information technology assignment

ptg16513123

“There’s not a single business model, and there’s not a single type of electronic

content. There are really a lot of opportunities and a lot of options and we

just have to discover all of them.” —TIM O’REILLY

A business model describes how an organization creates, captures, and delivers value to its customers. Every business performs some activity with the intention of generating value for its customers. At a conceptual level, what does that look like and what existing businesses can you point to as examples to determine that your model is sound? Identifying your business model is helpful for two important reasons. First, by studying businesses with a similar business model, you can increase your own odds of success—an activity referred to as modeling. Second, it provides a blueprint by which you can begin taking action to define your business model. If you already have a model, you still can make improvements or reinvent it by comparing it to well-established models—an activity referred to as benchmarking.

CHAPTER 6

BUSINESS MODELS

From the Library of Moaath Alangari

ptg16513123

Seven business model archetypes After spending considerable time mapping the various business models online, we began to realize that many of the models were similar. We observed there are fundamentally three archetypes that drive all business models: Trade, Product, and Service. This was a breakthrough observa- tion for us, because it paved the way for the model we then created. Just as a color wheel starts with three primary colors and derives a set of basic colors from the original three (red, green, blue), we’ve done the same with our model. Many of the interesting online businesses are hybrids of two of the three primaries; we call these the hybrid archetypes. They include the Marketplace, Brokerage, and Subscription models. And lastly there is the Ecosystem, which possesses traits of all three primary archetypes. Figure 6.1 illustrates this framework, which can be a useful place to start thinking about how to structure your business. To make this framework more useful, we also overlaid two prototypes to demonstrate each arche- type. These prototypes are more defined and actionable models of the more abstract archetype concept. This is not an exhaustive list of possible prototypes, just a set of examples that illustrate the concept and provide actionable material that you can use. Following the detailed description of each archetype, we provide a list of the prototypes and a set of exam- ples for each that appear to be succeeding online.

Trade Trade is the primary archetype that describes the business of connect- ing buyers and sellers, rather than offering something to be bought or sold. The trader is the consummate “connector” who knows everyone and helps to make introductions. Profits are generated by commission or arbitrage, not by selling units or hours.

PART II KNOW80

From the Library of Moaath Alangari

ptg16513123

Figure 6.1 Online business models.

The ideal trader personality is typically someone who comes from a busi- ness background, who’s comfortable reaching out to people, and who knows how to run complex spreadsheets. The trader’s core activities involve sales and sourcing, and the focus of the business is minding the spread between the two, in order to maintain optimal profitability. The two prototypes for the Trade Archetype are ecommerce and lead generation. While ecommerce focuses on physical products and lead generation on media arbitrage, they both demonstrate the same core arbitrage activity: buying inventory, packaging it, and reselling it for a higher price.

CHAPTER 6 BUSINESS MODELS 81

From the Library of Moaath Alangari

ptg16513123

ECOMMERCE

Ecommerce is a straightforward retail model, applied online. A business sources products, advertises to generate traffic, and sells the products online. The activities are equally straightforward to understand, and suc- cess depends on the ability to source quality products and quality traffic at a low cost and use the website to maximize the transactions that come from pairing products with traffic. The two main types of ecommerce websites are large volume and bou- tique. The large volume merchant can sell products at a low cost but depends on selling very large quantities of these products to make money, since each transaction is of relatively low value. The emergence of power- ful, large-volume merchants such as Amazon.com and Target.com have made it increasingly difficult for smaller merchants to make money sim- ply by buying and selling commodity or brand-name products, since they lack the volume to compete with the prices of large-volume businesses. Instead, boutique merchants focus on being a dominant provider of just one or two products, since they can compete on volume this way. A key competitive advantage for the online merchant is sourcing cost. The merchant also needs to be highly proficient in online marketing channels (keyword research, pay-per-click campaigns, landing page optimization, and so on) in order to keep margins under control. This reflects the funda- mental nature of cost arbitrage at the core of the Trade Archetype.

Table 6.1 Key attributes and strategies for ecommerce

ATTRIBUTES STRATEGIES

Key partners Product sourcing and advertising

Value proposition Low price, convenience, and curation

Key activities Sourcing and advertising

Monetization Product arbitrage

LEAD GENERATION

A lead-generation business does not create or stock its own product. It is focused on generating and qualifying leads that can be sold to its busi- ness partners. With this model the lead generator is neither consultant nor service provider to its business partners; rather, it is selling the leads on a per-unit basis, for a fee commonly called a “bounty.”

