The Business Bulletin
Do I really need a business model? Wherever you turn today business owners, leaders, social media channels, books, blogs and entrepreneurs talk about business models. It is a trendy term thrown around by so many and to such an extent that the power of a business model seems forgotten.
As a reminder, we ask and answer,
Professor for Technology Management
four questions. What is a business
at St Gallen University, Dr. Oliver
model? What does a business model
Gassmann, in his book: The Business
look like? Why are business models
Model Navigator, written in 2014, lists
so popular today? Why every business,
55 different types of business models!
regardless of type, size, age, wealth or
Some you may recognise as popular
industry, needs at least one.
today: Freemium, the use of some
What is a business model? In 1973 Douglas T. Ross, an accomplished computer scientist, wrote about scientifically modelling a business. Since then the business model has been tested, updated, and applied successfully many times by scientists, business owners and leaders globally. The model, or graphic, conceptualises the core elements of a business regardless of type, size, age,
author, said “you have to know the past to understand the present”. Before 1999, large corporates had secretive research & development
additional functionality. Subscriptions,
departments where scientists worked
a monthly fee is charged for a set
for years, decades even, to create the
period starting at an affordable price
‘next new thing’. Occasionally a ‘new
point with the option to increase or
thing’ would reach the local market,
decrease over time. E-commerce,
usually at a high price. For example,
the sale of products/services online.
in the early years of Dyson vacuum
Performance-based, a customer pays
cleaners the technology was secret
on results.
and the vacuum cleaners expensive.
Put loosely, a business model is a science-based graphic for easily communicating the core elements of
wealth or industry. These elements detail how a business makes money, channels are used to reach them, the
What does a business model look like?
unique value the business provides
Business models can either be explicit
customers, who to form strategic
as written or drawn, or, implicit,
relationships with, what key activities
unspoken or undocumented, yet no
the business performs to deliver this
less powerful. Explicit business models
value and collect revenue, and how
can be different designs as seen in the
these elements are measured.
four examples in figure.
Most businesses have more than
Carl Sagan, famous scientist and
of the service for free, upgrade for
a business.
who the customers are and what
Why are business models so popular today?
In general terms, a business model
one model – such as a model each
could be any design as long as it is a
for innovation, change, technologies,
graphic that communicates simply
strategic partnerships, acquisitions, etc.
the core business elements.
20 | Issue 4 – Strategy and Personal Development
However, after 1999, the adoption of digital technologies for everyday use changed our world. In the new world teenagers, students, parents – anyone with an idea – started a new type of business with little or no capital using digital technologies. Google and Facebook are two wellknown examples. Government campaigns, such as Digital Britain, drove infrastructure, development, use and e-skill training of technologies to stimulate economies, reduce costs, improve efficiency, effectiveness and competitiveness. Scientists, technology enthusiasts and self-taught programmers worked
