Running head: BUSINESS MODEL GENERATION 1
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Business Model Generation 1
Vanessa Montemayor
Liberty University
BUSI - 690
BUSINESS MODEL GENERATION 1
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BUSINESS MODEL GENERATION 1
A Business Model
According to Osterwalder and Pigneur (2010), a business model is the “rationale of how
an organization creates, delivers, and captures value” (p.14). A business model is the starting
point for any future business plans. It is the foundation and plan for any successful business
operations. Within this plan are several building blocks that map out specific areas of business
and identifies key factors that will guide the future of the business.
As previously mentioned, there are nine basic building blocks, described by Osterwalder
and Pigneur, as the “logic” of how a business can be successful. The nine blocks consist of
customer segments, value propositions, channels, customer relationships, revenue streams, key
resources, key activities, key partnerships, and cost structure.
Business Model: Further Analysis
Hoveskog, Halila and Danilovic (2015) also have a similar view on the business model
concept as Osterwalder and Pigneur. “The business model communicates strategic choices,
explains how companies create, deliver, and capture value, and facilitates identification of
sources of competitiveness” (p. 177). In their article, they emphasize the simplicity and easily
communicated business model canvas as introduced by Osterwalder and Pigneur. Hoveskog,
Halila and Danilovic further suggest that the business model is not merely a one-time effort, but
rather, it should be a long lasting, engaging process that is reevaluated over time.
Others have defined a business model similarly to Osterwalder and Pigneur with slight
differences. For example, Wirtz, Pistoia, Ullrich and Göttel (2016), provide the following
description. “…the term “business model” is not always consistently applied. Instead,
alternative and similar terms are also used; e.g., the most frequent synonyms are “business idea”,
“business concept”, “revenue model”, as well as “economic model”” (p. 36). They present
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information that indicates the term “business model” was introduced almost fifty years ago,
however, literature since has been vague with regards to what it is. Some have seen it as an
approach while others have gone on to say that it is a concept that that describes how an
organization does business. Porter has also been referenced as saying that the business model
definition is “murky” at best. This suggest that there is little research in this area and therefore,
the term “business model” is still not completely understood.
Value Propositions
Value propositions, the second building block in the business model canvas, is the
benefits in terms of products, services, or products that are offered to customers. This building
block consists of identifying what the needs of the customers are and what/how a business can
satisfy those needs. Hoveskog, Halila and Danilovic (2015) suggest that “the other eight
building blocks contribute to the creation and delivery of the Value Proposition(s) [building
block]” (p. 182). This indicates that it serves as a crucial building block for which all others rely
upon.
An organization can provide value to customers in several manners. One way value can
be created is by helping in various ways. In this fast-paced world, time is money and money is
time. Any way that a business can help cut that time is sometimes invaluable. Another way
value can be created for consumers is by providing quality products or services at a lower price
than competitors. Convenience and accessibility are also invaluable because they accommodate
consumers and can make things easier for them. Value can also be created through innovation,
exceptional performance, customization, design, and brand. Each of these propositions is a way
for organizations to attract customers and retain them in them in the long run.
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Brainstorming and “What if” Questions
Brainstorming is a technique that can draw out ideas from individuals and thus, can
provide a visual or a map that can be used to formulate routes to successfully implement
changes. Utilizing the business model canvas is a great way to brainstorm. This gives
collaborators the opportunity to make sense of an idea while being able to bounce these ideas off
others and where others can add on or take away from these same ideas. Innovation does not
occur by looking backwards or staying stagnant. It is about branching out and challenging the
status quo.
“One way to overcome this problem [status quo] is to challenge conventional
assumptions with “what if” questions” (Osterwalder & Pigneur, 2010, p. 140). By questioning
ourselves, we alter our current thought processes and challenge existing devices. Status quo
happens when an organization becomes complacent or comfortable with their existing
procedures and strategies. However, the ever-changing environment that which surrounds us
calls for continuous changes and adaption. When the time comes to make these changes,
mapping and designing a new business model can prove to be tricky, especially when we are
constrained by our own fears of failure or disappointment. “What if” questions spark creativity
and thought provoking conversations which is key in collaboration and developing a successful
business model.
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References
Hoveskog, M., Halila, F., Danilovic, M. (2015). Early phases of business model innovation: An
ideation experience workshop in the classroom. Decision Sciences Journal of Innovative
Education, 13(2), 177-195. doi:10.1111/dsji.12061
Osterwalder, A., & Pigneur, Y. (2010). Business model generation. Hoboken, NJ: John Wiley &
Sons, Inc.
Wirtz, B. W., Pistoia, A., Ullrich, S., & Göttel, V. (2016). Business models: Origin, development
and future research perspectives. Long Range Planning, 49(1), 36-54.
doi:10.1016/j.lrp.2015.04.001
