Business Model

How your company operates

In its simplest form a Business Model is the way a company chooses to operate. It answers the fundamental questions of how a company creates, delivers and captures value. Although we sometimes view the business model as a "value chain" starting with development of a product or service through delivery to the buyer, a value chain view is incomplete.

The key components of a Business model include the following:

1. Customer segments: Your groups of customers and prospects with distinct characteristics.

2. Offerings: The bundle of products and services that satisfy your customer segments’ needs.

3. Demand creation and sales effectiveness: The types of relationships you entertain with each customer segment.

4. Competition, communication and relationships: The channels through which you communicate with your customers and through which you offer your value proposition.

5. Revenue stream and mix: The stream and mix through which the business earns revenue from its customers for value creation and service activity.

6. Capital and assets: The key assets on which your business model is built.

7. Operations: The most important processes performed to implement the business model.

8. Partner network: The partners and suppliers you work with.

9. Cost structure: The cost you incur to run the business model.

10. Leadership: The right people in the right positions.

Having the right business model aligned across the key components is key to increasing the value delivered by a business. In order to innovate by driving outcome objectives you need to ensure that each component of the business model is aligned to deliver the desired outcomes.