Posts Tagged ‘complexity’

Can a Personal Business Model Be Combined with an Organizational One?
Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers describes a framework for thinking about what an organization offers, who its customers are, and how an organization creates value.
Business Model You: A One-Page Method For Reinventing Your Career provides guidelines and a framework for thinking about what we want, what we have, what we do, how we help those who help us, and who we help.
We can create a personal canvas which helps us find out when our personal business model can fit into an organization‚Äôs business model. The ‚ÄúBusiness Model You‚ÄĚ canvas can help us find an organization for which we can work passionately because we can combine models with the same goals to achieve personal and organizational benefits.

What We Have to Know If We Want to Implement a Business Model Combo:

1.    If we want to combine Business Model Canvases with the Business Model You canvas, we have to understand the process of creating both kinds of business models.

2.    We have to know our pains and gains.

3. ¬†¬†¬†We have to know an organization‚Äės pain and gains.

4.    If we can relieve an organization’s pains or help to achieve gains, we can work for that organization.

5.    But such an organization has to satisfy our expectations

6.    We have to test our hypotheses by means of canvases.

7.    Go ahead and try!



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A week ago, I talked with the manager of a medium-sized enterprise from the region where I live. He was very optimistic about the economic trends in Slovenia. He told me that his company has had a substantial increase of orders from abroad. As a result, he expects considerable growth in both income and added value in the future.  However, I think that possibility of growth for his company will need a longer period of time in order to affect the regional economy.

The main reason for this situation is that the company mentioned above is unwilling to collaborate with other local enterprises. Older companies which have old-fashioned opinions like to think they are self-sufficient or they work in limited business networks. Those enterprises don’t want to combine business models with any smaller companys’ business models. They mistakenly believe that they cannot share their companies’ value propositions or share in the value propositions in any other companies from the local region. If a company with an increase of orders starts to combine with the value propositions of the local enterprises, then it can increase incomes for commercial and value network services.

What do larger companies have to do to change this situation?

1. They have to eschew isolation, discard their outmoded ideas, and realize that businesses in today’s world flourish more through collaboration than competition.

2. They have to assess own business models.

3. They have to determine the areas suitable for changes.

4.  They have to determine appropriate scenarios.

5. They have to find possibilities for collaboration with the business models of complementary, local area partners.

6. They have to prepare prototypes of business models combining.

7. They have to implement combined business models collaboration in the involved companies.

Patrick van der Pijl intrigued me so much with his idea about a Visualized Business Model FIFA that I have started to research the main parties involved in this most important project: the South Africa World Cup 2010. There are a number of major interested parties participating in the project: FIFA, FIFA confederation members, and the South African government. Each of these main parties has contributed some parts to the jigsaw that, when assembled, forms the South Africa WC 2010 project business model. I think that we can find elements of business models combining in each of those major business models. Without the collaboration of all the interested parties, it’s impossible to imagine the creation of such an important event.

Of course, FIFA has been the most important player in constructing this fantastic value network. In the comments that follow, I will focus only the most important participants, such as the FIFA confederation, its member associations, and the South African government. ¬†However, there have also been many more organizations’ business models which have been influential and have helped make the project a success: hundreds of merchandizing companies, clubs, pubs, and schools, to name but a few. In return, the South Africa WC 2010 business model helps those organizations’ business models – a win-win situation.

The South African World Cup 2010 (SAWC 2010) business model  is integrated with and dependent on the business models of FIFA, the FIFA confederation members association and the South African government. The Fifa business model contributes marketing, organizational, and legal licence support services for the South African World Cup 2010 business model. Fifa has effective distribution channels to target advertisers, soccer fans, sponsors, TV stations, banks, and soccer teams. It also has effective customer relations through some social media sites and the FIFA Awards. FIFA is in charge of all World Cup tournaments and is therefore the most important link in the WC business model chain.

The FIFA confederation member associations (FCMA) business model contributes the world’s best national teams, whose soccer players are the most important ¬†tournament resource. Exciting matches featuring world-famous football stars are the magnet that draws an audience to watch soccer on TV and to visit South Africa and attend the matches there. The FCMA business model incorporates soccer fan associations which can organize local broadcast venues (pubs, restaurants. etc.). They help to promote soccer and SAWC 2010 at a local level, and they promote merchandising in the FCMA countries.

SVN

The third business model which contributes elements into the SAWC 2010 business model is that of the South African government. The South African government Business Model (SAGBM) contributes an appropriate and reliable infrastructure for the tournament. Stadiums are the most important and most expensive investment for the South African government, which also provides appropriate transport and the necessary information/communication infrastructure. Moreover, it has to assure safety by supplying security.

