McKinsey: What’s a Business Model?

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You offer no definition, so when you tell us to “innovate”, what exactly is the thing we are to change? To be fair, no-one else provides a useful definition either – not even the most popular Business Model Canvas. All use abstract, inconsistent terminology, provide no causal explanation as to how a business model actually works and delivers performance, and with no quantification we have not the vaguest idea of the scale or growth of the enterprise the “business model” describes, or even if the model is viable at all. They are not so much “business models” as “business statues” made of fog. We can do way better and produce working, quantified business models with every element and every causal relationship properly defined. It is not even difficult – see sdl.re/DynamicBusinessModels.

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