Patterns of Business Model Generator

1. Patterns of Business Model
Generator
Prepared by Hani Tarabichi
From Business Model Generator
Book

2. Patterns of BMG
• Similarities in business models exists and can
be made into patterns
• A single business model can incorporate
several patterns at the same time

3. Patterns of BMG - Unbundling
• A business usually is a bundle of:
– Customer relationship business area
– Product innovation business area
– Infrastructure business area
• These business areas have different economic
systems, competitiveness, and cultural
imperatives

4. Patterns of BMG - Unbundling
• Customer relation: Finding, acquiring, and
keeping customers and building relationships
with them.
• Product innovation: Develop new attractive
products.
• Infrastructure business: Build and manage
platform for high volume repetitive tasks.

5. Patterns of BMG - Unbundling
• Companies are to focus on:
– Operational excellence
– Product leadership
– Customer intimacy

6. Patterns of BMG - Unbundling

7. - Unbundling

8. Patterns of BMG – Long Tail
• Long Tail business model aims at Selling Less
of More.
• Offering large number of niche products which
sells relatively infrequently
• Requires:
– Low inventory cost
– Strong platform

9. Patterns of BMG – Long Tail
• From selling small hit items in large volumes
• To selling very large number of niche products
in small quantities
• It works best with user generated content.
• Lulu.com
• Lego

10. Patterns of BMG – Multi Sided
Platform
• MSP facilitates interaction between different
groups
• If it grows rapidly it could form network effect
• Creates value as intermediary connecting
different interdependent groups together.
• Chicken & egg dilemma

11. Patterns of BMG – Free as a business
model

12. Patterns of BMG – Free as a business
model
• At least one substantial customer segment is
able to continuously benefit from a free of
charge offer.
• None paying customers are financed by
another part of the business model or by
other customer segment

13. Patterns of BMG – Free as a business
model
• Sometimes the MSP subsidize a customer
segment in order to attract users.
– How to price?
– Who to subsidize?
– How can we attract sufficient number of
customers for each side?
– Which side is more price sensitive?
– Will the other side generate enough revenues to
cover the expenses and costs of the subsidized
side?

14. Patterns of BMG – Free as a business
model
• Examples:
– Free offer based on MSP: Metro NP
– Freemium model: Flicker/red hat/ LinkedIn
– Bat & Hook model: Free inexpensive initial offer
turns customers into repeat purchases
• Loss leader: Skype
• Razor & Blade: Gillette, HP, Mobile operators

15. Patterns of BMG – Free as a business
model

16. Patterns of BMG – Free as a business
model

17. Patterns of BMG – Free as a business
model

18. Patterns of BMG – Open Business
Model
• Creates and captures value by systematically
collaborating with outside partners
– Outside-in: Exploiting external ideas within the
firm
– Inside-out: Providing external partners with ideas
or assets lying idle within the firm

19. Patterns of BMG – Open Business
Model

20. Patterns of BMG – Open Business
Model