Business Models and Education
- Solution Shops - Employ experienced intuitively trained experts whose job is to diagnose problems and recommend solutions. High-end consulting, law, advertising firms, R&D organizations, and specialist physicians' diagnostic activities in hospitals are examples. The firms abilities to deliver value to customers are dependent on the people who work there; standardized processes are uncommon in solution shops.
- Value Chains - Manufacturing, retailing, and food service companies are examples. These companies bring inputs of materials into one end of their premises, transform them by adding value, and deliver higher-value products to their customers at the other end. The ability to deliver value is embedded in strong, standardized processes.
- Facilitated User Networks - Telecommunications, Insurance, and Banking are facilitated user networks. Participation in the network typically isn't the primary profit engine for participants. Rather, the network is a supporting infrastructure that helps the buyers and sellers make money elsewhere. The company that makes money in a user network is the one that facilitates the network.
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Business Model Innovation
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A business model describes how an organization creates, delivers, and captures value. Most business model definitions highlight four key elements:
- Customer value proposition, which explains how an organization will address a customer need
- Value chain, which organizes processes, partners, and resources to deliver the value proposition
- Profit formula, which lays out how an organization will make money
- Competitive strategy, which describes how an organization will compete with rivals and defend its position in the value network.
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Osterwalder and Pigneur call "unbundled" business models. Unbundled models separate three core business functions that require different types of organizational expertise:
- customer-relationship management,
- product innovation, and
- infrastructure management.