Business model

rationale of how an organization creates, delivers, and captures value in economic, social, cultural or other contexts

A business model describes the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction is part of business strategy.

Environment-Strategy-Structure-Operations (ESSO) Business Model Development.


  • The business model is an abstract representation of an organization, be it conceptual, textual, and/or graphical, of all core interrelated architectural, co-operational, and financial arrangements designed and developed by an organization presently and in the future, as well as all core products and/or services the organization offers, or will offer, based on these arrangements that are needed to achieve its strategic goals and objectives.
    • Mutaz M. Al-Debei et al. (2008). "Defining the business model in the new world of digital business." In Proceedings of the Americas Conference on Information Systems (AMCIS), Vol. 2008, pp. 1-11
  • A startup is a temporary organization in search of a scalable, repeatable, profitable business model.
    • Steve Blank and Bob Dorf. The Startup Owner’s Manual, K&S Ranch, 2012, p. xvii.
  • Innovative e-business projects start with a design of the e-business model. We often encounter the view, in research as well as industry practice, that an e-business model is similar to a business process model, and so can be specified using UML activity diagrams or Petri nets. In this paper, we explain why this is a misunderstanding. The root cause is that a business model is not about process but about value exchanged between actors. Failure to make this separation of concerns leads to poor business decision-making and inadequate business requirements.
    • Jaap Gordijn, Hans Akkermans, and Hans van Vliet. "Business modelling is not process modelling." International Conference on Conceptual Modeling. Springer Berlin Heidelberg, 2000. Abstract
  • All too often, a successful new business model becomes the business model for companies not creative enough to invent their own.
    • Gary Hamel, Leading the Revolution: How to Thrive in Turbulent Times by Making Innovation a Way of Life. 2002 p. 46
  • Business models and value propositions expire like a yogurt in the fridge.
    • Alexander Osterwalder in foreword to: Stefanie Auge-Dickhut, ‎Bernhard Koye, ‎Axel Liebetrau (2015), Customer Value Generation in Banking: The Zurich Model of Customer-Centricity. p. ix
  • A frustration I have is that a lot of people increasingly seem to equate an advertising business model with somehow being out of alignment with your customers, ... I think it’s the most ridiculous concept. What, you think because you’re paying Apple that you’re somehow in alignment with them? If you were in alignment with them, then they’d make their products a lot cheaper!
    • Mark Zuckerberg, in “Inside Facebook's Plan to Wire the World” by Lev Grossman, Time (2014)

See also

Wikipedia has an article about: