MANAGEMENT INFORMATION SYSTEMS

MANAGEMENT INFORMATION SYSTEMS

How to Design A Winning Business Modelby Ramon Casadesus-Masanell and Joan E. Ricart

Harvard Business Review

Prepare by資訊管理系碩專一

蔡銘祥、廖至仁

PrefacePreface

Strategy has been the primary building block ofcompetitiveness over the past three decades.

While the convergence of information and communication technologies in the 1990s resulted in a short-lived fascination with Business models.

Deregulation, technological change, globalization and sustainability have rekindled interest in Business Models today.

What force companies to modify or create business model

What force companies to modify or create business model

Crack open markets in developing countriesThe economic slowdown in the developed worldThe rise of new technology-based and low-cost rivals

Why Business Model Fail?Why Business Model Fail?

The studies of this paper over the past seven years

Focus on creating innovative and evaluate efficacy in isolationWithout think about the competitionIgnore dynamic elements of business model

What is a Business Model?What is a Business Model?

Joan Magretta(Management writer) The story that explains how an enterprise works.

Peter Drucker Who is your customer, what does the customer value, and how do you deliver value at an appropriate cost?

Clay Christensen(Harvard Business School) A customer value proposition, a profit formula, key resources, and key processes.

What is a Business Model?What is a Business Model?

Studies suggest: One component of a business model must be the choices that executives make about how the organization should operate—choices.

Managerial choices have consequences. For instance, pricing affects sales volume which shapes the company’s scale economies and bargaining power.

Choices

GOVERNANCE

POLICIES

ASSETS

Consequences

RIGID

FLEXIBLE

Business Model

Ryanair’s Business ModelRyanair’s Business Model

In the 1980s

How Business Models Generate Virtuous Cycles

How Business Models Generate Virtuous Cycles

Three Characteristcs ofa Good Business ModelThree Characteristcs ofa Good Business Model

Is it aligned with company goals? The choices made while designing a business model should deliver consequences that enable an organization to achieve its goals. Example:

Is it self-reinforcing? The choices that executives make while creating a business model should complement on another ; there must be internal consistency.

Three Characteristcs ofa Good Business ModelThree Characteristcs ofa Good Business Model

Is it robust? A good business model should be able to sustain its effectiveness over time by fending off four threats, identified by Pankaj Ghemawat.

Imitation Holdup Slack Substitution

Competitive Advantageof High-Tech CompaniesCompetitive Advantage

of High-Tech Companies

Ryanair’s Business ModelRyanair’s Business Model

Now

Virtuous cycles can onlybe created

by a low-cost, no-frills player?

Virtuous cycles can onlybe created

by a low-cost, no-frills player?

A differentiatormay also create virtuous cycles.

Example: Irizar

A differentiatormay also create virtuous cycles.

Example: Irizar

Irizar’s Novel Business ModelIrizar’s Novel Business Model

QUALITYOnly one product for all marketsMost repetitive tasks outsourced

ACCOMPLISHMENTRelatively high product pricesPay scale ratio of just 3:1Some profit (or loss) sharing every year

Irizar’s Novel Business ModelIrizar’s Novel Business Model

SHARED OWNERSHIPWorkers own assets and contribute financially to join IrizarTeams set their own goals and choose leadersNo bosses, only coordinatorsFlat hierarchy, with only three levelsNo overtime pay

TRUSTDecentralized decision makingShared information and transparency about performanceNo walls inside plants or offices; no assigned parking spacesTenure after three years of probation; no evaluation or firings thereafterNo clocking in and out

Competing with Business ModelsCompeting with Business Models

To compete with rivals that have similar business models, companies must quickly build rigid consequences so that they can create and capture more value than rivals do.

For instance:

Finland’s dominant retailers: S Group, a consumers’ cooperative, and Kesko which uses entrepreneur retailers to own and operate its stores.

Compete through business models in three ways

Compete through business models in three ways

Strengthen your virtuous cycle Companies can modify their business models to generate new virtuous cycles that enable them to compete more eff ectively with rivals.

Compete through business models in three ways

Compete through business models in three ways

Weaken competitors’ cycles Some companies get ahead by using the rigid consequences of their choices to weaken new entrants’ virtuous cycles.

Compete through business models in three ways

Compete through business models in three ways

Turn competitors into complements Rivals with different business models can also become partners in value creation.

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Business Models vs.Strategy vs. TacticsBusiness Models vs.Strategy vs. Tactics

Business models: refer to the logic of the company -how it operates and creates and captures value for stakeholders in a competitive marketplace

Strategy: is the plan to create a unique and valuable position involving a distinctive set of activities

Tactics:the residual choices open to a company by virtue of the business model that it employs.

SummarySummary