Business Models

Designing Business models which can be "Glocal", successful for both local and global success

Differentiation of

Business Plan
Financial Plan
Business Model (based on unique value)

Business model describes a value proposition for customers and other participants, an arrangement of activities that produces this value, and associated revenue and cost structures (Johnson, G et al 2017: 229).Johnson, Christensen, and Kagermann argue that business models consist of four elements: a customer value proposition, a profit formula, key resources, and key processes.Likewise, Chesbrough and Rosenbloon, state that “the functions of a business model are to: articulate the value proposition, identify a market segment, define the structure of the value chain, estimate the cost structure and profit potential, describe the position of the firm within the value network, and formulate the competitive strategy.” “The functions of a business model are to:
articulate the value proposition, that is, the value created for users by the offering based on the technology
identify a market segment, that is, the users to whom the technology is useful and for what purpose
define the structure of the value chain within the firm required to create and distribute the offering
estimate the cost structure and profit potential of producing the offering, given the value proposition and value chain structure chosen
describe the position of the firm within the value network linking suppliers and customers, including identification of potential complementors and competitors
formulate the competitive strategy by which the innovating firm will gain and hold advantage over rivals.

Business Plan Versus Business Models

Where did the idea that startups write business plans come from? In the early days of venture capital, investors and entrepreneurs were familiar with the format of business plans from large companies and adopted it for startups. Without much thought it has been used ever since.
A business plan is the execution document that existing companies write when planning product-line extensions where customer, market and product features are known. The plan is an operating document describes the execution strategy for addressing these “knowns.”
Entrepreneurs treat a business plan, once written, as the culmination of everything they know and believe. All they need to do is add money and magically that five-year forecast in Appendix A will simply happen if they execute to the plan.
It turns out that’s a mistake. A big mistake. A startup is not about executing a series of knowns. Most startups are facing a series of unknowns – unknown customer segments, unknown customer needs, unknown product feature set, etc.
That means that writing a static business plan first adds no value to starting a company, as the plan does not represent the iterative nature of the search for the model.

Why a Business Model Should Come Before a Business Plan

Instead of writing a full-fledged business plan, they had focused on building and testing a business model with a customer development process to test each of their business model hypothesis. A business model describes how your company creates, delivers and captures value.
A business model is designed to change rapidly to reflect what you find outside the building in talking to customers. It’s dynamic and it reflects the iterative reality that startups face. Business models allow agile and opportunistic founders to keep score of the pivots in their search for a repeatable business model.

STEVE BLANK

Dr Sed SAAD, PhD MBA MPA MA
セド・サード (佐亜渡) 博士
Сед Саад D.Sc.

value creation

business models

Business Plan Versus Business Models

START WITH A BUSINESS MODEL, NOT A BUSINESS PLAN

Supporting you...

to get the triple -local, global and "glocal"- mindset through core competences