I’ve been watching the buzz from the latest SOBcon ’08 (a blogging convention) in Chicago this weekend. One of the speakers, Brian Clark (aka Copyblogger) spoke about online business models that work. From what I can gather from the tweets and follow-up blog posts, one of the takeaway quotes was this:
“Business Model = right product or service at the right price for the right audience”
I have to say that when I first read this, my first reaction was…”What? That’s a business model?”. That sounds more like a marketing model to me than a business model (and more specifically 3 of the 4 P’s of marketing – product, price and people).
From my management consulting days, I am pretty sure that the definition of a business model should really include some sort of mention of the systems and processes by which the product/service is delivered and the capabilities an organisation needs to deliver their offerings.
In short, it needs to include something about how a business should be structured in order to deliver on their promise (of the right product, at the right price for the right audience).
It’s not that I disagree with Brian, it’s more that I think his definition doesn’t go far enough – so I did a bit of digging and searching on the phrase “What makes a good business model” stumbled upon an article which ranked #1 on Google, from none other than my former employers, Accenture.
This is their definition:
A real business model is the organization’s core logic for creating value. More specifically, it is:
- The set of value propositions an organization offers to its stakeholders,
- along with the operating processes to deliver on these,
- arranged as a coherent system,
- that both relies on and builds assets, capabilities and relationships,
- to create value.
So translate that into semi-normal speak and you get:
- The benefits you offer to stakeholders in your business – who could be your readers, your clients and anyone else who declares an interest in your business,
- Along with the processes & methods by which you distribute these benefits – i.e. your blogging routine, your Twitter routine, your consulting services, your books,
- Arranged in a way that enables their organised, coherent and efficient delivery – i.e. via your blog feed, your sales system, your delivery channels,
- That relies on and builds assets of your business (like your proprietary coaching system or your ebook library), your capabilities (like the processes you use to attract new business or the way you provide customer service) and relationships (with suppliers, vendors, prospects, affiliates),
- To create value for everyone involved.
Call me pernickety if you will, but for once I like Accenture’s definition much better (and I never thought I’d say that!!)
Jonathan Woodward Studio
Kinetiva
Location Independent
Vibrapreneur
Great thoughts, Lea. Brian would probably agree with you. I think he kept his definition basic to emphasize some common misconceptions among bloggers about what a business model really is.
I loved attending SOBCon08 and would be happy to go into more detail with you about what was presented there.
And I don’t think you’re persnickety – you’re just curious and conscientious! :)
H Easton – glad you enjoyed SOBcon and thanks for the offer or sharing more on what was presented there – would def be interested in hearing more :-)
I am sure Brian knows *exactly* what a business model is – I think there are a lot of misconceptions amongst bloggers about even some of the basic, solid business concepts and how they apply to blogging. I do think however that if bloggers are going to learn about these concepts (and they really should), then the ones sharing & teaching them should certainly keep them basic but also make them accurate & complete – which I don’t believe Brian’s definition was/is. The processes & systems aspect of a business model is key in my mind – that’s what defines it from a marketing model or a revenue model.
Anyway, now I’m probably sounding pernickety, so I’ll stop ;-)