Business Model Alchemist

As I have written earlier in this blog, I think the business model is an interesting unit of analysis that might replace the old ways of thinking. Many companies are still stuck with the paradigm of industry and company departments (products, marketing, etc.) Yet, this seems outdated as many case studies show.

In a recent post I have outlined that the Apple’s way of doing business is better described by using the business model concept than industry concepts. Apple is today a producer of hardware (e.g. iMac, iPod, iBook and others), software (operating system, iTunes, etc.) and sells music over the (iTunes). Furthermore, it can only offer these services in collaboration with a wide web of partners, spanning from chip producers over designers to music artists. How can we possibly describe or analyze this company in terms of industry?

Today I found a further example illustrating this trend towards business models in an article of the FT: Ringtones (FT, Wednesday January 5, 2005, “The surprise rise of the US ringtone”). Ringtones are a typical illustration of what business models are all about. Making ringtones available for purchase is nothing else than a value proposition that a company co-offers in collaboration with many different partners spanning from telcos all the way to song writers. The ringtone phenomena is best illustrated, understood and analyzed by using the business model concept. Perhaps even the one I propose in my recent research.

Browsing the EBSCO-HOST database of scholarly business journals I discovered a quite interesting paper on strategy and business models by George S. Yip in the Business Strategy Review (2004, Vol.15 Nr.2). He discusses how the Internet boom and bust has introduced a new term, the “business model”, that he believes may become a valuable complement to current concepts in strategic thinking. He ends the paper with the statement that “The distinction between “business model” and “strategy” is more than one of semantics”. According to Yip “they are two different concepts”. Yet, it remains to be seen how the academic community, particularly in the field of strategy research, will react to the introduction of such a new concept in their field. Until now, Gary Hamel with his book “Leading the Revolution” (2002) has in my opinion made one of the most interesting contributions from the field of business strategy thinkers.