Tell everyone in the most straightforward words: the business model is how the company makes money? In short, beverage companies make money by selling drinks; Express companies make money by sending express delivery; Internet companies make money through click-through rates; Communication companies make money by collecting phone bills; Supermarkets make money through platforms and warehousing, and so on. As long as there is money, there is a business model.
Business model is a relatively new term. Although it first appeared in 1950s, it was not widely used and spread until 1990s. Up to now, although this term appears very frequently, there is still no authoritative version of its definition. Read a lot of literature, the definition is:
A business model is a conceptual tool, which contains a series of elements and their relationships to clarify the business logic of a specific entity. It describes the value that a company can provide to its customers, and the internal structure, partner network, relationship capital and other factors used to realize (create, sell and deliver) this value and generate sustainable profit income.
When people use the term "business model" in literature, they often confuse two different meanings: one kind of authors simply use it to refer to the specific methods and ways for companies to engage in business, while the other kind of authors emphasize the significance of the model. There are essential differences between the two: the former generally refers to the way companies do business, while the latter refers to the conceptualization of this way. Supporters of the latter view put forward some ReferenceModel composed of elements and their relationships to describe the company's business model.
The concept of business model
There are many versions of business model conceptualization. There are different degrees of similarities and differences between the two. On the basis of synthesizing the commonness of various concepts, a reference model with nine elements is proposed. These elements include:
Value proposition: the value that a company can provide to consumers through its products and services. The value proposition confirms the practical significance of the company to consumers.
Target customer group: the consumer group targeted by the company. These groups have certain commonalities, which enable companies to create value. The process of defining consumer groups is also called market segmentation.
Distribution channels: that is, various channels used by companies to reach consumers. This paper expounds how the company develops the market. It involves the company's marketing and distribution strategy.
Customer relationship: the relationship between a company and its consumer groups. What we call customer relationship management is related to this.
ValueConfigurations: the configuration of resources and activities.
Core competitiveness: the ability and qualification that a company needs to realize its business model.
Partner network: a cooperative network formed between a company and other companies to effectively provide value and realize its commercialization.
The business model defined by Timos refers to a complete system of products, services and information flow, including each participant and his role in it, as well as the potential benefits of each participant and the corresponding sources and methods of income. In the process of analyzing business model, we mainly pay attention to the relationship between a class of enterprises and users, suppliers and other cooperative offices in the market, especially the logistics, information flow and capital flow between them.
The design of business model is an integral part of business strategy. It is a part of business operation to implement the business model into the company's organizational structure (including institutional setup, workflow, human resources, etc.). ) and systems (including IT architecture and production lines, etc. ). Two confusing terms must be clearly distinguished here: business modeling usually refers to business process design); At the business level; Business model and business model design refer to the definition of business logic at the strategic level of the company.
[Edit this paragraph] Types of business models
Generally speaking, the business model of service industry is more complicated than that of manufacturing and retail industry. The oldest and most basic business model is the "shopkeeper model", specifically, it is to open a shop where there are potential consumers and display their products or services.
A business model is a description of how an organization performs its functions and a summary of its main activities. It defines the company's customers, products and services. It also provides information about how companies are organized and how they generate revenue and profits. The business model, together with the strategy, dominates the company's main decisions. The business model also describes the company's products, services, customer markets and business processes.
Today, most business models rely on technology. Entrepreneurs on the Internet have invented many brand-new business models, relying entirely on existing and emerging technologies. Using technology, enterprises can reach more consumers with the least cost.
With the progress of the times, the business model has become more and more complicated. The "bait and hook" model-also known as the "razor and blade" model or the "bundled product" model-appeared in the early 20th century. In this mode, the price of basic products is extremely low, usually at a loss; Related consumables or services are very expensive. Such as razor (bait) and blade (hook), mobile phone (bait) and talk time (hook), printer (bait) and ink cartridge (hook), camera (bait) and photos (hook), and so on. Another interesting change of this model is that software developers distribute their text readers for free, but their text editors cost hundreds of dollars.
In 1950s, McDonald's and Toyota started a new business model. The innovators in the 1960s were Wal-Mart and hypermarkets, which were supermarkets and warehouses. In 1970s, a new business model appeared in the operation of FedEx and Toys R Us toy stores. In the 1980s, it was Blockbuster, The Home Depot, Intel and Dell. . In 1990s, Southwest Airlines, Amazon.com Netflix, Yi Bei and Simbach Coffee. The business model without careful consideration is a serious problem for many internet companies.
Every innovation of business model can give the company a competitive advantage in a certain period of time. But with the change of time, the company must constantly reflect on its business design. As the value orientation (of consumers) shifts from one industry to another, enterprises must constantly change their business models. The success or failure of a company ultimately depends on whether its business design meets the priority needs of consumers.