PART II KNOW82

From the Library of Moaath Alangari

ptg16513123

The sophistication and approach of lead-generation companies varies widely, but the goal is always the same: generate qualified leads and sell them to a handful of clients at a marked-up premium. In a way, lead gen- eration can be thought of as arbitraging the online ad markets in much the same way as the stock market. The traffic is acquired through a com- mon media channel, scored and qualified, and then repackaged into a more meaningful and higher-quality unit that is actionable by the sales force of the acquiring company. In the early days of the Internet, there were few who understood online marketing. For those who did blaze the early trails, there was consider- able money to be made. Today the landscape is more challenging, but the nimble lead generator can still stay a couple steps ahead and perform advertisement arbitrage on newer media channels. Over the longer term, it’s important to create end-user value in order to obtain traffic and retain visitors. The emphasis in lead generation (and affiliate marketing, its close relative) has thus shifted toward content creation as a vehicle to attain organic search results and to provide a vehicle for social and email marketing. Professional bloggers, for example, frequently monetize their content using lead generation-related activities.

Table 6.2 Key attributes and strategies for lead generation

ATTRIBUTES STRATEGIES

Key partners Sales departments

Value proposition Demand generation

Key activities Media buying

Monetization Media arbitrage

Product The Product is the primary archetype that describes the creation of a tangible unit of value that can be bought and sold in a marketplace. The product creator is typically an engineer, intellectual, or artist who is com- pelled to create something. The product itself might efficiently solve a problem in the case of an engineer, or might intrigue or entertain in the case of an intellectual or artist.

CHAPTER 6 BUSINESS MODELS 83

From the Library of Moaath Alangari

ptg16513123

Profits are generated through sale of a sufficient quantity to overcome ini- tial sunk cost requirements to set up and produce the product. Since the product must be created before it can be demonstrated or sold, there can be a significant risk burden for the product entrepreneur. For this reason, it is common for product businesses to seek investors to fund product development and expansion costs. The reason digital products attract so many funding opportunities is because of the ability to quickly and cost-effectively scale. Once the initial cost and risk burdens are overcome, a product business has the potential to grow quickly and provide a substantial return on the initial investment, within a relatively short period of time. While this is highly attractive to investors, it does come at a long-term cost. Because products are easily reproduced, they are also easily copied and thus vulnerable to com- moditization, as a result of too much competition entering a market. As quickly as a business can ramp up, so too can it fall when equally funded competition enters the market. For this reason, digital products are a high-stakes and high-reward opportunity. Timing of market entry is particularly important and so is having sufficient capital to compete. The business must fight aggressively to establish dominance quickly so as to sell large quantities of product at a maximally compressed profit margin.

SOF T WARE AS A PRODUCT

A software product is purchased for a one-time fee from an online mar- ketplace. It is then downloaded and installed on an individual computer or server. Software as a product in its purest form is best demonstrated by how Microsoft sold software in the 1990s. The product was created, boxed, and distributed to physical stores; it was inherently tangible. Today most software is sold in online marketplaces, so the product is not as tangible. We still define it as a product, however, because it has a user interface and turnkey functionality. Common manifestations of the software product are mobile apps in the consumer world, and functional plug-ins and design themes for software platforms such as Magento and Salesforce in the business world.

PART II KNOW84

From the Library of Moaath Alangari

ptg16513123

Table 6.3 Key attributes and strategies for software

ATTRIBUTES STRATEGIES

Key partners Marketplaces

Value proposition Cost-effective productivity

Key activities Software development

Monetization Sale of product

CONTENT AS A PRODUCT

Content as a product is any form of intellectual property that can be bought or sold in a marketplace. Common offline product examples include books, music CDs, TV shows, and movies on DVD. Applying this concept to online, we are limited to digital media that can be bought and sold primarily through online marketplaces such as e-books, MP3s, or videos. This is the ideal domain for the intellectual or artistic entrepreneur who wants to develop and sell his ideas, particularly in the digital era. Several recent innovations have led to the democratization of media content and now are in the favor of small, independent content producers. First, with the advent of digital technology, the cost of producing high-quality products is substantially lower than it was even just a decade ago. Second, marketplace distribution that was once limited to those few who were signed by major media companies is now accessible to anyone with a computer and some initiative. The major challenge for those creating content products is breaking through the noise. Because product development and distribution costs have fallen so much, there is a glut of content products on the market. This also means that many original ideas have already been explored. The burden for the content product creator thus is to create compelling con- tent that is fresh and will stand out from the crowd. Several companies have built brands around content creation, such as Advantage Media, which helps entrepreneurs to write and publish e-books, and Maker Studios for development of YouTube content. Meanwhile, many believe the technology for the coming convergence of the Internet and television is already in place and a wave of innovation is imminent, which will create tremendous new opportunities in this area.1

