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Book chapter
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Reference no. BEP1505
Chapter from: "Business Model Design and Learning: A Strategic Guide"
Published by: Business Expert Press
Originally published in: 2013
Length: 20 pages

Abstract

This chapter is excerpted from ‘Business Model Design and Learning: A Strategic Guide'. The purpose of this book is to explain what a business model is, what you have to do to get one, and what to do about the one you've already got. It contends that to be successful, your business model must be focused sharply on your customer. And it argues that you must think strategically about how to use your business model if you want to gain an advantage over your competitors. This book is aimed at aspiring entrepreneurs and practicing managers who want to create new business models as well as managers and leaders who want to understand, refine, and even reinvent their company's current model. It is based on the premise that the fundamental purpose of any business model is to create, deliver, and capture value. More specifically, business models describe the value proposition to the customer, the system that must be in place to create that value, and the logics needed to capture a reasonable share of that value for the firm. In addition, the book shows that the core of every business model is an agreement with your customers. If they don't get the value they are seeking, you won't either. The book proceeds as follows. First, it clearly defines business models and explains how they relate to strategy. Second, it presents seven basic components of business models, including the customer value proposition, key resources, key processes, the profit formula, the aspirations and capabilities of key leaders, the customers and the customer relationships. These components are then combined into three business model lenses which can be used to explain how a business creates and captures value. As the book proceeds, these three business model lenses are used to explore the value creating capabilities of several companies including Bomgar, TOMS Shoes, Netflix, Rent-the-Runway, and JC Penney. Each story provides lessons and implications related to effective business modeling and strategy.

About

Abstract

This chapter is excerpted from ‘Business Model Design and Learning: A Strategic Guide'. The purpose of this book is to explain what a business model is, what you have to do to get one, and what to do about the one you've already got. It contends that to be successful, your business model must be focused sharply on your customer. And it argues that you must think strategically about how to use your business model if you want to gain an advantage over your competitors. This book is aimed at aspiring entrepreneurs and practicing managers who want to create new business models as well as managers and leaders who want to understand, refine, and even reinvent their company's current model. It is based on the premise that the fundamental purpose of any business model is to create, deliver, and capture value. More specifically, business models describe the value proposition to the customer, the system that must be in place to create that value, and the logics needed to capture a reasonable share of that value for the firm. In addition, the book shows that the core of every business model is an agreement with your customers. If they don't get the value they are seeking, you won't either. The book proceeds as follows. First, it clearly defines business models and explains how they relate to strategy. Second, it presents seven basic components of business models, including the customer value proposition, key resources, key processes, the profit formula, the aspirations and capabilities of key leaders, the customers and the customer relationships. These components are then combined into three business model lenses which can be used to explain how a business creates and captures value. As the book proceeds, these three business model lenses are used to explore the value creating capabilities of several companies including Bomgar, TOMS Shoes, Netflix, Rent-the-Runway, and JC Penney. Each story provides lessons and implications related to effective business modeling and strategy.

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