Reinventing Your Business Model Summary

Topics: Management, Armen Sargsyan, Business model Pages: 2 (418 words) Published: September 28, 2012
Reinventing your business model
Summary by Armen Sargsyan
Business innovations have reshaped entire industries and redistributed billions of dollars of value. However, stories of business model innovation from well-established companies are rare as new business models often look unattractive to internal and external stakeholders. Business models consist of four interlocking elements that taken together create and deliver value. The first element is the customer value proposition which shows the way for a company to help a customer to get an important job done. The next part is the profit formula which in turn consists of four parts revenue model, cost structure, margin model and resource velocity. Key resources are the third part of a business model. They are assets such as people, technology, equipment and so on. The last component is the key processes which are operational and managerial processes that allow companies to deliver value in a way they can successfully repeat and increase in scale. It is not possible to invent or reinvent a business model without first identifying a clear customer proposition. The most important attribute of a customer value proposition is its precision how perfectly it nails the customer job to be done and nothing else. But such precision is often the most difficult thing to achieve. One way to generate precise customer value proposition is to think about the four most common barriers keeping people from getting particular jobs done insufficient wealth, access, skill or time. Then, having articulated the value proposition for both the customer and the business companies must then consider the key resources and processes needed to deliver the value. Rules, norms and metrics which are considered as key processes are often the last element to emerge in a developing business model. They may not be fully envisioned until the new product or...
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