1 http://www.bothsidesofthetable.com/2011/11/14/future-of-tv-the-quick-version/

CHAPTER 6 BUSINESS MODELS 85

From the Library of Moaath Alangari

ptg16513123

Table 6.4 Key attributes and strategies for content

ATTRIBUTES STRATEGIES

Key partners Marketplaces and ecosystems

Value proposition Engaging content

Key activities Writing, filming, and recording

Monetization Product sale and ad revenue

Service Service, the third primary archetype, provides intangible solutions for clients. The service provider is typically a group of skilled professionals or technicians with expert knowledge in a specific domain. Clients delegate responsibilities to the service provider because they require the compe- tence or efficiency of a specialist. Services fill the gap where existing off-the-shelf products do not satisfy a need, or for which customizations to that product are needed. They might also provide ongoing support, either as a skilled technician or an automated system.

SERVICE AGENCY

The Service Agency prototype consists of a team of skilled professionals who work on behalf of a client to solve specific problems dictated by the client, on an hourly or project basis. This can be in the form of consulting and training, or as a production agency, performing specialty work on behalf of a client who does not retain those specialty skills in-house. For engagements in which the vendor has performed similar work before, it’s common to charge fixed rates for services rendered. Many consulting and production opportunities are unique, however, and requirement dis- covery is a big part of the engagement. In such cases, the agency typically bills on a time and materials basis (that is, hourly plus expenses). For both of these agency models, it’s important to develop a platform for services to avoid being marginalized. For consultants, this is accomplished through publishing and speaking engagements that raise awareness and pedigree. For the agency, this might be accomplished through strategic partnerships and independent service vendor (ISV) relationships.

PART II KNOW86

From the Library of Moaath Alangari

ptg16513123

Table 6.5 Key attributes and strategies for service agency

ATTRIBUTES STRATEGIES

Key partners Ecosystem platform owner

Value proposition Customization and support of platform

Key activities Customization and maintenance

Monetization Time and materials

SERVICE PLATFORM (PA AS)

The Service Platform prototype is synonymous with the Platform as a Service model (PaaS). The Internet’s cloud architecture consists of three layers: service, platform, and infrastructure. At the top of the stack are Software as a Service (SaaS) providers offering customer-facing appli- cations such as CRMs, social networks, productivity tools, and so on. Just below that are Platform as a Service (PaaS) providers who offer outsourced resources to effectively power an SaaS business. In this way, PaaS is a decisively business-to-business focused business model, target- ing primarily the developers of software solutions. Examples of successful PaaS businesses include SendGrid for managed email services, DemandWare for ecommerce back-end services, and MaxMind for GEO IP and fraud detection. All three provide extensive API resources that custom applications can be written around, providing the opportunity to write automation around their outsourced services. It may be tempting to think of PaaS as a hybrid product model, similar to SaaS. But keep in mind that what separates products from services is tan- gibility. SaaS may not sell in a marketplace like a true software product, but it does have a tangible user interface with turnkey user functionality, both of which are aspects of a product. Combine that with the ongoing maintenance and support and it is a clear hybrid of product and service. PaaS conversely lacks the tangible user interface and turnkey product attributes. It is typically consumed by applications via API. Thus it is a utility service.

CHAPTER 6 BUSINESS MODELS 87

From the Library of Moaath Alangari

ptg16513123

Table 6.6 Key attributes and strategies for service platform

ATTRIBUTES STRATEGIES

Key partners IaaS providers

Value proposition Outsourced management of service via API

Key activities Maintain stability, scalability, and system health

Monetization API pay per use

Marketplace An online marketplace brings buyers of products together with sell- ers, providing a forum in which to conduct business. The Marketplace Archetype is considered a hybrid of the Trade and Product archetypes because it provides a fundamental service of putting buyers and sellers together, but it does so via a tangible “self-service” forum, which in itself is a product. The offline world’s analog version of the online marketplace would be a farmer’s market or a shopping mall. The marketplace itself provides value by advertising and creating traf- fic for the benefit of buyers and sellers. As the marketplace grows larger, its value increases for everyone involved. This is a classic example of Metcalfe’s Law regarding network effects, which suggests that a network is as valuable as the square of the number of participants. In other words, maximum value is not realized (conversion rates typically do not maxi- mize and top clients do not opt in) until critical mass is achieved. While a marketplace can be a valuable and self-sustaining business once it achieves critical mass, it can be difficult to start for the same reasons.

