The business model, commonly called “business model” is an organizational tool to create value and exploit its environment. Mastering it is necessary to understand the digital transformation of a business. Accessible and widespread tools allow everyone to analyze their own model and to imagine its future evolution. 

The business model: why be interested in it? 

Whether you are an entrepreneur looking for success, a start-up or a well-established company, you have probably already thought about your business model. But is it sustainable, solid and successful? Or on the contrary, is it shaky and fragile? You need to analyse, compare and even test it. To do this, there are various methods and tools that help us to better understand the main concepts of the business model. 

How does an organization make money? 

The business model describes the way in which an organisation creates, delivers and collects value. In other words, it defines how the organization goes about making money, based on its own indicators of success. And the methods it uses to increase traffic, win new customers, etc. The concept of business model applies to all forms of public or private organizations, from schools to associations, to startups and large companies. The latter do not have a monopoly on it! 

Components of the business model 

You have to think of your business model as a way of highlighting the flows between the different components of a company. A schematic representation of a business model allows you to identify how services and products are distributed to customers and how revenues reach the company. The business model then details the cost structures, the interactions between the company’s departments, the links between the company, its competitors and its partners. 

The approach permitted by the diagramming allows us to obtain a global vision of the components of the business model. This is a form of assistance in the conceptualization of the strategic model, but also in its realization. It is carried out as follows: 

• On the left, what enables the value proposition;
• At the core is the value proposition;
• And on the right, the links with the customers.

Designing your business model 

The matrix (or “canvas”) therefore includes nine key elements: 

• The customer segment: every activity has its recipients, who are grouped into one or more customer segments. 
• The value proposition: this refers to the products and services that create value for a customer segment. It is the central element of the business model, but not the most obvious one to fill in. 
• Distribution channels: these refer to all the means used and implemented to deliver the value proposition to customers. Vectors, channels, networks… 
• Customer relations: this links all the means used to attract new customers and build their loyalty. It also makes it possible to specify the relationship between customers and the company. 
• Revenue streams: these are the revenues generated by each of the customer segments listed above. The nature of revenues and resources can be very different. 
• Key activities: includes the activities necessary for the production of the company’s value. Production, logistics, consulting… 
• Key resources: refers to the key assets that are essential to the production of value and are held by the company. They can be material assets (equipment, fleet of vehicles, etc.), immaterial assets (patents, licences, brands) or human assets. 
• Key partners: refers to partners without whom the company is not able to produce the same value proposition, whose activities and resources are external. 
• The cost structure: refers to all the costs that the business model can represent in its matrix. It is therefore most often a question of fixed and variable costs, major costs, etc.  

A complete approach thanks to the business model 

More often than not, the alternative business model approach focuses solely on the study of channels, revenue models and cost models. While these elements are part of the business model, they should not be considered in isolation. A change in customer target, channel or pricing model will have an impact on all the other components of the business model! So the canvas (or matrix) makes it possible to take all the components into consideration. And thus, to highlight all the strengths and weaknesses of this whole. 

A common language and vision 

The use of a canvas model will allow all the stakeholders to be brought together around a common vision and language. And this, where strategic approaches are most often fragmented between the various players: finance, marketing, sales, HR, etc. The matrix will enable the sharing of objectives and a common strategy within the company. And obtain the support of all the players. But also a sharing of the vision of the company as well as its objectives and its environment. However, bringing together a diverse team that is representative of the company’s positions and businesses is essential to achieve this. 

Today, it is therefore very difficult to understand the digital transformation of our economy without taking the trouble to evaluate and analyze the changes that are taking place with the business model. And in this area, it is the platform business model that stands out as the most innovative!