Opinion

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The future of the business model

5 Mins

New buzzwords will emerge. The business model will be one more framework taught in business schools, used by consultants and analysed by venture capitalists.

The success of the Business Model Canvas has led to similar tools, such as the Lean Canvas, the Business Model Zen Canvas and others. Any of these can provide a valuable process for evaluating an entrepreneurial opportunity.

The value of a business model tool is not embedded in the tool itself. Using the tool does not guarantee success! The benefit of such a tool comes from the structured process of clarifying assumptions, thinking about how organisational elements work together.

In the coming years, academic scholars will publish more research on business models. All of it will probably be useful, in the sense that it will further knowledge about how organisations explore and exploit opportunities. On the other hand, most of it likely will be disconnected from practice in which entrepreneurs and managers make difficult decisions about new ideas with limited time and resources.

In addition, research on this subject is often so narrowly focused that the findings are either irrelevant to most organisations or effectively impossible to use.

Further, the rapid pace of technological change in some fields, such as information technology, combined with the relatively lengthy timeframes required to publish management research, means academic research on business models is often out of date when it is published.

As academics, we are hopeful this research will become more substantive and cumulative over time. But you might be asking: “What does all this mean for me?”

Business models are an important tool when launching a new venture or building a growth company. Its analysis provides a simple and effective framework for evaluating new opportunities. Exploring a venture’s business model helps identify key questions and low-cost experiments to test the validity of the opportunity.

If you manage a family or lifestyle business, business models are still very relevant. In many cases, the managers of such companies have never had to think explicitly about the organisation’s business model.

These managers can benefit significantly from business model analysis because it will help explore the underlying assumptions that led to the firm’s formation and original success. Most firms cannot remain static forever; exploiting new opportunities requires change.

If you are a senior manager at a large company, non-profit foundation, educational institution or other non-commercial organisation, then you still can benefit from it. Every organisation has one. Business models can be constructed, tested and evaluated.

The business model is a key indicator of whether or not the organisation is viable. Managers at these types of organisations generally do not think about business models, which means that the analysis is likely to generate unexpected and eye-opening results.

New ones will emerge in time. Innovative business models tend to follow significant changes in largescale infrastructure. Changes in technological, social and legal frameworks create new value creation opportunities. Accessing those new sources of value often will require entirely new structures. To recap:

• Managers and scholars have not always thought about business models in the same way.
• It is one of the newest tools in the management toolkit.
• New and innovative business models still have to create measurable value.
• If there is organisation, there is a business model!

Adam J. Bock and Gerard George are co-authors of The Business Model Book: Design, build and adapt business ideas that drive business growth (Pearson). It is out now on, priced £10.78


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