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Patterns

OVERVIEW Overview Unbundling Business Models The Long Tail Multi-Sided Platforms FREE as a Business Model Open Business Models

118 context An integrated model combines infrastructure The Value Proposition targets only the most One Value Proposition targets one A high-value, high-cost Value Proposition R&D Resources and Key Activities are
(before) management, product innovation, and profi table clients. Customer Segment. is offered to paying customers only. concentrated in-house:
Customer Relationships under one roof. › Ideas are invented “inside” only
PATTERNS › Results are exploited “inside” only

challenge Costs are too high. Targeting less profi table segments with specifi c Enterprise fails to acquire potential new cus- The high price dissuades customers. R&D is costly and/or productivity is falling.
Several confl icting organizational cultures Value Propositions is too costly. tomers who are interested in gaining access to
are combined in a single entity, resulting in a company’s existing customer base (e.g. game
undesirable trade-offs. developers who want to reach console users)

solution The business is unbundled into three separate The new or additional Value Proposition targets A Value Proposition “giving access” to a com- Several Value Propositions are offered to Internal R&D Resources and Activities are
(after) but complementary models dealing with a large number of historically less profi table, pany’s existing Customer Segment is added different Customer Segments with different leveraged by utilizing outside partners.
› Infrastructure management niche Customer Segments—which in aggregate (e.g. a game console manufacturer provides Revenue Streams, one of them being free- Internal R&D results are transformed into a
› Product innovation are profi table. software developers with access to its users) of-charge (or very low cost). Value Proposition and offered to interested
› Customer relationships Customer Segments.

rationale IT and management tool improvements allow IT and operations management improvements An intermediary operating a platform between Non-paying Customer Segments are subsidized Acquiring R&D from external sources can
separating and coordinating different business allow delivering tailored Value Propositions two or more Customer Segments adds Revenue by paying customers in order to attract the be less expensive, resulting in faster time-
models at lower cost, thus eliminating undesir- to a very large number of new customers at Streams to the initial model. maximum number of users. to-market. Unexploited innovations have
able trade-offs. low cost. the potential to bring in more revenue when
sold outside.

examples Private Banking Publishing Industry (Lulu.com) Google Advertising and newspapers Procter & Gamble
Mobile Telco LEGO Video game consoles from Metro GlaxoSmithKline
Nintendo, Sony, Microsoft Flickr Innocentive
Apple Open Source
iPod, iTunes, iPhone Red Hat
Skype (versus Telco)
Gillette
Razor and blades

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