The Business Model Zoo (Klaus edition)

Question 1

What is Baden-Fuller’s critique of Michael Porter?

Answer 1

Michael Porter tells us that choice of industry-sector matters – but facts show it is only 5% of profit variance, at least 45% of variance due to strategy

Baden Fuller argue choice of business model is more key, but NOT enough to determine profits: It is both choice of model and the strategy of implementation

Question 2

How many business models can a company have?

Answer 2

Reality is that many firms have multiple models:

1) across units, and
2) even within units

–> seeking out solutions to problems of survival

Question 3

Does every business need a business model?

Answer 3

Yes,

• Each business needs a business model
• Every organization needs a business model to sustain economically (universities, charities, etc.)
• Businesses collaborate and models span several organizations

Question 4

What enables new business models?

Answer 4

Innovation

Question 5

Define a business model

Answer 5

A configuration that connects inside to outside, with these dimensions:

1. Identifies the customer – who is the customer and what’s the relational structure (DYADIC or TRIADIC)
2. Specifies customer engagement –(e.g. Service vs. Product)
3. Explains how value is delivered – the system (e.g. hierarchical or networked, integrated or outsourced)
4. Describes how value is monetized (e.g. value based pricing or razor-blade)

Question 6

What drives industry change?

Answer 6

innovation in the Business Model is driver of industry change

Question 7

Explain the dyadic business model structure.

and what are the two key categories?

Answer 7

Customer pays directly (dyadic)

Product and service

Question 8

Explain the characteristics of a service (briefly)

Answer 8

Service:

1. Work-for-hire
2. Oldest form of business model
3. Sell labour & knowledge
4. Short value chain
5. Scaling difficult
6. Complexity is possible
7. Costs ever rising

Question 9

Explain the characteristics of a product (briefly)

Answer 9

Product:

1. Knowledge embodied in product
2. Opportunities for reuse
3. Mass Production
4. Scaling essential
5. Supply chains prevalent
6. Distribution chain prevalent
7. Costs ever falling

Question 10

Explain the triadic business model structure.

and what are the two key categories?

Answer 10

Multiple customers pay (triadic)

Market and platform

Question 11

Explain the characteristics of a market (briefly)

Answer 11

Market:

1. Brings buyers and sellers together: matchmaker
2. Charges a transaction fee and/or Charges a fixed fee
3. The multiple customers (buyers and sellers) interact directly with each other

Question 12

Explain the characteristics of a platform (briefly)

Answer 12

Platform:

1. Mediate between customers
2. Charge a fee or surplus
3. Pricing can be very different across the customer types and it matters for size
4. The multiple customers cannot interact directly

Question 13

What are the reasons for the development toward the current composition of business models?

Answer 13

1. Information and communications technology (ICT) and Internet grow in importance: Both as products, services, and enabling mechanisms
   
   • Better products – mobile phones, tablets, games etc.
   • Better mobilization – web
2. Society values have shifted:
   
   • Consumption seen as collective activity
   • Social networking becomes key – rise of match making
3. Products become yet more sophisticated:
   
   • Mass customization
   • Problem solving, value enhancing (“power by the hour”)