General Management Innovazione

Why Business Models Matter

Each company in the world has in place a set of mechanisms for creating valuable products and services (i.e., value creation), and monetizing by offering them to one of more customer groups (i.e., value capture).
Such set of mechanisms, in business jargon, is commonly called “business model.”

For example, eBay offers an online platform where sellers and buyers trade goods (via auctions or pre-determined price) and charges fee to the uses which represents a share of each completed transaction. Assessing, and possibly changing a company’s business model offers strategic possibilities to increasing sales and enhancing financial performance – see the innovative business models of Facebook, AirBnB, Google, or Amazon as an example.

Each product or service can be sold in a variety of ways (e.g., online vs. brick and mortar; individual sale vs. subscription; full sale vs. advertisers’ subsidy; full price vs. freemium; low-cost vs. servitized; fixed price vs. auction).

Being able to offer new and innovative ways to sell a specific product can offer to companies additional revenue streams, increasing sales, key differentiation factors, and overall a significant competitive advantage.
Yet, executives often lack a toolbox to assess what options are more valuable for their company, and which are the best to maximize their performance. As a matter of fact, many executives and entrepreneurs design (or run) their business models in an intuitive way, more often than not by simply copying what the other competitors normally do. This often brings to suboptimal outcomes that reduce the company’s distinctiveness, and harness its sales and financial performance potential.

The course Business Model Innovation and Digital Transformation precisely provides an important set of frameworks and toolbox to leverage the full contribution of business models to strategically maximize each company’s performance.

Paolo Aversa, Associate Professor of Strategy and Full Time MBA Course Director Cass Business School – City,  University of London
Faculty Member CUOA Business School