In the engagements with our client we face that business model innovation is a complex issue. Many aspects are involved and these are also intertwined. As I wrote in articles earlier we use a Business Model Innovation Framework based on Oosterwalder. We use this framework to facilitate the in depth discussion with our clients according to the systematic approach to create more business value. In these discussion sometimes we end up into an academic dilemma if we can speak about a new business model or just an improvement of the current business model. In concrete terms: how many of the building blocks of the framework have to change in order to speak of a real new business model. Personally I think that it is not a key discussion but I looked for some interesting peer views on the web. I found an interesting paper of MIT Sloan: Do some business models perform better than others? The authors defined a Basic Business Model Archetypes. They use two key criteria:
1. What rights are being sold?
2. What type of asset is involved?
In the first criteria they defined different rights: ownership, use, matching. In the situation of ownership they distinguish an ownership of asset with significant or limited transformation.
The second criteria they came also with four different types: Financial, Physical, Intangible and Human assets. If you combine these two sets of criteria you get theoretical 16 possible archetypes. The good news is that in the study of the largest 1000 US companies they discovered only seven types in practice. As I work a lot with high tech companies and manufacturers I am interested in the physical assets with gives three archetypes:
1.Manufacturer: creates and sells physical assets. Buys raw materials or components from suppliers and then transform or assembles the asset to create a product sold to buyers. (example: General Motors)
2.Wholesaler/Retailer: buys and sells physical assets. Buys a product and resells essential the same product to someone else an may provide additional value by transport, repackaging and customer service. (example: Wall marts)
3.Physical Landlord: sells the right to use a physical asset. The asset may be a location or equipment or even complete production plants (example: Marriot, Hertz).
We see that a lot of our Business to Business Clients are willing to move from one to type two or event to type three. We start to analyze the different archetypes in terms of differentiation of the Business Model Innovation Framework. As expected we see some logical differences in dominancy of the buildings blocks within the framework.
We use the outcome in two parallel ways. The first way (insight out) is we analyze the impact on the current business model of a running innovation project and see if it will lead to a new Business Model archetype and what kind of transformation is needed. In the second way (outside in) we use the Business Model Archetypes to challenge the current Innovation Portfolio in order to change the projects to boost the value creation.
The conclusion is that Business Model Archetypes can indeed help clients to improve the discussion of the current Innovation Portfolio and how to boost there business value. But only if the archetypes are in detailed analyzed by the Business Model Innovation Framework value can be captured.
