Business Model Development

Business planning and business model development is the last module of this course. In the previous modules, students learned about different topics that will be very useful for this final part of the course. Now it is time to integrate all knowledge acquired so far and apply it in the process of developing a business plan for your own business idea/project for this course. The business plan is your final assignment for this course (you are required to submit).

In both theory and practice, there is a fundamental dilemma over the methodology that should be applied when developing a business idea/project. Two main directions can be identified, i.e. methodology of business plan or methodology of business models. Although there are several methodologies of Business Model development, our focus will be on: Business Model Canvas and The Lean Canvas (Maurya, Retrieved, April 18, 2016 from http://bit.ly/1RdRRCo). Hegedić (2013) offered an interesting explanation, available however only in Croatian (Retrieved, April 18, 2016 from: http://bit.ly/29svSG6). Therefore, we will start this module by explaining the methodology needed to develop a business plan. At the end of this course, you will be required to apply one of them to your business project.

STUDENT ACTIVITY

For better understanding of Business model origins, purpose and relevance please read the following article: Osterwalder, A., Pigneur, Y. and Tucci, C. L. (2005) ’Clarifying Business Models: Origins, Present, and Future of the Concept,’ Communications of the Association for Information Systems: Vol. 16, Article 1. (Retrieved, April 18, 2016 http://bit.ly/29vkbiI)

Business Model as methodology

A business model describes the rationale of how an organization creates, delivers, and captures value (Osterwalder, A. & Pigneur, Y. 2009:14, Retrieved, April 18, 2016 from http://bit.ly/1eutgmG). A business model can be defined as a way a company does its business, i.e. a business model defines how a company works as a system, creates value, attracts customers, distributes products and services, earns and spends money. In any business planning process, no matter whether it is a start-up or any other type of company, particularly in the innovation or new product/process/services development phase, it is of paramount importance to consider business model elements with the aim to clarify business idea and find the best way to start a business or run it. Some interesting definitions of business model are given in the Financial Times Lexicon, Definition of Business Model check it out from (Retrieved, April 18, 2016 from: http://on.ft.com/29FHjjI).

Two Different Approaches to Business Models

In today’s business literature, it is possible to find two dominant methodologies for the development of business models, namely Lean Canvas and Business Model Canvas Generation. Both of them provide wannabe entrepreneurs with valuable insights about the future business. Here in this module, first the contents of both Business Models and then the Business Plan methodology will be explained. At the end, you will develop your own business idea applying only one methodology, but keeping in mind what you have learned from both of them and trying to anticipate the content and directions in a way that will help you develop and improve both the development process and outputs of your business idea/project.

STUDENT ACTIVITY:

Watch the following You Tube video where Alexander Osterwalder explains the Business Model Canvas at https://www.youtube.com/watch?v=RzkdJiax6Tw to familiarize yourself with the methodology. If you wish to explore this topic in more detail, then watch the video Startup Secrets: Business Model by Harvard i-lab at https://www.youtube.com/watch?v=K0Eu6cL0BR8 and uncover the secrets of business models.