Some scholars and experts try to classify business models systematically. Timmas and Rapa were the first people to try this.
[Edit this paragraph] The way to make a profit: innovate the business model.
The problem of profit is the first problem that every company needs to consider, and it is also a topic of interest to everyone. The way of profit is easy to understand, that is, the way of profit and the idea of profit. So, how should we run our business? Mr. Lu Xun put it well: "In fact, there is no road on the ground. If there are more people walking, there will be a way. " In the growth of the enterprise, Mr. Lu Xun's epigrams gave us strength and encouraged us to work hard, explore bravely and open up new paths.
However, the current situation is often chaotic, and active efforts and courage to explore may not solve the problem. I think people often encounter traffic jams: during rush hours, let's say Beijing's North Fourth Ring Road, 14 lane, is a spacious avenue, but there are often traffic jams, long queues, slow crawling and spectacular. The same is true of enterprise management. Often, similar faces, familiar means and the same ideas squeeze into the same road, so thousands of troops cross the wooden bridge and no one can walk. Therefore, the reality enlightens us that enterprise management must be good at innovation, and to paraphrase Mr. Lu Xun's words: "There are roads on the ground, so there are many people walking, so there is no road"! If enterprises want to stand out from the crowd, they must "find another way". This is also the guiding ideology of our course "The Way to Profit in the New Economic Era-Business Model Innovation".
Ok, let's talk about the things around us-the Olympic Games. See how unconventional innovation can promote social progress and change the development of the situation. As we all know, the Olympic Games is the biggest feast and gathering of global sports and humanities. For many years, it has carried passion, pride, glory and dreams. It is every friend's dream to hold the Olympic Games successfully in our own country. You must remember that on July 3rd, 2006, Mr Samaranch announced in Moscow that "Beijing will be the host city of the 2008 Olympic Games", how our 654,380.3 billion people cheered and excited, and the whole country boiled, and many compatriots were so excited that they left tears of happiness on their faces. But what is not known to everyone is that before 1984, the Olympic Games were mainly held by compulsory designation. At that time, no country was willing to host the Olympic Games, let alone the public's expectation or competition, and even all countries avoided it. Why? The reason is very simple, and the situation is very serious: the cost of hosting the Olympic Games is too high, earning too little and losing too much, and everyone is afraid.
1972 The debt of the 20th Munich Olympic Games has not been paid for many years. 1976 The debt of the 20th Montreal Olympic Games 10 billion dollars almost bankrupted the municipal government. 1980 The 22nd Moscow Olympic Games cost 9 billion US dollars, while the total sponsorship income of 38 1 sponsors is only about 9 million US dollars. 1984 Los Angeles Olympic Games was initially rejected by the US government, until finally by talented businessman Peter? Ueberroth came forward to take charge of the organization and rewrote the history of the Olympic Games in one fell swoop. Ueberroth strives to increase revenue and reduce expenditure, and is determined to innovate management. As we all know, the two biggest expenses for hosting the Olympic Games are the new gymnasium and the Olympic Village. Ueberroth suggested not to build the Olympic Village, and borrowed 20,000 apartments from three nearby university dormitories to provide temporary reception. Most competition venues also use existing facilities, and there is no large-scale construction of new venues. At the same time, on the one hand, vigorously reduce the number of people in the staff, and halve the number of people in the staff; On the other hand, vigorously recruit volunteers to get support. In terms of open source, Ueberroth is trying his best to collect as much money as possible: the ticket price has greatly increased, and almost all facilities are clearly marked. A small TV studio costs 500,000 RMB, and even the torch relay costs 3,000 US dollars per kilometer. In terms of income from sponsorship fees, we are determined to innovate: in the end, only 30 enterprises are eligible to sponsor, one in each industry, and the minimum sponsorship threshold for each enterprise is 4 million US dollars. After the sponsorship plan was announced, rivals in various industries competed with each other, and Coca-Cola and Pepsi-Cola competed with each other. In the end, Coca-Cola won the exclusive sponsorship qualification with $654.38+$02.6 million. Kodak thinks that 4 million is too expensive and is only willing to pay $654.38+00,000. Uber Ross immediately flew to Japan to find the president of Fuji, who was worried that he could not find a stepping stone to enter the United States. He was overjoyed and immediately made a deal with 7 million sponsorship fees. GM 9 million surpassed Toyota; The highest is the auction of TV broadcasting rights, and the three major TV networks in the United States compete for bids. In the end, NBC won the broadcasting right with 65.438+0.2 billion yuan.