PRODUCT MARKETPLACE

An effective product marketplace is typically utilized by small businesses as a means of selling their product(s). The best-known example of a product marketplace is eBay.com, which provides an auction platform for buyers and sellers to exchange goods all over the world. It is dominated by small resellers, and the company has augmented the marketplace for that core audience by offering Pro Stores and PayPal for payment management. Product marketplaces are also commonly found as an extension of the Ecosystem Archetype. Apple’s App Store, Magento’s Connect, and

PART II KNOW88

From the Library of Moaath Alangari

ptg16513123

Salesforce’s Force.com are all examples. Third-party solution providers and service agencies create extension products for the ecosystem plat- form and sell their products through their marketplace.

Table 6.7 Key attributes and strategies for product marketplace

ATTRIBUTES STRATEGIES

Key partners Merchants (sellers)

Value proposition Destination shopping

Key activities Recruit vendors and advertise

Monetization Commission per sale

SERVICE MARKETPLACE

The service marketplace is similar to the product marketplace, except the connections being created are clients and service providers, rather than customers and merchants. The prospective client has the advantage of selecting from a large pool of candidates and easily filtering and compar- ing them by specific criteria. It is common for service marketplaces to provide tests and certifications that professionals can take to demon- strate their abilities. It is also common practice for previous clients to rate the service provider, which helps prospective clients locate the best professional to assist them. The marketplace business profits when a connection is made by taking a commission from hours billed and frequently offers related services such as hours tracking and escrow services. This model is common in soft- ware development and design, with brands such as oDesk and Freelancer being popular marketplaces for offshore talent. Elance meanwhile is popular with domestic professionals. Care.com is another great resource, focusing on nannies and adult care professionals.

Table 6.8 Key attributes and strategies for service marketplace

ATTRIBUTES STRATEGIES

Key partners Service providers (sellers)

Value proposition Locate skilled professionals

Key activities Recruit professionals and advertise for clients

Monetization Commission per sale

CHAPTER 6 BUSINESS MODELS 89

From the Library of Moaath Alangari

ptg16513123

Brokerage The Brokerage Archetype is a hybrid of the Trade and Service archetypes. It provides trade as a service, on behalf of its clients. An advertiser may create content, purchase media, and conduct other activities with the end goal of generating traffic and demand for her clients. As compared to the Trade Archetype, the performance incentive rests with the Brokerage because the broker sells a unit of inventory (product or media) at a market rate to a competing customer and profits from sourcing it lower than market rate. With a Brokerage, the effort is per- formed on behalf of a longer-term client, either for an agreed retainer or on a time and materials basis. Any profits generated due to the sourcing efforts are retained by the client. Compare this also to a service agency that may create advertising content, design, and strategy for a brand, as a service company. While this type of service agency may specialize in the field of online advertising, the focus is on production skills and content strategy. In contrast, a true advertis- ing company specializes in the brokering of media. It may also invest in brokering networks (ad networks), whereas the agency would focus more on effective communication and content.

ADVERTISING NET WORK

In its most primitive form, the advertising company connects those who want to advertise with those who want to monetize their online property through advertising. To better help advertisers navigate the complexities of online advertising, an advertising network becomes a common media- tor of supply and demand. The company matches the most effective channels for a brand or product, and sources the advertising opportunity at the best price. These activities were typically handled by a media-buying specialist in the offline world, but automation facilitates much of the online media bro- kering activity, including the selection of appropriate online properties and price negotiation. Traditional media buyers do still assemble custom media packages for large clients but, for most, the automation of the net- work proves the most efficient and cost-effective option.

