Sunday, February 01, 2009

Broken Business Models 3

When people say “the business model is broken”, they are not talking about the kind of models you can draw in UML or BPMN or ArchiMate, but about the set of assumptions that enable the business to survive and succeed. What kind of value does this business provide to its stakeholders, and how can this added value be maintained and extended?

Business models of this kind have long been used for complex business planning. A few years ago I built a business case for a complex multifunction smartcard scheme, in which we used a simple simulation tool to work out how many people needed to carry the card, and how many outlets needed to accept the card, within what timescale, in order to make the scheme viable. (The tool allowed us to create sliders to represent some of the key assumptions - we could move each slider and see how it affected the shape of the graph, or the speed that the scheme would reach critical mass.)

Business models like these are essentially quantitative. So how do we bridge between these models to the enterprise models used by Enterprise Architects, which are basically line-and-box structure diagrams? Where do emerging notations like e3value and BMM fit?


Amusing footnote from The Onion


Even CEO Can't Figure Out How RadioShack Still In Business
(The Onion, April 23, 2007)

"There must be some sort of business model that enables this company to make money, but I'll be damned if I know what it is," Day said. "You wouldn't think that people still buy enough strobe lights and extension cords to support an entire nationwide chain, but I guess they must, or I wouldn't have this desk to sit behind all day."

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