Strategic Use of Business Models: Introduction

Strategic Use of Business Models: Introduction

Times are tough: many businesses are struggling to stay afloat in the wild economic currents. Many organizations attempt to find a “blue ocean” of uncontested space, but let’s face it: most of us are stuck in a “red ocean” with a lot of competition, growing power of both suppliers and consumers and increased threat of substitutes. Indeed, one can argue that it is “all hands on deck” for many organizations in their struggle to survive.

Strategic management and business models
Dealing with these issues is the field of strategic management. In line with the excellent book “Strategy synthesis” by de Wit and Meyer, we define strategic management to be the discipline that is concerned with the question “how should we position ourselves with respect to our environment?”

In the field of strategic management, many different models are used as analysis tools. Typical examples are SWOT, Value chain analysis, 5 Forces, and the Blue Ocean approach. The idea seems to be that these models provide a framework that helps the strategist do what he or she is supposed to do: come up with a solid business model that helps the organization to be successful. In line with Osterwalder’s book “Business Model Generation”, we define a business model as follows “A business model describes the value an organization offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and sustainable revenue streams.”

Enterprise architecture and BPM
Selecting a proper business model is one thing, but actually implementing it is another! This is where the focus shifts from strategic positioning to the question “how should we organize ourselves in order to be successful?” This is the realm of enterprise architecture, an area that typically relies heavily on models for communication, analysis and design of the organization.

Enterprise Architecture models are typically used to guide the organization in realizing its strategic goals and link to more detailed models (e.g. process models, information models and so on) which ultimately help the people in the organization to do their jobs.

Goals for the series
Bridging the gap between “external positioning” (strategy) and “internal organization” (architecture and BPM) is far from easy. As a colleahue explained in his paper “Strategy and Architecture – reconciling worldviews”, it often seems that practitioners of those disciplines are from two different planets. We believe that the proper use of models can help.

In order to show how this can be done, we outline our vision in a series of blog posts. Each post in the series covers one piece of the puzzle. The series as a whole answers the question: how can we (a) improve the process of strategic management through the use of models, and (b) improve the execution/implementation of strategies with Enterprise Architecture Management. It should be noted that we plan to cover these topics in more detail in future blog posts, whitepapers, and a handbook. The following diagram outlines the topics for the posts in this series:

The series is structured as follows:

• The series will kick off with an outline of the field of strategic management by discussing what it is, and how models are used in this field. This posti will also explain how strategists aim to come up with a solid business model.
• In the next post, we will zoom in on the business model canvas. I will show how this canvas can be used to develop, document, and analyze strategies, as well as how it can be used as a tool for communication and innovation. I will also stress the need for a solid approach for implementation.
• Implementation is the key topic of the next post. I will argue the case for enterprise architecture as a way to successfully implement ones business model, and show how the business model canvas is a key driver for architecture initiatives. I will also briefly touch upon the subject of drilling down from architecture models to more detailed models.
• To illustrate the whole, I will end the series with a short case study where I will show the interplay between the various models using BiZZdesign Enterprise Studio: from SWOT and BlueOcean via the Business Model Canvas, all the way down to ArchiMate.