Business Model Innovation Learning Path

Business model definition and value creation

A business model describes how an organization creates, delivers, and captures value, including how it spends and earns money to generate profit. It is used both to describe and classify businesses and to help managers explore future development. In this view, business model innovation is an iterative and potentially circular process that is part of business strategy, covering elements such as purpose, target customers, offerings, strategies, infrastructure, profit logic, sourcing and trading practices, and operational processes and policies (including culture). Value creation is closely tied to how the business model is designed and how its components fit together. Research highlights “design logic,” where entrepreneurs and managers construct business models by creating new organizational structures (or changing existing ones) to pursue opportunities, often using coherent narratives to align stakeholders and guide change. Business models also need to account for complementarities with partners in an open-systems perspective, since firms may not control their surrounding networks. Additionally, business models can be understood through different structural families—such as moving from “pipes” (linear value creation and consumption) to “platforms” (networked models where users create and consume value)—with platform success often depending on connection, pull, and matchmaking supported by data. Finally, business model value creation is reflected in economic and strategic definitions: it can be framed as how a firm makes money and sustains profit over time, as a blueprint of how the company operates, and as a design of interdependent systems that create and sustain competitive advantage. The concept has also been incorporated into financial reporting and accounting standards, where an entity’s business model can influence measurement and classification decisions (e.g., for financial instruments and leases).

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Business model innovation as strategy process

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