The essence of a business model is some source of value that represents a competitive advantage of their organization.
Organizations exist to enable one or more business models to function. A business model is a construct of value proposition, products and services, customer channels, partnerships, cost structure, revenue structure, and required capabilities.
At a conceptual level, a business model includes all aspects of a company’s approach to developing a profitable offering and delivering it to its target customers.
Business Modeling is the basic and key business system you need to design, test and validate to keep companies viable: The fundamental goal for running a business is to create customers by generating business models to provide best fit products/services and solve their problems large or small. The business model is a description of the particular way a business operates, including the components and functions of the business which generate revenues and expenses of the business. The emerging trends and technology evolutions bring significant opportunities for companies across vertical sectors to pursue growth through the methodical examination and development of the alternative business model. The business model designers should methodologically review a list of levers for business model components, and generate a list of potential business model options systematically,
Forward-thinking companies intend to become people-centric organizations. The business management needs to identify prospective customers, figure out how they are going to charge them and identify what differentiated value they can provide. If you have a strong business model, you have a set of value-generating business competencies that match customers’ needs and are difficult to copy, at least in the short term. That’s one of the criteria to evaluate a successful business model. From a business development perspective, business model review enables the management to expand their thinking on how to adapt or redesign the basic building blocks of the business, reach the next level of the business growth cycle and achieve high-performance business results.
Create a new business model based on unique business capabilities: Business model reinvention usually needs to be based on business’s core capabilities, either through providing new value-added service or products to current customers or exploring the new customer need. A strong business model is unique and makes an accurate prediction on how to operate and make profits. At strategic level, starting the business model based on the technologic vision and on the mega-trends is to be able to build the core competencies and the critical business capabilities early enough to catch the emerging digital wave. At the detailed level, business model designers need to emphasize analytic information or it requires that there would be any formal analysis. Thus, business model design is often the collective activities that need complementary mindsets and integral processes and technologies.
There is the mapping relationship between the business model (value model) and capability model, between the capability model and process model. A business modeling considers the process dimension itself, but also an interrelated system and an investment portfolio with all those mixed components such as information, technology, process, people, culture, others. The capability-based modeling can improve feasibility, maximize value-creation and gain the long term business advantage. Methodologically, business modeling is composed of loosely structured and circular processes that allow companies to connect with the various points of the spiral in different ways and at different times. The evolution of business modeling also evolves through various iterations from a very crude view to a refined view along a gradient of preciseness validated by customer feedback and employee brainstorming.
With hyper-competition and shortened business cycles, to avoid fast obsolescence and survive in frequent disruptions, a strong business model needs to be both inspirational and practical. An implementable business model must be testable both from a standpoint of the compelling "story" - the value scenario and the qualitative and quantitative “numbers” - the tangible business results. In order to build an "innovative organization," A business model's strength as a planning tool is that it focuses attention on how all the elements of the system fit into a working whole, as well as make the strategy more feasible to achieve higher than expected business results.
The essence of a business model is some source of value that represents a competitive advantage of their organization. Every successful new business venture evolves business model invention, but not all business model innovation need to become new ventures. Both startups and well-established companies across vertical sectors should keep reinventing themselves by enhancing business modeling development, cultivating the new attitude and fusing the fresh energy, taking bold initiatives, increasing its pro-activeness and willingness to take risks. They should keep pursuing innovation opportunities, pioneering the development of new products, processes, and services for increasing profitability through enriching its competitiveness, brand and reputation.
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