PART II KNOW90

From the Library of Moaath Alangari

ptg16513123

Table 6.9 Key attributes and strategies for advertising network

ATTRIBUTES STRATEGIES

Key partners Media sites

Value proposition Efficient media procurement

Key activities Recruiting media sites

Monetization Base fee plus commission

DROPSHIP PROGRAM

Today it’s easier than ever to launch a retail business. Subscription ecom- merce platforms make it possible for a business to launch an online store in 30 minutes or less and for as little as $20 per month. Companies like Volusion, BigCommerce, and Shopify take care of all of the mechani- cal details of getting a website up and running, even providing design themes and a marketplace for low-cost, third-party plug-ins. For small businesses, the technology problem has largely been solved, leaving only sourcing, fulfillment, and marketing to worry about. Enter the dropship service provider. For a small business that is interested in either backfilling around a few core products or testing an ecommerce concept without investing sig- nificantly into product inventory, dropship can be an excellent partner. It provides a turnkey solution to sourcing, warehousing, and fulfillment of an infinite array of products. The merchant simply sends over the orders to the dropship partner at the end of the day and the dropship provider takes care of the rest. Companies such as Ordoro and Doba provide a membership program that allows the retail partner to download lists of products that can be easily uploaded into their store for resale. Subscription ecommerce companies even provide a plug-in that directly integrates their product feed into the merchant’s. This is a classic example of brokering of products as a service.

Table 6.10 Key attributes and strategies for dropship program

ATTRIBUTES STRATEGIES

Key partners Product sourcing

Value proposition Outsourced supply chain

Key activities Sourcing, inventory, and fulfillment

Monetization Membership fee and commission per sale

CHAPTER 6 BUSINESS MODELS 91

From the Library of Moaath Alangari

ptg16513123

Subscription The Subscription Archetype blends the benefits of Product and Service Archetypes and provides its value for an ongoing subscription fee. It has been said that products are too commoditizable and services are not scal- able. A way of addressing these issues is to provide a hybrid of the two. This is the case with many of the most innovative businesses of the past decade. The benefits of a subscription approach to content and software are numerous. Subscription allows implicit financing of what would other- wise be an expensive up-front purchase, thus lowering the barriers to entry for small business and some consumer products. Retaining cus- tomers and spreading that revenue over a longer period of time provides more predictable revenue for the business offering the subscription ser- vice. And it strikes a meaningful balance between a cost-effective product and the supporting services that actually make it useful for most.

SOF T WARE AS A SERVICE (SA AS)

Software as a Service (SaaS) has become the preferred software develop- ment model in the post-Web 2.0 era. Rather than paying a large sum up front to license and download a piece of software, customers can pay a monthly fee to access the hosted version of the software. For small businesses this presents several new opportunities: first, less cash up front improves cash flow for the business. Second, the headaches of having to install and manage the software in-house are removed. Third, an SaaS model business often provides superior service and support compared to software as a product business. In many cases, SaaS could be said to be a “productized,” lower-cost alterna- tive to what would otherwise require a custom service agency solution. For example, it might cost thousands of dollars to have an agency implement a custom ecommerce system, but SaaS shopping cart providers such as Volusion and BigCommerce now provide hosted basic solutions for $20 per month or less. Provided the merchant is satisfied with the customization limits of the hosting solution, this can be a very efficient solution. A primary activity of SaaS organizations is software development, since a software product is at the center of the business. It is thus an attrac- tive business model for software engineers seeking to develop a business.

PART II KNOW92

From the Library of Moaath Alangari

ptg16513123

However, SaaS organizations must remember that they are fundamentally service organizations; their product merely automates or adds efficiency to the service, so proactively facilitating customers is a key aspect of their business.

Table 6.11 Key attributes and strategies for SaaS

ATTRIBUTES STRATEGIES

Key partners SaaS providers

Value proposition Turnkey software and management

Key activities Develop software and manage servers

Monetization Subscription fee

CONTENT AS A SERVICE (CA AS)

Content as a product is typically sold as a tangible artifact in a market- place, for example, books or e-books being sold on Amazon or songs sold through iTunes. But what about content portals that exist outside of a marketplace and provide ongoing curation of valuable information or insights? This is the Content as a Service (CaaS) prototype. This type of business may charge a monthly subscription for exclusive content, such as Ancestry.com, or it may monetize its content through advertisement, as is the case with Demand Media and its collection of popular online guide sites. In the case of monthly subscriptions, it is common to offer a free trial period or limited-use option in order to gen- erate actionable leads the company can then market upgrades to. With the advertising model, the content portal might have a number of rela- tionships with various ad networks and may even sell premium ad buys directly to big customers.

