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A business model explains how a firm creates, delivers, and captures value, including the logic of earning money and generating profit.
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).
A business model explains how a firm creates, delivers, and captures value, including the logic of earning money and generating profit.
Business model design emphasizes coherence (including narrative alignment) and fit among components, and it must consider interactions with partners and the broader network.
Business models can shift from linear “pipes” to networked “platforms,” where value is enabled through user participation and data-driven matchmaking.
The concept links to economic and strategic outcomes (profit sustainability and competitive advantage) and is used in some accounting standards to guide measurement and classification.
A business model describes how a business creates, delivers, and captures value, including how it conducts activities and earns money to generate profit.
An iterative and potentially circular process of constructing and modifying a business model as part of business strategy.
A perspective that treats business models as outcomes of designing or changing organizational structures to pursue commercial opportunities, often supported by coherent narratives.
The alignment between the story components of a business model and the actual configuration of its elements, which affects the likelihood of success.
The idea that business model innovation often requires aligning heterogeneous interests across firms because firms lack full control over their surrounding networks.
A business model where firms create goods/services, push them to customers, and value flows linearly from upstream to downstream.
A business model that enables users to create and consume value, typically relying on connections, pull, and matchmaking supported by data.
A dimension of business modelling focused on costing, pricing methods, and revenue structure.
The activity of designing a company’s business model, often distinguished from reconfiguring an existing one.
The use of an entity’s business model as a criterion to determine how certain assets or contracts should be measured and classified in accounting standards.
“Can you explain what "A business model explains how a firm creates, delivers, and captures value, including the logic of earning money and generating profit." means in simple terms?”