Chapter 1: Key Components of Business Model
The reflection essay will focus on the first nine topics learned in the course. They include the building block of business model, business model canvas template, unbundling business model, long tail business model, multi-sided platform business model, free business model and open business model. The next part will focus on the process of designing business model. Besides identifying the key concepts learned, the essay will give personal account on aspects such as the feelings, the lessons, the challenges and the after-topic activities.
In chapter 1, we learned about key components of business model. We also did presentation on Uber. The chapter revealed that there are nine building blocks of a business model. The first element is customer segment. A good business model should have customer segment at its core. The second element is unique value proposition (Osterwalder, Pigneur, Bernarda & Smith, 2014). A business model can be successful if it is a source of solution to customer’s problem. The third element is channels of distribution. This is necessary because goods must be delivered to selling points. Other components include customer relationship, revenue sources, key resources, key activities, key partners, and cost structures (Pijl, Lokitz & Solomon, 2016). What I learned is that business model is crucial in any business because it makes it possible to optimize the economic, financial and human setup of the digital company, to adapt and adapt its offer to the various stakeholders: customers, suppliers, etc.
While taking the tutorials, we were shown how to place the right simulations in the right boxes. For example, Finding the right mix of Channels to satisfy how customers want to be reached is crucial in bringing a Value Proposition to market. I like the fact that the canvas business model brings the same deductions as the business plan, in an ultra-summary and ultra-visual way. I felt that most companies fail because they do not consider all key elements of business model. After finishing the session, I researched more about the business model.
In chapter 2, we focused on canvas template. The template has nine blocks, each representing the nine-building block of the business model. We learned that a business model can distinguish between successful and unsuccessful enterprise even if both produce similar products. It is through business model that Apple managed to dominate the market in 2001 after launching iPod. Apple perfected the value proposition element of business model. Business model canvas helps a business think holistically (Attaran, 2017)
Chapter 2: Canvas Template
I learned that the decision-making process and invention is becoming easier due to the invention of simulation tools. However, for one to effectively apply the canvas concept, he or she should have wider perspective of the intended enterprise. I like the fact that it is possible to make any business competitive by using the right model. I felt that many people are unaware of the business model especially small medium enterprises. After the end of the chapter, I went back to look more about Apple’s business model.
In chapter 3, we learned that through unbundling, a company will be all the more powerful that it will choose and focus solely on one of these 3 models. Most companies have 3 business models (Schoemaker, Heaton and Teece, 2018. The first model is based on customer relationship. In this model, businesses are focused on finding customers and building lasting relationships with them (Srnicek, 2017). The second model is based on innovation. Here, companies develop new products and services. The third model is based on provision of infrastructure. Here, companies build systems that allow repetitive and large number.
I learned that most business fail to prosper simply because they combine all the three models together. I feel that it is high time for most of the businesses to reevaluate their models and determine whether they are pursuing the right models. One good thing about the topic is that by knowing the different models, it is easy to diagnose the problem in a company (Imke, 2016). The challenge related to unbundling is that most of the models are interdependent and hence there is no way of excluding other models. What I can do differently is to know how to identify major and minor models and see how to allocate resources effectively. After the session, I researched a lot about the topic in order to understand more (De Bono, 2000).
In chapter 4, we focused on the long tail model. The main requirement for the sale of long troll products is efficient distribution mechanisms with the lowest possible storage costs. The model is based on the fact that at least as interesting to sell several different items in small quantities as to sell few distinct items in large quantities. Lulu.com, a publishing company adopted this strategy and it was successful.
I learned that it is not always profitable to limit the potential customers based on their purchasing power. I feel that most companies often rush for highly paying enterprises and in process, the demand for their services and products falls (50minutes.com, 2017). That is why Lulu.com took advantage of the gap created after publishers started discriminating the authors (Francis, 2017). One good thing about the model is that it is feasible and that it challenges entrepreneurs not to focus on selling expensive products alone. What I can do differently is to find whether long tail model can be applied in any enterprise or not. After the session, I explored some of the advantages and disadvantages of long tail model.
