Diagrams and tools help support task modelling in engineering and process management. Unfortunately they are unfit to help in a business context on a strategic level, because of the flexibility needed for creative thinking and user friendly interactions. We propose a tool which bridges the gap between freedom of actions encouraging creativity, and constraints allowing for validation and advanced features.

(pdf)

initially presented at the 6th Conference of the Italian Chapter of AIS (2009)

Platforms like E-bay allow product seekers and providers to meet and exchange goods. On the same way in open innovation an enterprise can collect ideas from outside the company. But on E-bay, the seeker can return the product if it does not correspond to the expectations, since E-bay is the third-party actor in charge of assuring that the agreement between seekers and providers will be respected. So who does provide the same service for what concerns open innovation, where specifications might not fully defined? In this paper we shall describe the business model of an organizational structure to support the elicitation and respect of agreements between actors, who have conflicting interests but that gain from cooperating together. The description of our first evaluation phase shall find place at the end.

(pdf)

The business model topic is very popular among business people today because in various industries we can see a proliferation of new and innovative business models (i.e. new ways of making money). In several industries new business models are threatening or even replacing established companies and conventional ways of doing business. Just have a look at the music or airline industry.

Hence, the interest in business models comes from two opposing sides:

• Established companies have to find new and innovative business models to compete against growing competition and to fend off insurgents
• Entrepreneurs want to find new and innovative business models to carve out their space in the marketplace

Within this context the business model concept is a particularly helpful unit of strategic analysis tailored to today’s competitive business environment. It helps executives as well as entrepreneurs increase their capacity to manage continuous change and constantly adapt to rapidly changing business environments by injecting new ideas into their business model.

But what actually is a business model?
In management meetings the question of what a business model is (even what ’our’ business model is) often remains relatively vague. The main reason for this is because business people have an intuitive understanding of business models. Normal, since the business model is about how an organization makes money, which is a manger’s job after all. However, there is often a lack of a more precise and shared understanding of what a business model is. Yet, such a common understanding is required if we want to have high quality discussions of one’s business model and make important business model decisions.

Therefore we have come up with the 9 building block approach to describing business models. It has the characteristics of any other type of model (e.g. in architecture or engineering).

Like other models it is a simplified description and representation of a complex real world object. It describes the original in a way that we understand its essence without having to deal with all its characteristics and complexities. In the same line of thought we can define a business model as a simplified description of how a company does business and makes money without having to go into the complex details of all its strategy, processes, units, rules, hierarchies, workflows, and systems.

Based on an extensive literature research and real-world experience we define a business model as consisting of 9 building blocks that constitute the business model canvas (readers of this blog will realize that this is an updated and slightly adapted version of the model):

1. The value proposition of what is offered to the market;
2. The segment(s) of clients that are addressed by the value proposition;
3. The communication and distribution channels to reach clients and offer them the value proposition;
4. The relationships established with clients;
5. The key resources needed to make the business model possible;
6. The key activities necessary to implement the business model;
7. The key partners and their motivations to participate in the business model;
8. The revenue streams generated by the business model (constituting the revenue model);
9. The cost structure resulting from the business model.

Origins of the term business model

The term business model became popular only in the late 90s, which, personally I think is related to the rapid erosion of prices in the IT and telecom industry. The roots of my assumption lie in Transaction Cost Economics (TCE). Because it became so cheap to process, store and share information across business units and other companies all the way to the customer, many new ways of doing business became possible: Value chains were broken up and reconfigured; Innovative information-rich or -enriched products and services appeared; New distribution channels emerged; More customers were reached.

Ultimately this lead to globalization and increased competition, but, as described above, it also led to new ways of doing business. In other words, today there is a larger variety of how companies can make money: this means new in terms of what they do, how they do it and for whom they do it…

For managers and executives this means that they have a whole new range of possibilities to design their businesses. This results in innovative and competing business models in the same industries. Before, it used to be sufficient to say in what industry you where in, for somebody to understand what your company was doing. All players had more or less the same business model. Today it is not sufficient to choose a lucrative industry, but you must also design a competitive business model. In addition, increased competition and rapid copying of successful business models forces all players to continuously innovate and adapt their business model to gain and/or sustain a competitive edge.

