Wednesday, December 15, 2004

From Patterns to Strategies

Found some interesting material by Peter Seddon and Geoffrey Lewis from July/August 2003 (html).
  • Strategy and Business Models: What's The Difference (pdf).
  • The Case for Viewing Business Models as Abstractions of Strategy (ppt)
Picking up on some of the ideas from my book Component-Based Business, they argue that business strategies may be composed from what they call business models, in the same way that software solutions may be composed from software patterns. The business model serves as a known successful building block for conceptualizing and building strategy. This is not something I discussed in my book, but it is broadly consistent with some of the work I've been doing more recently.)

(I prefer to call this a business component - I use the term business model for an abstract description at any level, including the component level, the strategy level and the ecosystem level.)

In answer to the question "Which comes first: strategy or business model?", the authors argue that the business model comes first. Of course, as with chicken/egg questions, which comes first depends what process you are describing.

Business Development Constructing/composing a strategy from abstract business models representing business components. (These components may be bundles of business activity or bundles of business interaction/collaboration.)
Business Intelligence Making sense of a complex business ecosystem by deconstructing/decomposing strategies into their components.
Business Innovation Introducing new components into a complex ecosystem, to produce (or inhibit) creative change. Among other things, strategies may be designed to alter market forces by reconfiguring the geometry of the ecosystem. At a higher level, strategy may refer to the mode of engagement with the ecosystem.

Seddon and Lewis are focused upon business development, and adopt a Harvard-centric notion of business strategy, based on the work of Michael Porter. This leads to a design approach known as Directive Composition. My most recent work is on business innovation, and this calls for a different design approach, known as Collaborative Composition.

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