Business models have nearly always been discussed and described in the context of two key organisational concepts. The first is value creation, Business models have something
to do with how (and why) organisations create value. The second concept is design. Business models have something to do with how organisations function,on, specifically in terms of the structures and relationships that govern behaviours and activities.
In other words, a business model is the organisational design used to exploit an opportunity and create value.
Every organisation exists for a single purpose: to create more value than an individual could do alone. That value could be profit, education, economic growth, social justice, entertainmentorany number of other possible outcomes. An organisation uses various forms of capital (human, financial, physical, etc.) to create and capture that value.
In the specific case of for-profit companies, value created must be captured in a familiar form: money. Technically, every good business model captures value. For example, effective non-governmental organisations (NGOs) create change, usually to accomplish a social purpose or agenda. The NGO may use outcome date to fundraise or recruit but, in most cases, the outcome itself does not fuel the organisation's operations.At for profit companies, the business model should explicitly link value creation and capture, because the financial of the organisation are also an input. The profits tuad development and growth and reward the owners
TEST IN THE REAL WORLD
The hard truth is that there is no single, surefire test of a business model other than to try it out in the real world.
The good news is that many business models can be pilot tested. Later we will look at how to transition from a business model design to a real-world test. Unless very large economies of scale or network effects are inherent to value creation or capture, small-scale tests are generally effective for identifying business model bottlenecks and inefficiencies.
The bad news is that business models can be copied. Business models cannot be protected with patents, trademark or copyright. By their nature, business models cannot be hidden as a trade secret. An organisation's business model is, fundamentally, what it does to create value. Customers, suppliers, partners and even competitors