"Business Models" on Wikipedia

I finally took the time to edit the Wikipedia entry of the term "business model". The entry was so bad it actually hurt me everytime I returned to have a look. There was absolutely no reference to the many valuable articles written on the topic. In other words no "business model expert" ever took the time to update the existing text... I put aside some time today to update the entry and in addition I created an entry for "business model design". Im curious to see how the gatekeepers of Wikipedia will react... (By the way, there is no entry on me in Wikipedia yet, since I shouldn't write an entry myself and I'm not famous enough to be written about - like e.g. Michael Porter ;-)

Following the text I submit to Wikipedia (I left some of the existing text on typologies):

Business Model

The term business model is relatively recent. Though it appeared for the first time in the 1950s it rose to prominence and reached the mainstream only in the 1990s. Today the term is commonly used, but there is still no single dominant definition. Based on an extensive literature review Osterwalder, Pigneur and Tucci (2005) define a business model as:

a conceptual tool that contains a set of elements and their relationships and allows expressing the business logic of a specific firm. It is a description of the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams.

The growing body of literature using the term business model shows that there is a continuum between authors using the term to simply refer to the way a company does business (e.g. Galper 2001; Gebauer and Ginsburg 2003) and authors that emphasize the model aspect (e.g. Gordijn 2002). These two viewpoints differ because the former generically refers to the way a company does business, whereas the latter refers to a conceptualization of the way a company does business. Proponents of the latter viewpoint propose reference models that consist of elements and relationships that allow describing the business model of a company.

Busines Model Concept

Many different conceptualizations of business models exist (Chesbrough and Rosenbloom 2000; Hamel 2000; Linder and Cantrell 2000; Petrovic, Kittl et al.; Weill and Vitale 2001; Gordijn 2002; Afuah and Tucci 2003; Osterwalder 2004). They all have various degrees of resemblance or difference. The model proposed by Osterwalder (2004) synthesises the different conceptualizations into a single reference model based on the similarities of a large range of models. The author's conceptualization describes a business model as consisting of nine related business model building blocks. Thus, a business model describes a company's:

  • value propositions: The company's offers which bundle products and services into value for the customer. A value proposition creates utility for the customer.
  • target customer segments: The customer segments a company wants to offer value to. This describes the groups of people with common characteristics for which the company creates value. The process of defining customer segments is referred to as market segmentation.
  • distribution channels: The various means of the company to get in touch with its customers. This describes how a company goes to market. It refers to the company's marketing and distribution strategy.
  • customer relationships: The links a company establishes between itself and its different customer segments. The process of managing customer relationships is referred to as customer relationship management.
  • value configurations: The configuration of activities and resources.
  • core capabilities: The capabilities and competencies necessary to execute the company's business model.
  • partner network: The network of cooperative agreements with other companies necessary to efficiently offer and commercialize value. This describes the company's range of business alliences.
  • cost structure: The monetary consequences of the means employed in the business model.
  • revenue model: The way a company makes money through a variety of revenue flows.

The process of business model design is part of business strategy. The implementation of a company's business model into organizational structures (e.g. organigrams, workflows, human resources) and systems (e.g. Information Technology architecture, production lines) is part of a company's business operations. It is important to understand that business modeling commonly refers to business process design at the operational level, whereas business models and business model design refer to defining the business logic of a company at the strategic level.