itself in a repeatable way.” It’s a straightforward concept, but important enough that academics and consultants alike talk about it frequently.

For example, in my work with entrepreneurs — both established and “would-be” (i.e., students at the Questrom School of Business at Boston University) — I often leverage something called the “Business Model Canvas,” created by training firm Strategyzer. This framework is useful in ensuring that all the relevant elements and their interconnections are considered before going to market.

The interconnections are particularly critical, since changes in one can wreak havoc on the rest.

Consider digital music. Apple’s iTunes disrupted the music industry by enabling downloads of individual songs at only 99c each, upending a once fabulously profitable record industry and forever changing how music was purchased. But it wasn’t long after that when the next tech innovation arrived — cellular broadband — which allowed for music streaming (via Spotify and others), changing the game once again, as music ownership was eclipsed by an unlimited library and a monthly subscription.

Note that renting rather than owning is not, in itself, new; people have had the choice of leasing cars instead of buying them for decades, as one example. But the application of the “rent rather than own” business model to music, was… enough to disrupt an entire industry.

 

Key points include:

  • Customer segmentation
  • Pricing and cost
  • Changing the business model

 

Read the full article, What’s Your Business Model, on HorwitzandCo.com.