The South African World Cup 2010 (SAWC 2010) business model can access FIFA’s business model services for a fee, and in return gets income from tickets sales, merchandise license fees, advertising & sponsoring, and TV & radio license fees.

SAWC 2010 allows the FIFA confederation member associations (FCMA) business model to promote soccer players, national teams, soccer on national level, and countries the national teams come from worldwide. The national teams all get WC compensation fees.

The South African government benefits from SAWC 2010 by the extensive worldwide promotion of the country, the new infrastructure required for the games, the increase in  business activity, the income from taxes, and the growth of tourism. The South African World Cup 2010 (SAWC 2010) gathers together millions of soccer fans and presents unforgettable matches. These matches inspire people of all ages, races, and genders  to go out and play the sport. Soccer also gives hope to countless poor people in underdeveloped countries when they see role models such as Pele and Maradonna, both of whom used the sport to escape from poverty.  SAWC 2010 provides an marvellous opportunity to combine business models of existing business or start-ups.

The South African World Cup 2010 (SAWC 2010) is great case of business model combining which can help businesses in so many ways at different levels.

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Business Model Canvas, Osterwalder, Pigneur & al. 2010, CC BY-SA 3.0.

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A value network analysis can help to manage enterprises in boom times and recession. Value network positioning is important in the time of fat cows, but enterprises also have to assess risk especially in the time of thin cows.

The Slovenian construction industry is a huge value network.  Construction companies grew enormous in past years; contractors and subcontractors had large profits, so banks lent them money at very low interest rates.

A recession creates the opposite situation for value network participants. Now, the Slovenian construction market has a large surplus of dwellings and business buildings, all of which remain untenanted owing to the unfavorable economic climate.

Banks have stopped offering long-term loans to construction and real estate companies. In addition, they are raising interest rates for long-term real-estate loans for such purchases as family homes, flats and semi-detached houses.  Of course, this has reduced the demand for such properties, and, as a result, construction companies have less income and lack the funds to finance future projects.

Construction companies with suitable business models and the right position in value networks are much more likely to weather an economic downturn by their ability to assess all the risks presented by potential projects. I advise all other construction companies, the ones without viable business models and information-laden value networks, to lay down their shovels and shut down their bulldozers. After all, when in a deep hole, remember Rule Number One: Stop Digging.

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Whether yours is a startup company or a going concern, it is necessary to position all parties in the value network business model in order to add value which can then be delivered to customer supply. Based on the information collected, value can be analyzed, and within this network a company’s value share position can be determined.

From this evaluation of the new combined business model and the  analysis of the value network, which is included in the creation of values, a zero point can be determined. This represents a position from which we can  begin to look for different alternatives and simulate some desired states of the business model we would like to achieve.

Only a year ago, Ryanair‚Äôs planes landed regularly at the Edvard Rusjan Airport (line Maribor ‚ÄďLondon) not far away from my home. The Rast company managed the airport but soon ceased to cooperate with the Irish carrier because Ryanair required what Rast considered to be too high a fee for flights to that airport. Rast proposed that Ryanair raise its ticket prices, rather than requiring Rast to pay any compensation, a proposal that was greeted by Ryanair as absurd. All Ryanair flights to the Edvard Rusjan Airport immediately ceased.

Ryanair would still fly the London-Maribor line today if Rast had created a map of the value network, identified the participants in that network and evaluated the importance of the stakeholders by criteria

That analysis would have helped Rast by providing a base for combining stakeholder business models. Moreover, other stakeholders in the region, such as hotels, shops, and restaurants, which would be patronized by Ryanair passengers, would have needed to be involved in the value propositions.

This range of stakeholders also includes other businesses that offer accommodations (apartments and guesthouses), skiing, sport events, cultural events (museums, galleries, and concerts), souvenirs, etc. Rast should have combined the business models of all interested stakeholders with its business model into a new model that would have provided the required very high fee.

The regional community and the Tourist Association of Slovenia should have played a crucial role and could have prevented the loss of Raynair, which transported a few thousand tourists to Slovenia annually.

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With the nine business model blocks, I can easily analyze the construction of existing business models. As a consultant I analyze business models. I have noticed that in many large companies and state institutions the content of elements of the business models is often so complicated as to be muddled and arcane. This situation could lead to particular individuals’ having a monopoly on information, which could block the flow of communication within those companies and institutions. The cause of such unnecessary complexity in business models is often ignorance about the subject, or the unclear mission, vision and/or objectives of the management and/or the owners. Such complex models are very difficult or even impossible to combine with other business models. Therefore, it is necessary first to make sure that the business models are basically simple. Then, only in the second step, can a simplified business model be combined with other business models. The laws of simplicity can help us to rebuild existing business model on the basis of 9 building blocks. We have to be aware, however, of the 9th law, which posits that some things can never be made simple.

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