Patterns in

Business Models
Patterns
Business Models with
Similar characteristics
Similar arrangements of business model Building Blocks
Similar behaviors 2

Objective
Understand business model dynamics and serve as a
source of inspiration for your own work with business
models.
Types of Patterns

• Unbundling Business Models

• The Long Tail
• Multi-sided Platforms 3

• FREE
• Open
 Unbundling Business Model
Three types of business: Each type with different imperatives:

1. Economic
1. Customer Relationship businesses
2. Competitive 4
2. Product Innovation businesses
3. Infrastructure businesses 3. Cultural
Unbundling Business Model

5
6
 The Long Tail
Long tail business models are about selling less of more:

￭ They focus on offering a large number of niche

products, each of which sells relatively.
Require low inventory costs and strong platforms to make niche 7
content readily available to interested buyers.
 Multi-sided Platforms
o Bring together two or more distinct but interdependent
groups of customers.

o Such platforms are of value to one group of customers

8
only if the other groups of customers are also present.

o The platform creates value by facilitating interactions

between the different groups.
 Free as a Business Model
o At least one substantial Customer Segment is able to continuously benefit from
a free-of-charge offer.

o Non-paying customers are financed by another part of the business model or

by another customer segment. 9

o How can you systematically offer something for free and still earn substantial
revenues?

1. Free offer based on multi-sided platforms (advertising-based)

2. Free basic services with optional premium services (“freemium” model)
3. “Bait & hook”
10
 Open Business Model
Can be used by companies to create and capture value by systematically collaborating with outside partners.

This may happen from the “outside-in” by exploiting external ideas within the firm, or from the “inside-out” by providing external
parties with ideas or assets lying idle within the firm.
11
“Outside-in” innovation occurs when an organization brings external ideas, technology, or intellectual property into its
development and commercialization processes.

“Inside-out” innovation occurs when organizations license or sell their intellectual property or technologies, particularly unused
assets.
Outside-In Inside-Out 12

Pattern Pattern
 Unbundling Business The Long Tail Multi-Sided FREE as a Open Business
Model Platform Business Model Model

Context An integrated model The Value One Value A high value, R&D Resources
combines Proposition Proposition high cost Value and Key
infrastructure targets only the targets one Proposition is Activities are
management, product most profitable Customer offered to paying concentrated in-
innovation and Clients Segment customers only house
Customer
Relationships under
one roof

Challenge High costs Targeting less Company fails to The high price R&D is costly
Conflicting profitable acquire potential dissuades
organizational segments with new customers customers
cultures are combined specific Value who are
in a single entity. Proposition is interested in
too expensive gaining access
13
to a company’s
existing
customer base

Solution The business is The new or Create a Value Several Value Internal R&D
unbundled into three additional Value Proposition to Propositions are Resources and
separate but Proposition give access to a offered to Activities are
complementary targets a large company’s different leveraged by
models number of niche existing Customer using outside
Customer Customer Segments with partners
Segments – Segment different
which in Revenue
aggregate are Streams (one of
profitable them free of
charge)

Examples Private Banking Lego Apple Skype P&G

14