Definition of a Business Model is Ambiguous

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Definition of a Business Model is Ambiguous
In Ho Kim, Member
In studying or analyzing something, a clear-cut definition of the concept or term is required.
As far as 'Business Model' is concerned, it is one term with many meanings.
I therefore recommend to use 'business paradigm' as a new terminology that always has one term with one meaning.
A BUSINESS PARADIGM always refers to the mechanism to connect Explicit Needs (demand side) with Extended Value Chain (supply side). Where 'explicit needs' stands for needs with willingness to pay (purchase) as well as purchasing power, and 'Extended Value Chain' implies the willingness to add entrepreneurial activities and resources to Porter's value chain.

Business Model Definition According to Osterwalder
drs. ing. Peter Cleton, Member
I would suggest to use Osterwalder's Business model definition:
"A Business Model is the logic a company earns money".

Why Business Paradigm Rather Than Business Model
In Ho Kim, Member
@Ing. Peter Cleton: Absolutely I accept the definition of business model as the logic a company earns money. What matters, however, is that the logic depends on time, place or person, usually giving rise to much confusion.

Business Model Definition
Derek Lark, SIG Leader
Hi Mr Kim, I am not a big fan of the term paradigm. To me it sounds like a fixed idea that cannot be moved to meet new ways of thinking, new market imperatives, etc?
The business model needs flexibility so as an organisation, whether for profit or not for profit can apply it to their current organisation and future organisation so as to deal with the emerging disrupters that invariably are on the horizon.

Business Model Purpose
Gert Kindgren, Member
The value of defining a Business Model seems to be more in the process than in the result. In the process you get to know your business environment, the staring point for your business logic and pricing.
Once on your way you are depending on your ability to adapt to customer/market reaction to be successful.
Thus the Business Model to me is either a snapshot or a conceptual rational for your business raison d'ętre, never the blueprint to build a business on.
Osterwalder's BMC makes an excellent tool for snapshot & conceptual descriptions.

Business Model Purpose
Derek Lark, SIG Leader
@Gert Kindgren: I like what you are saying. Snapshot because the environment is changing continually, conceptual yes. However I personally do use it as a blueprint to further develop businesses. A model is just that, something you can use to visualise what you are building.
Other good canvases are the Business Model Zen canvas and the Customer Trends Canvas, there are quite a few out there.

Further on the Purpose of a Business Model
Gert Kindgren, Member
I trust what you need in the end is a good plausible story for customers, employees, investors and others to buy into and not the least for yourself to understand your business environment and what you are trying to achieve.
My main fear is when a model becomes a detailed blueprint too early and gets in the way for dynamic development of the idea. Any tool you feel comfortable with could be used to reach the point where you understand you business model and can make educated guesstimates.
The Customer Trends Canvas was a good tip - thanks!

Why Business Paradigm Rather Than Business Model
In Ho Kim, Member
These three: concept + term + definition should go together in order to express a single concept vividly in an objective manner. Unless it is done it that way, no effective discussion can be expected.
'Business Model' as a term has many meanings (definitions). Because it requires one single exact meaning, it cannot work well.
That's why we need 'Business Paradigm' as a term with one single meaning: the mechanism to connect a firm's value chain to customer needs with willingness to pay as well as purchasing power. Accordingly, Business Paradigm can generally be used at anytime in any circumstance, without any confusion about its meaning such as is the case with Business Model.

Business Model Terminology and Usage
Derek Lark, SIG Leader
@Gert, thank you yes totally agree the blueprint can be too early. As Steve Blank says the only true test is when you meet the customer. You need flexibility to actually deliver something that the customer will want to acquire. And you need a model that is a plausible story and one that can be used to innovate.
The use of the term 'Business Model' is now very common and widespread, Osterwalder and others have made it very usable and he clearly sets out what it is and isn't in his many tweets, blogs and other posts. I personally can't see a need to change it. (In the true sense all the words being used or suggested are synonyms in any case, as are example, archetype, prototype, hypothesis). In truth in my experience it doesn't matter what you call it but it does matter that you use it and how you use it.

Terminology and Usage
In Ho Kim, Member
I am just on your side on that it doesn't matter what you call it but how you use it. When it comes to business model as a logic of earning profit, it always should comprise both value chain (supply side) and customer needs (demand side). With regard to Business Model, so far no one cannot meet this requirement except the Business Model Canvas (BMC), which always covers both sides.
The BMC must be a powerful holism model to visually show what the business is. Yet it works just like merely a snapshot or check lists for a certain business unit. This might be due to lack of any theoretical basis of profit-seeking.
In order to make BMC more effectively, strategically used, it should be upgraded based on something like the theory of profit-seeking. As Kurt Lewin says, 'there is nothing so practical as a good theory.'
I'd like to add, 'There is nothing so powerful and practical as the general theory'. For this we badly require a new term definition to avoid the confusion which the term 'Business Model' currently faces.


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