Companies that thoroughly understand their business model and know how the building blocks relate to each other will be able to constantly rethink and redesign these blocks and their relationship to innovate before their business model is copied.

Business Models & Innovation

The term business model is also closely related to innovation. As I mentioned, the business model concept is related to a whole new range of business design opportunities. There are examples of business model innovations in each of the 9 building blocks described. The most obvious is innovating in the value proposition. When mobile phones appeared in the market they offered a different value proposition than fixed line phones. In the early days of the Internet popular indexes like Yahoo! helped people find information on the Web. Regarding target customer segments, low-cost airlines like EasyJet have brought flying to the masses. Dell became really successful by exploring the web as a distribution channel. Gillette has made a fortune by establishing a continuous relationship with customers based on its disposable razors. Apple resurged based on its core capacity of bringing design to computers and electronic gadgets. Cisco became famous for its capacity of configuring activities in new and innovative supply chains. Intel thrived for its capacity to get partners to build on its processing platform. Google tapped in an innovative revenue streams by linking highly specific search results and content with text ads. Wal-Mart became dominant by its ability to slash cost throughout its business model.

Information Technology (IT) departments are under pressure to deliver business value to their organization. There is a need for RE methods that enable engineers to align IT system requirements with the business value expected by the organization. This is becoming ever more complicated with the emergence of complicated business models where the barriers between competitors, suppliers and customers are torn down through the use of IT systems and globalization. Ever more stringent regulations in all types markets are also changing the value proposition expected by companies and public sector organizations. Business-oriented RE methods have only emerged in recent years and much work remains to be done. This proposal seeks to research methods for modeling and simulating these new business models, analyze the value that IT systems can provide and define requirements for these IT systems. The modeling and analysis are based on the inclusion of game theory and system dynamics models within existing business oriented RE methods.

Doctoral thesis
Riccardo Bonnazi, Designing a compliance support system

Research grants
Funded by the Swiss National Science Foundation (NSF) under grant number xxx.
Prime contractor is EPFL – LAMS lab (Prof. Alain Wegmann)

Today’s business environment is characterized by rapid technological change that makes disruptive innovations and new business models possible. However, little analytical tools help in identifying disruptive business models. Identifying how insurgents disrupt established markets is a major challenge.

In this seminar, we study techniques for evaluating the disruptive potential of innovative business models. We illustrate these techniques with the case study of Shockfish.

Our analysis is composed of three parts.

First, we present a scenario-based forecasting approach, which could be helpful before defining a strategy of adoption, deployment, and management of business solutions; this forecasting method seems particularly appropriate since the future in a technology landscape, such as mobile computing and ambient intelligence, is so uncertain and the pace of development so fast.

Second, we define a business model ontology, which provides the analyst with a framework for describing the main components of a business model, covering the product innovation, the customer relationship, the infrastructure management, and the financial aspects.

Thirdly, we describe an analytical instrument for detecting disruptive innovations. We apply this instrument to a case study in order to discover the disruptive potential of its business model.

[from Spiral web site]

This talk “presented a rigorous conceptual framework for defining and designing a business model, its value proposition and the associated services. [It] described an analytical instrument for evaluating the value proposition in its environment and detecting its potential disruptiveness”.

[slideshare id=529018&doc=luxnov07tc-1217079066766029-8&w=300]

Despite the dot-com bubble burst, e-commerce have redefined the ways of conducting business, providing new business models, and competing in the global marketplace. This course provides the participants with an understanding of e-business from a business perspective, in a Internet-enabled economy. The course integrates principles suggested by the science of design, and mainly concerns business/IT alignment engineering.

The course introduces concepts, frameworks, and models for analyzing business models, designing enterprise architectures, and evaluating business/IT alignment. Learning will be accomplished through lectures, case studies, group presentation, and research. Upon completion this course, the participants will have a general understanding of the current state and trends of e-business, and be aware of the desirable business/IT alignment. More specifically, the participants will be able to (a) design the business model of a company, (b) design an enterprise architecture, and (c) assess the environment, the evolution and the innovation.