Table 6.12 Key attributes and strategies for CaaS

ATTRIBUTES STRATEGIES

Key partners CaaS providers

Value proposition Turnkey software and management

Key activities Develop software and manage servers

Monetization Subscription fee

CHAPTER 6 BUSINESS MODELS 93

From the Library of Moaath Alangari

ptg16513123

Ecosystem The Ecosystem Archetype is a hybrid that combines all three primary archetypes (Trade, Product, and Service). It is the holy grail of business models, as it is highly desirable but extremely difficult to achieve. Success of a business in one vertical opens up opportunities to augment the busi- ness with additional offerings, each of which adds incremental revenue and reinforces the value of the other revenue streams. From a strategic perspective, the ecosystem augments the brand’s value chain as much as it increases revenue streams every time a synergistic business unit is added. And because the ecosystem is so valuable and so rare, it helps to entrench the brand within its market, providing a highly defensible position. It is simply more valuable to the end-consumer to have the support, resources, and momentum of an entire ecosystem than to purchase a mere commodity. The brand that offers this will stand clearly ahead of the others both in desirability and pricing power.

TECHNOLOGY PLATFORM

Many of the most successful online ecosystems revolve around technol- ogy platforms. Apple is a classic example in the consumer space. What started as a set of innovative products became something entirely different when Apple went direct to consumer by opening its own stores. The stores were not just a retail presence that enabled better brokering of their own products. Every store also offered training seminars and a Genius Bar that provided unparalleled support in the computer hardware market. Overnight the company went from being solely a product business to having a toe in brokering and services as well. Shortly thereafter, the company expanded its burgeoning ecosystem by introducing the App Store, a marketplace for third-party mobile applications. What started as simple computer hardware is a brand now wrapped in a massive value chain that arguably exceeds the value of the commodity itself. A similar pattern can be seen with companies like Salesforce, Amazon, and Zillow, all of which have core technology platforms that became so popular that the companies were able to offer complimentary services, marketplaces, and networks for third-party businesses to build around.

PART II KNOW94

From the Library of Moaath Alangari

ptg16513123

Table 6.13 Key attributes and strategies for product platform

ATTRIBUTES STRATEGIES

Key partners PaaS providers

Value proposition Turnkey software and management

Key activities Develop software and manage servers

Monetization Subscription fee

MEDIA PLATFORM

A content ecosystem is a larger-than-life destination for information and entertainment. This is the classic media portal that Yahoo.com and Google represent. Television networks such as NBC and CBS are exam- ples in the offline world. Social platforms like Facebook and Twitter are further examples of content magnets that give companies tremendous strength of voice for consumer advertising. These content titans create ecosystems as they monetize their content. All of these companies have their own advertising platforms, and several provide service platforms as well. Facebook, Google, and Twitter in par- ticular have robust APIs that enable other businesses to mash up content or better integrate their ad platforms. These companies also provide a syndicated ad network (Google AdSense in particular) that third-party websites can use to monetize their content by embedding code that calls back to the respective ad platform (Figure 6.2).

Table 6.14 Key attributes and strategy for media platform

ATTRIBUTES STRATEGIES

Key partners Advertisers

Value proposition Quality content

Key activities Content development

Monetization Advertisement

CHAPTER 6 BUSINESS MODELS 95

From the Library of Moaath Alangari

ptg16513123

Figure 6.2 Examples for each business model prototype.

Defining your business model This chapter has covered the seven fundamental business archetypes by introducing a framework that provides a starting point for identifying online business categories. But it is not enough to simply select one of these prototypes. Rather, these serve as a starting point from which to define your own unique model in detail.

PART II KNOW96

From the Library of Moaath Alangari

ptg16513123

In 2010, Alexander Osterwalder introduced a conceptual framework called the Business Model Canvas based on his work on the Business Model Ontology in 2004.2 With this model there are nine building blocks for creating a well-defined business model, each of which addresses a set of key questions that help to account for the most important parameters of the business (Figure 6.3). The purpose of this framework is to provide an accountability matrix to ensure that important attributes such as key partners, customer segments, and applicable channels are considered when developing your model. It’s a good idea to periodically revisit this model as you go through the market-fit stage, and revise your business model specifics, filling out a new template each time you iterate. This discipline will assist you in clari- fying the purpose of the iteration and eventually help to crystallize your model along its important criteria.

Figure 6.3 The Business Model Canvas.

2 http://en.wikipedia.org/wiki/Business_model

CHAPTER 6 BUSINESS MODELS 97

From the Library of Moaath Alangari

ptg16513123

Takeaways Understand the seven foundational archetypes for online busi- ness. Use this foundation to begin planning your own unique buiness model.

Studying established business models will help you under- stand businesses similar to what you might develop for your own business.

Use the Business Model Canvas to develop your own unique busi- ness model. It will help you account for important attributes of your business plan.

PART II KNOW98

From the Library of Moaath Alangari

ptg16513123

DO PART III

From the Library of Moaath Alangari