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evaluating business models

Like seeing the doctor for an annual exam, regularly assessing
a business model is an important management activity that allows an
organization to evaluate the health of its market position and adapt accord-
ingly. This checkup may become the basis for incremental business model
improvements, or it might trigger a serious intervention in the form of a
business model innovation initiative. As the automobile, newspaper, and
music industries have shown, failing to conduct regular checkups may
prevent early detection of business model problems, and may even lead
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to a company’s demise.
In the previous chapter on the business models environment (see p. 200),
we evaluated the infl uence of external forces. In this chapter, we adopt the
point of view of an existing business model and analyze external forces from
the inside out.
The following pages outline two types of assessment. First, we provide a
big picture assessment of Amazon.com’s online retailing model circa 2005
and describe how the company has built strategically on that model since.
Second, we provide a set of checklists for assessing your business model’s
strengths, weaknesses, opportunities, and threats (SWOT) and to help
you evaluate each Building Block. Keep in mind that assessing a business
model from a big picture perspective and assessing it from a Building Block
perspective are complementary activities. A weakness in one Building
Block, for example, may have consequences for one or several other
Building Blocks—or for the entire model. Business model assessment,
therefore, alternates between individual elements and overall integrity.

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