Chapter 3: Unbundling Business Model
In chapter 5, we focused on the multi-sided platform. Multi-faceted platform acts as a catalyst for inter-group interactions. It operates by connecting at least two distinct customer groups that depend on each other. I learned that its success depends on the networking of a large number of users, of at least one group concerned (Foss and Saebi, 2018). This is the marketing strategy that companies like Google (with its search engines and derivative advertising products) or Apple (with its App Store) have chosen to implement. Google, for example, has a unique value proposition. It also has distinct revenue model. Its resources include Web search (Google.com), advertising (AdWords), and third-party content monetization (AdSense). Nintendo Wii is another company utilizing multi-sided platform.
I must admit that this was my favorite platform. I was eager to learn what makes Google the best company and I realized that Google’s success has to do with the concept of multi-sided platform. I felt that google, Nintendo and even Apple deserves to be the best companies because of their innovative abilities. Even Uber applies the multi-sided platform because it indirectly acts as a catalyst for inter-group interactions. The bad thing about this model is that it is not easy to adopt. This means that few companies and industries can implement this model. If I was asked to propose new idea for Uber, I would suggest the expansion of the services to include other deliveries and even try the air and water transport. After the session, I tried to find out whether Uber can still improve its services to make even better.
In chapter 6, we focused on free model. We learned that in this model, a customer segment can always have a free offer. To operate economically, this model requires one or more other customer segments to compensate for the shortfall thus created (Teece, 2018). It is either to charge the same products or services offered for free to other customers, or more commonly to charge additional products or services to the same segment with free products or services. It consists of offering, besides completely free services, paid services allowing their buyers to access privileged functionalities (the example of some online games perfectly illustrates this mechanism). Skype is an example of company utilizing this concept.
What I learned is that most of the online businesses utilizes free model. It is like the concept of baiting and hooking. I feel that this is good model to introduce a given product into the market. What is good about the model is that it can attract many potential customers. What is bad is that it is not guarantee that those who have used free services will eventually subscribe to the paid for services (Amankwah-Amoah, Osabutey and Egbetokun, 2018). At the end of the topic, I tried to imagine if it is possible for Uber to adopt free model in combination with the current model
Chapter 4: Long Tail Business Model
In chapter 7, we focused on open business model. It is here to apply marketing principles implementing the purchase of patents or external products on behalf of his company (outside-in), or conversely to assign patents, license fees or technology to a third-party company for royalties. Example of businesses under this model include procter and gamble, GlaxoSmithKline’s Patent Pools, Innocentive,
Concerning this model, I felt that it is not the best model as compare to others. This is because it is limited to handful of companies. After the topic, I went and read more about patenting and why this activity is effective as far as open business model is concerned.
Part 3 of the course covers more about design used in business modeling. There are six business model design techniques which include customer insights, ideation, visual thinking, story telling and scenarios (Norman, 2017).
This chapter focused on customer insights. To create appropriate business models, for the right customers, you must first and foremost have a thorough knowledge of the consumers with whom you want to do business. The study of the wants, needs, expectations and behaviors of consumers is a very important key activity that catering companies must constantly carry out (King, 2017). It is thanks to this key activity that some companies (and some entrepreneurs) are, more than others, able to identify business opportunities and exploit them successfully (Clark, Osterwalder, Pigneur, Smith, Papadakos & In Lacey, 2012). I realized that difficult to imagine that a company can hope to succeed and last without being able to benefit from a thorough knowledge of the consumers with whom it wishes to do business (their desires, their needs). , their expectations, the environment in which they live, their routines, their concerns, their aspirations and, etc.). What I like about concept of customer insight is that this basic knowledge is in fact a valuable information resource without which a company cannot hope to reach an optimum level of performance.
I also like the fact that having a customer profile will guide you to better design choices in value proposition, distribution and customer relationship (Osterwalder and Pigneur 2011, 131). What I would do better is to determine how to identify the customer’s needs effectively. After the topic, I studied more on what compelled Uber to start the idea of connecting drivers, technology, investors and consumers (David and West, 2017).
Chapter 9 focused on ideation. The key epicenters for generating business idea include customer-driven, finance-driven, innovation-driven, resource-driven and offer-driven (Norman, 2017). What if question is very important when coming up with business idea. Diverse team is necessary for generation of a good idea. The team should follow the brainstorming rules. Once we have target customers and problems to solve, what we do is find solutions that satisfy those customers. The process of generating solutions (which will lead to innovative ideas for companies) can be based again on the technique of Gamestorming, and of course the star tool in all creativity process are the Postits.
