Reinventing the business model for sure-fire success

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Wanted: CEOs from India

: complexity and ambiguity, it needs an ontological perspective to understand the business model and construct it for giving it lasting value.

Thanks to the concept of sense making put forward by Weick, ontological perspective of business model design helps in bringing together multiple disciplines of strategy, customer value orientation, information and communications technology, process and people management. Sense making concept implies finding logically reinforced possible choices out of vague questions, muddy answers and negotiated agreements that attempt to reduce confusion.

IT has proved and pioneered the value of outsourcing to obtain cost, time and quality advantage in the global economy. Fuelled by the lower cost of high speed bandwidth connectivity, this has also been extended to other business processes. Businesses across the world are outsourcing business processes to service providers who specialize in these services that are served from cost-effective locations. The next wave of organisational scope and scale would come from dynamic collaboration across various constituents of the “new” value chain. The successful innovation will be through dynamic forming or reforming of partner alliances, while ensuring seamless delivery of services, products development or manufacturing for superior customer experience. Information technologies will play a cementing role in realizing business model innovating.

In this chapter, we will discuss how to realise this dream and try to clear the cobweb of confusion surrounding business model and the role of IT in innovating it. A word of caution however—unless the core concepts and rigors of business model are understood, any innovation in this space may remain cosmetic.

What is Business Model?

A business model is the value an enterprise creates for its customers. Defined in terms of its business architecture including network of its partners and suppliers, business model also depicts the way the enterprise is structured for creating, marketing and delivering its value and relationship to generate sustained profit and revenue streams. Some experts also explain business model as “architecture of revenue” to illustrate the point.