Patterns and Designs in Business Model Generation

• three fundamentally different types of businesses: o customer relationship
 build relationships w customers o product innovation
 develop new and attractive products o infrastructure
 high volume repetitive
• focus on only one of these three in a company
• they can conflict with each other Product Customer infrustructure economics Premium price High cost to acquire cust  get access to ppl’s wallet! High volume to get economies of scale
Culture Battle for talent
Low barriers to entry
Small players thrive Battle for scope, consolidate, big players dominate Battle for scale, rapid consolidation, big players dominate
Competition Employee, coddle the superstars Service oriented, customer first Cost centered, standards and efficiency
• long tail biz models: sell few niche items. Low inventory costs and have a strong platform to make it readily available to interested buyers o ex customized legos o offer wide scope of “non hit” items. o Maybe user generated content o Focus on niche customers o Platform development is key and costs a lot o Internet is used to maintain customer relationship and as the transaction channel
• Multiplatform- intermediaries o Bring together two groups: only works if both sides come to the table o Facilitating interactions between different groups o More value happens when there are more people, creates a network effect o bring together two or more distinct but interdependent groups of customers. o key is that the o platform must attract and serve all groups simultaneously o lure one segment to the platform with an inexpensive or free Value Proposition in order to subsequently attract users of the platform’s “other side.” o Difficulty: which side to subsidize o Ex. Xbox, google, facebook
 Wii
• Low cost
• New untapped market
• Double sided platform o Generate profit from platform and also get royalties from developers o Free- non paying customers are financed by another customer segment
 Supported