As a result, Ueberroth successfully applied the 2: 8 principle, and 30 sponsors sponsored a total of 385 million US dollars, while in 1980, only 38/kloc-0 sponsors in Moscow sponsored 9 million US dollars. Finally, the Los Angeles Olympic Games earned a total of $760 million and made a profit of $250 million, making it the first profitable Olympic Games in human history. Since then, the Olympic Games has become an opportunity for the mayor to make a fortune, and various places are competing to host it. Today's Olympic Games is unparalleled. The Olympic Games has already got rid of the embarrassing situation that nobody cares about, and has become a rare opportunity for countries to compete for it. This year's Beijing Olympic Games, only one souvenir, the Olympic Xiangyun Torch, was issued with 200,000 pieces, each of which cost 2,990 yuan, with a revenue of hundreds of millions of RMB. The Olympic Games, which lasted for more than 2,000 years, was successfully passed down.
Looking back on the development history of the Olympic Games, Ueberroth took advantage of the unique resource advantages of the Olympic Games in the world, successfully created the scarcity of opportunities and enhanced the commercial value by limiting the number of enterprises and setting the sponsorship threshold. At the same time, he made great efforts to increase revenue and reduce expenditure, and finally made a profit in one fell swoop, making the Los Angeles Olympic Games a milestone in the development history of the Olympic Games. We say that when we encounter difficulties, it is often not that there is no way out, but that we have not found a solution to the problem. The key is to find the original problem and find the solution to it. Through unconventional thinking innovation and brand-new management methods, Ueberroth successfully broke through the predicament of serious losses since the Millennium of the Olympic Games, created a successful mode of profitable operation of the Olympic Games, and further created the glory of the Olympic Games.
Just as the Olympic Games is in trouble, enterprises facing fierce competition also need such a breakthrough. We say that there is no sunset industry, only sunset enterprises; There is no sunset enterprise, only sunset thinking. Let's take a look at another example around us: how a bankrupt cannery is reborn through thinking innovation.
1992 coincides with the beginning of the retreat of the country and the advancement of the people. In Yiyuan County, Shandong Province, a national cadre surnamed Zhu, who once served as the director of the county foreign economic commission, resigned and went to sea to buy a local state-owned cannery with a loss of10 million yuan. The so-called purchase didn't cost a penny, but only a long-term promissory note was issued-provided that the project was used to save the cannery, feed hundreds of workers and bear the debt of the original factory of 4.5 million yuan. After leaving the cannery, I want to introduce foreign advanced production equipment. However, director Zhu, who is heavily in debt, has no money to buy equipment, so he wants to solve the problem through compensation trade. The solution for the cannery to successfully introduce foreign production equipment is to produce products at home, offset the equipment purchase fee with the export sales of products in the next five years, and pay off part of the equipment. As a result, advanced assembly line production equipment was introduced, and a large order of more than 8 million dollars was signed in one breath. At the beginning of 1993, under the guidance of more than 20 German experts and technicians, we commissioned the production line to produce products. At this time, an international food Expo was being held in Germany. Director Zhu went to the meeting alone. With the help of overseas Chinese, the first batch of business-3,000 tons of apple juice was signed in Monihei, Germany and Lausanne, Switzerland, with a contract amount of more than 5 million US dollars. The cannery used the advance payment of this contract to buy raw materials and start a new production line, thus digging the first bucket of gold. Since then, the development has been smooth sailing. They found the blank of domestic products at that time-fruit juice drinks, which developed rapidly and occupied the highest point. From 65438 to 0994, the headquarters of this enterprise moved from Shandong to Beijing, and now it has developed into the largest juice producer in China. The fruit juice drinks that many of our friends drink every day are produced by this company. Speaking of which, you must have guessed who the bankrupt cannery was. It is the predecessor of Huiyuan Group today. At that time, Zhu Xinli, a famous entrepreneur, was the director of a factory. He could only afford a plane ticket to attend the German Food Expo without an interpreter. Of course, he is worth billions now.
Let's go back and sort it out. Huiyuan's development idea is to withdraw the state-owned cannery from the market with the promise of supporting enterprises, change the future product output into advanced production lines through compensation trade, start the production lines with the advance payment of overseas contract orders, and finance repayment with new contracts, so as to realize the original accumulation and continuous rolling development, and finally find fruit juice, a product that has not yet formed a climate in China, and then quickly become the industry leader by taking advantage of the first-Mover advantage.
What can we draw from these two real cases? There must be methods for success and ideas for management. Both cases show clear business ideas. Here, we call this business idea a business model. What is the business model?