Content
This first part presents the concept of business model with its main components: value proposition, customer relationship, and operations management. Case studies will be used to illustrate the concepts (Shockfish, Swissquote, Sena, Skype …).
This second part presents the concepts of (service-oriented) enterprise architecture, application portfolio and IT infrastructure. The notions of service level agreement and service quality are also presented.
This third part illustrates the concept of patterns applied to three e-business situations: direct sale, virtual community, and e-marketplaces. Moreover it deals with three related notions: supply chain management, reputation mechanisms, and auctions. At each session, we will have an invited person who will present a concrete case or company, illustrating one of the three e-business situations: online sale (LeShop), virtual community (CampToCamp), and intermediary (TicketCorner).
This last part deals with business intelligence, technology foresight, and environment assessment, analyzed from a market, actor, and issue perspectives. Researchers working on technology foresight with multi-criterion decision models (with experts) and prediction market (with the “crowd”) will also present (and oppose) their research during this part of the course.

Required text
Course materials are listed in the syllabus and provided on the web site. Weekly reading materials will acquaint the participants with the topic to be covered in the upcoming class. Students are required to read all of them for the course. The assigned reading list is provided in the “Course Schedule” section of this syllabus.

Evaluation
Third, student will conduct a group project for defining a case study, write and refine a report consisting of the three following main parts: business model, enterprise architecture, and environment assessment. The deliverables have also to be uploaded on the group web site (blog) on the due dates. For grading purpose, activities will be issued based on the following scheme: (a) 20% for the class participation, (b) 30% for the project, and (c) 50% for a three-hour written closed-book exam (same conditions for retake).

Language
The course is given in French but the course material is in English. In addition, English-speaking students can ask their questions, and write exam and project paper in English.

syllabus
http://www.hec.unil.ch/yp/GTI/

Today’s business environment is characterized by rapid technological changes that makes disruptive innovations and new business models possible. A ’managing as designing’ approach is suggested for defining and evaluating business models. There are three reasons why researchers attending the SIKS day could be interested in this course:

1. It gives a short overview of a scenario-based approach for assessing a technological (ambient intelligence) environment;
2. It presents a rigorous conceptual framework for defining and designing a business model. It shows how this framework can be applied to design a concrete case study;
3. It describes an analytical instrument for evaluating a business model in its environment and detecting its potential disruptiveness.

Identifying how insurgents disrupt established markets is a major challenge. In this tutorial, we study techniques for evaluating the disruptive potential of innovative business models. We illustrate these techniques with the case study of Shockfish.

Our analysis is composed of three parts.

First, we present a scenario-based forecasting approach, which could be helpful before defining a strategy of adoption, deployment, and management of business solutions; this forecasting method seems particularly appropriate since the future in a technology landscape, such as mobile computing and ambient intelligence, is so uncertain and the pace of development so fast.

Second, we define a business model ontology, which provides the analyst with a framework for describing the main components of a business model, covering the product innovation, the customer relationship, the infrastructure management, and the financial aspects.

Thirdly, we describe an analytical instrument for detecting disruptive innovations. We apply this instrument to a case study in order to discover the disruptive potential of its business model.

Today’s business environment is characterized by rapid technological change that makes disruptive innovations and new business models possible. However, little analytical tools help in identifying disruptive business models. Therefore we believe there are four reasons why practitioners and academics attending MINEMA could be interested in this tutorial:

1. It presents a rigorous conceptual framework for defining and describing a business model;
2. It shows how this framework can be applied to describe and understand a concrete case study, and, in addition, how it can be used for comparing two business models;
3. It describes an analytical instrument, similar to a multi-criterion decision model, for detecting the potential disruptiveness of a business model;
4. The analytical tools presented in the tutorial are applied to an attractive case study that is a likely potential to disrupt the mobile computing market.

slides