I heard the author of Business Model Generation speak today. Alexander Osterwalder presented a talk on business models, so important since all businesses need one, but many have no clue to what it is.
In fact, the author asked the audience to define “business model”, and quite surprising, no two definitions were alike, and many were quite extreme in their similarities. He says this is because we do not have a shared language when discussing business models. He defines business model:
Describes the rationale of how an organization creates, delivers, and captures value.
The method he presents in designing a business model works on understanding 9 building blocks that show the logic of how a company intends to make money: customer segments, value propositions, channels of delivery, customer relationships, revenue streams, key resources, key activities, key partnerships and cost structure.
His book offers a strategic and methodological way of defining, designing, and implementing a business model for any organization.