What is a Business Model?

A few weeks ago I was sent off with the task to figure out a business model for a product with the CFO. Well, in my head I said, what’s a business model? And of course I started an internet search for sample business models. In my research I discovered another term that people define in different ways – business model.

Definition

Business Model – A business model describes the rationale of how an organization creates, delivers, and captures value.

Source: Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers by Alexander Osterwalder and Yves Pigneur

The Business Model Canvas

The Business Model Canvas is a framework that help you describe the business model using a shared language.  View the video below to see an explanation of the Business Model Canvas from Strategyzer.com.

A Simple Framework

The thing I like about the book was that it first taught you about the canvas and it’s categories. It included definitions and questions. From there sample business models were shown. But from there additional models were shown for various business types. For me, this is awesome because I like to learn by seeing real world examples. It is a simple yet powerful framework.

This book provides a framework for looking at your startup or existing business. It also provides a framework for innovation inside of the existing company through different value propositions, revenue streams, partners and the like. But it also heavily suggests that at each turn the theories that you have documented should be tested. More on that in another post.

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