Chapter 5: Multi-sided Platform Business Model
I learned that there are many sources of business ideas. However, what I found a bit challenging to many people is that they are so inclined to the new inventions and hence most people tend to work alone. They want to be like Einstein. Fortunately, the chapter revealed that brainstorming is crucial in business development. I feel that most people often fail to invent new ideas simply because they do not form team. Idea can be easily discovered through the contribution of team members.
Based on the ideas gained in the nine chapters, one area I need to develop so that I can improve my creativity and innovation skills is the problem-solving. I realized that every innovation strategy eventually fails, because innovation is inherently problem-solving — and there are as many ways to innovate as there are types of problems that need to be solved. There is no single “true” path for innovation. I also need to build on leadership skills. I learned that innovation and ideation often requires risk. Not all innovative ideas guarantee success. Our highly innovative leaders build close collaborative relationships with the team. Colleagues know that their boss will cover the rear and not throw them to the wolves if something goes wrong. For conscientious mistakes no one is punished. Lastly, I should foster my communication skills. So far, I have learned that the best, most advanced ideas might come from below. They form a culture in which good ideas, like bubbles of champagne, rise from the bottom of the glass to the top, that is, come from ordinary employees. They are said to be radiant with optimism, full of energy, and susceptible to new ideas. No sullenness – jokes and laughter
Conclusion
So far, I can admit that I am now equipped with basic concepts of innovation and invention. I have learned that without business model, even the best innovation may not perform well in the market. I have learned many business models that can be applied and I feel that if given chance, I can comfortably design a business model for any company so long as I have enough information about the market and internal operations of a company.
References
50minutes.com, (2017) The Business Model Canvas: Let your business thrive with this simple model, Cork: Primento Digital.
Amankwah-Amoah, J, Osabutey, EL and Egbetokun, A (2018) Contemporary challenges and opportunities of doing business in Africa: The emerging roles and effects of technologies. Technological Forecasting and Social Change, 131, pp.171-174.
Attaran, M, (2017) The internet of things: Limitless Opportunities for business and society. Journal of Strategic Innovation and Sustainability Vol, 12(1), p.11.
Clark, T, Osterwalder, A, Pigneur, Y, Smith, A, Papadakos, T, & In Lacey, M (2012) Business model you: A one-page method for reinventing your career, Hoboken, N.J. : Wiley.
David, C and West, R (2017) NDIS Self?Management Approaches: Opportunities for choice and control or an Uber?style wild west? Australian Journal of Social Issues, 52(4), pp.331-346.
De Bono, E, (2000) Six thinking hats. London: Penguin.
Foss, NJ and Saebi, T (2018). Business models and business model innovation: Between wicked and paradigmatic problems. Long Range Planning, 51(1), pp.9-21.
Francis, A (2017) Gap Model Of service Quality [Online] Available : https://www.mbaknol.com/marketing-management/the-gap-model-of-service-quality/ [Accessed: September 2018]
Imke, S (2016) Applying the business model canvas: A practical guide for small businesss : design, align, and test your ideas, Monument : KSI Enterprise, Wroc?aw : Amazon Fulfillment
King, R (2017) Business model canvas: A good tool with bad instructions? : a new visual book about disruptively moving from nine block business model to one line business model, Erscheinungsort nicht ermittelbar.
Norman, D., (2017) Design, business models, and human-technology teamwork: As automation and artificial intelligence technologies develop, we need to think less about human-machine interfaces and more about human-machine teamwork. Research-Technology Management, 60(1), pp.26-30.
Osterwalder, A, Pigneur, Y, Bernarda, G, & Smith, A (2014). Value proposition design: How to create products and services customers want : get started with. Hoboken, New Jersey : Wiley
Pijl, PVD, Lokitz, J, & Solomon, LK (2016). Design a Better Business: New Tools, Skills, and Mindset for Strategy and I. John Wiley & Sons.
Schoemaker, P.J., Heaton, S. and Teece, D., (2018) Innovation, Dynamic Capabilities, and Leadership. California Management Review, p.0008125618790246.
Srnicek, N., (2017) The challenges of platform capitalism: Understanding the logic of a new business model. Juncture, 23(4), pp.254-257.
Teece, D.J., (2018) Business models and dynamic capabilities. Long Range Planning, 51(1), pp.40-49
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