1997 10, Robertson, one of the most famous venture capital consultants in Silicon Valley? Steven asked Tian Suning, CEO of AsiaInfo, a famous high-tech enterprise in China, "What is AsiaInfo's business model?" Tian Suning asked Robertson, "What is a business model?" Robertson was surprised that Tian Suning, as CEO, didn't know what a business model was. Robertson explained to Tian Suning, "A dollar circulating in your company becomes a dollar. The business model refers to where this dime has increased. " This example vividly illustrates what a business model is, and also shows that the concept of "business model" is imported. In fact, any enterprise in China is selling products and then recovering funds. This is a business model, but we didn't mention "business model" before. In fact, the development experiences of the Los Angeles Olympic Games and Huiyuan Group both describe a complete profit-making process and explain their unique business models.
In 2000, the Internet bubble burst, and a large number of Internet star enterprises that had no practical value and could not stand scrutiny closed down. Michael, former chief technology officer of time warner Inc.? In an interview with Businessweek, Dunn said: "A new enterprise must establish a solid business model for the first time, but high technology is secondary. In the process of running a business, the business model is more important than high technology, because the former is the premise of the company's foothold. " Drucker, a management scientist, said: "The competition among enterprises today is not the competition between products, but the competition between business models." It can be seen that the business model plays an important role. According to a survey, the failure of entrepreneurial enterprises in China today is 23% due to strategic mistakes, 28% due to implementation problems, and as high as 49% due to failure to find a suitable business model.
Among all innovations, business model innovation belongs to the most primitive innovation of enterprises. Without the business model, other management innovations and technological innovations have lost the possibility of sustainable development and the basis of profit. All successful large enterprises come from small enterprises with successful business models. We say that Wal-Mart actually runs a grocery store, Coca-Cola sells soda, Microsoft sells software, Gome runs an electrical appliance store, and Little Sheep runs a hot pot restaurant. What does the success of these ordinary industries mean? In fact, it illustrates a truth: whether high-tech or low-tech, you can succeed. The key is to find a successful business model and give full play to its profitability.
The definition of business model recognized by academic circles is: "In order to maximize customer value, integrate internal and external factors that can make enterprises run, form an efficient operation system with unique core competitiveness, and realize the overall solution of organizational design by providing products and services." Among them, integration, efficiency and system are the basis or premise, core competitiveness is the means, customer value maximization is the subjective purpose, and sustainable profit is the objective result and the only external standard to test whether a business model is successful.
The essence of business model is about what enterprises do, how to do it and how to make profits, and the essence is the concrete application of business laws in business. Just now we talked about the process of Huiyuan and expounded his business model. By promising to pay for the enterprise, introducing equipment through compensation trade, selling new products to make profits, and signing new contracts to collect advance payment, we can enter the profitable business process of benign development cycle.
A successful business model is not necessarily a technological innovation, but a transformation of a certain link of enterprise management, a reorganization and innovation of the original business model, and even a subversion of the whole rules of the game. The innovation of business model runs through the whole process of enterprise management, including enterprise resource development, research and development model, manufacturing model, marketing system and circulation system. Every link of innovation may create a brand-new and successful business model.
Any big enterprise started from a small age, and Liu Xiang, which proudly runs faster than the wind, also embarked on the road to success from a toddler. Let's take a serious look at these enterprises that have created business legends around us today: Baidu, Mengniu, Gome, Haier, Lenovo, Li Ning, Wahaha, Huiyuan, Wuliangye and Little Sheep ... Have they developed successfully in the same way since childhood?
Lev? Tolstoy said: Happy families are generally similar, but unhappy families are different. Here, careful friends must see that failed enterprises are generally similar, and successful enterprises are different. The failure of an enterprise is generally caused by several reasons: capital, talent, strategy, implementation and so on. And the road to success of enterprises also has its own merits. Baidu's bidding ranking, Mengniu's event marketing, Gome's multi-system model, Haier's dedicated service, Lenovo's diversified business, Li Ning's athlete brand management, Wahaha's channel joint venture ... Every successful enterprise can only develop and grow if it finds its own unique business ideas and business model, and constantly adjusts and upgrades its business model with the changes of business environment, competitive factors and consumers. We have designed the "5R Model of Business Model" in the course system of "Profit Way in the New Economic Era-Business Model Innovation", and discussed and designed each enterprise's unique business model from five chapters that every enterprise will experience: product chapter, management chapter, communication chapter, financing chapter and social value chain interaction chapter, and finally tried to design a business model system that changes with time and environment.
"In fact, there is a road on the ground. If there are more people walking, there will be no road!" In today's rapidly changing market and increasingly fierce competition, if our enterprises want to stand out and grow stronger, they must not take the usual road and design a competitive and unique successful business model that suits them.
The chapter is selected from teacher Jin Chao's series "The Way to Profit in the New Economic Era-Business Model Innovation" (unfinished, to be continued).