This presentation provides some insight in the business model concept and the factors influencing its sustainability. Some hands-on tools are shown to (1) identify a firm\'s business model, (2) analyse the influence of market developments on the business model, and (3) assess the sustainability of the business model in order to remain competitive on the market.

1. The Sustainability of
Business Models
Influence of company and market developments on a firm’s business model
Jules J. Verlinden – © 2010

2. Welcome
Objective
► To explain how to be sustainable in your business
► Use the Business Model concept as assessment tool
► To indicate the role of innovation
The Sustainability of Business Models - Jules J. Verlinden Slide 2

3. Business Model - Definition
cause-and-effect relationships and
internal consistency of strategic choices
A representation of a firm’s underlying core logic and strategic choices for
creating and capturing value within a value network
raison d’être why your suppliers, partners,
company exists distribution channels
The Sustainability of Business Models - Jules J. Verlinden Slide 3

4. Business Model - Components
What makes up a business model?
Strategic Choices Value Network
Customer/Market Suppliers
Value Proposition Customer Information
Capabilities/Competences Customer Relationship
Competitors Information Flows
Output Product/Service Flows
Strategy
Branding Capture Value
Differentiation
Cost
Mission
Financial Aspects
Profit
Create Value
Resources/Assets
Processes/Activities
The Sustainability of Business Models - Jules J. Verlinden Slide 4

5. Business Model - Types
The typology of business models is expressed in 4 design themes.
Novelty
Product or service innovation
Efficiency Value Lock-In
Reducing costs Creation Retain stakeholders
Complementarities
Bundling of activities or resources
The Sustainability of Business Models - Jules J. Verlinden Slide 5

6. Business Model - Examples
Based on strongest apparent theme
Novelty
Value Lock-In
Efficiency
Creation
Complementarities
The Sustainability of Business Models - Jules J. Verlinden Slide 6

7. Business Model - Summary
Novelty, Lock-In,
Complementarities,
Efficiency
STRATEGIC BM THEME
Customer, pricing,
TACTICAL BM COMPONENTS competitors, etc.
OPERATIONAL FIRM’S ACTIVITIES
Your day-to-day work
The Sustainability of Business Models - Jules J. Verlinden Slide 7

8. Business Model - Application
The business model serves as a unifying unit of analyses to:
Analyze your current business practice
Capture value creation from multiple sources
Assess dynamics in the environment of your company
The Sustainability of Business Models - Jules J. Verlinden Slide 8

9. Business Model - Dynamics
Why consider dynamics?
,,The practices and business models that constitute advantages for today’s
most successful companies confer those advantages only because of
particular factors at work under particular conditions at this particular time”
Static business models do not hold over time.
The Sustainability of Business Models - Jules J. Verlinden Slide 9

10. Sources of Business Model dynamics
There are 3 sources of dynamics:
1. Organizational life cycle (internal)
2. General and task environment (external)
3. Business Model originated (subdynamics)
These dynamics influence your business model theme or components
The Sustainability of Business Models - Jules J. Verlinden Slide 10

11. Internal dynamics – Organizational Life Cycle
Existence Marks the beginning of organizational development, with a focus on
(entrepreneurial identifying a set of customers.
or birth stage) The environment is considered un‐analyzable and self‐enacted or ‐
created.
Survival Encompasses the development of distinctive competencies, with a
(collectivity) focus on growth by generating enough revenue to continue and
expand operations.
The environment is considered analyzable.
Success Represents formalization and control through bureaucracy, with a
(maturity) focus on protecting what has been gained.
The environment is considered analyzable.
Renewal Displays the desire to return to a leaner time, with a focus on
(elaboration) innovation and creativity and the needs of customers.
Decline Characterizes the erosion of organizational viability due to a desire
for power and influence in earlier stages, with a focus on
centralizing control and decision‐making.
The Sustainability of Business Models - Jules J. Verlinden Slide 11

12. External dynamics – Business Environment
GENERAL BUSINESS DRIVERS
World population / World energy demand /
Energy supply / Climate change
GENERAL TASK
ENVIRONMENT ENVIRONMENT
Government / Demo‐ Industry sector / Raw
graphics / Economics materials / Human
/ Technology resources / Market
YOUR
COMPANY!
The Sustainability of Business Models - Jules J. Verlinden Slide 12

13. Subdynamics – Business Model originated
Need causes First mover
novelty Novelty advantages
Efficiency Value Lock-In
Creation
Improved Complementarities Attract and retain
decision making customers
The Sustainability of Business Models - Jules J. Verlinden Slide 13

14. Role of Innovation
Why innovate?
Company
life cycle
To Improve business practice
General/Task
environment
To continue business and seize business opportunities
Subdynamics To increase your value creation potential
The Sustainability of Business Models - Jules J. Verlinden Slide 14

15. Business Model sustainability
Failing to meet changing customer needs in changing markets, or successful copying
by competitors can render a firm’s strategy and business model as obsolete.
Company
life cycle
General/Task YOUR
environment BUSINESS
MODEL
Subdynamics
Change
A business model that is being improved continuously
remains hard to imitate, thus unique, thus sustainable.
The Sustainability of Business Models - Jules J. Verlinden Slide 15

16. Business Model sustainability
How to make an existing business model more sustainable?
1. Identify your business model (if applicable)
2. Identify the sources of dynamics
3. Assess their impact on your business model
4. Improve business practice
5. Check and benchmark
The Sustainability of Business Models - Jules J. Verlinden Slide 16

17. Further reading
In The Sustainability of Business Models,
a comprehensive overview of the state-of-the-
art literature on business models is presented.
Using various views on this popular concept,
and supported by case studies, some hands-on
tools are developed to (1) identify a firm's
business model, (2) analyse the influence of
market developments on the business model,
and (3) assess the sustainability of the
business model in order to remain competitive
on the market.
The Sustainability of Business Models - Jules J. Verlinden Slide 17

18. More information
Interested to know more?
Jules J. Verlinden M.Sc.
jjverlinden@gmail.com
nl.linkedin.com/in/jjverlinden
The Sustainability of Business Models - Jules J. Verlinden Slide 18

19. Copyright & References
Copyright
© Jules Verlinden 2010
No part of this publication may be reproduced or transmitted,
in any form or by any means, electronic, mechanical, photocopying, recording,
or otherwise, without prior written permission of Jules Verlinden.
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