What is a business model? What is a business model? ——Wei Wei Zhu Wuxiang/Text Why do people who have never read books seem to be more likely to succeed in business? That's because they can understand "Why do people who haven't read books seem to be more likely to succeed in business? That's because they can understand the "business model" well, although they often can't tell clearly. So, What is a business model? In a word, it is a "model" - although they often cannot tell it clearly. So, what is a business model? In a word, it is a "stakeholder transaction structure". First, you need to think about who is your " "Stakeholders": "stakeholders' transaction structure". First, you need to think about who your "stakeholders" are. Second, you need to analyze what these stakeholders are. What "value" can be exchanged? The third is to design a most winning "transaction structure". The Internet revolution has brought us into a world where "commercial value" can be exchanged. The third is to design a most winning "transaction structure". The Internet revolution, In the era of business model competition, the difficulties faced by Chinese enterprises today can be found through the reconstruction of business models! The difficulties faced by Chinese enterprises today can be found through the reconstruction of business models! In the November 2007 issue, the article "How to Design a Business Model" was published. The "Business Model" proposed six elements: positioning, profit model, business system, key resources and capabilities, free cash flow structure, and maximization of corporate value. . These six elements can help you observe and analyze a company's business model, but for entrepreneurs who want to "create" a business model, what is the focus of thinking? Can you explain clearly in one sentence what a "business model" is? This is the purpose of this article. A business model is a "stakeholder transaction structure". This is because "business" is embodied in a series of "transactions". , and the "business model" is the "transaction structure" reached by the stakeholders. The business model has been around since ancient times. Why has it become the key to corporate competition today? This is because the development of business has made more and more entities participate in transactions. The Internet revolution has greatly reduced the information cost in transactions, allowing resources that were previously isolated and dispersed to be effectively combined, giving more “stakeholders” the opportunity to integrate beyond geographical and cultural restrictions. The revolution of "business model". In the future competition, enterprises need to continuously reconstruct their business models in order to have long-term vitality and even survive. Let's start by looking at cases such as Boeing Company and VISA International Organization. A journey of thinking about business model innovation. Boeing Reconstructs its Business Model Why Boeing wants to reconstruct its business model starts with its competition with Airbus. The key to competing with "aircraft manufacturing companies" is how to get customers. Obtaining more orders also depends to a large extent on how to develop new aircraft models. After Airbus invested tens of billions of euros and launched the A380 project in 2000, its market share increased rapidly. In 2003, it ranked first in the world with more than 100 seats. In the civil passenger aircraft market, deliveries accounted for 54% and orders accounted for 52%, both surpassing Boeing, which was once the market leader. Faced with the challenge from the "Airbus A380" to the "Boeing 747", Boeing decided to use carbon fiber composite materials at the end of 2003. The development of a smaller, faster, and fuel-efficient long-range civil aviation aircraft is the "Boeing 787" known as the Dreamliner. However, the possibility of failure in developing the new aircraft means huge financial risks for the American aircraft manufacturer "Locke." Sid's "Samsung Airliner" lost US$2.5 billion, almost bringing the company to the brink of bankruptcy, and then it withdrew from the civil aviation market. In addition, rising fuel prices and even terrorist attacks will lead to significant changes in aircraft orders and increase risks. "The investment in R&D costs is almost as scary as venture capital," said Alan Mulla, former president of Boeing's commercial airplanes business. To this end, Boeing has adopted a new "business model", which is to change the "transaction structure" with "stakeholders" (i.e. suppliers). It not only allocates development and manufacturing costs to its suppliers around the world, but also At the same time, the in-depth participation of these suppliers will also help Boeing obtain aircraft orders in their countries and regions.

A Boeing airplane has millions of parts, supplied by more than 5,000 suppliers around the world. What is the trading relationship between Boeing and them? In the past, Boeing's approach was "centralized control" - using a set of "technical standards" and "supply chain management rules" to cooperate with suppliers. In this model, Boeing tells "suppliers" what to do and gives guidelines. In order to reduce misunderstandings during communication, the clearer the rules, the better. For example, the "Boeing 777" rule sheet for "electronic component suppliers" is as long as 2,500 pages, which gives precise requirements and detailed instructions for each component. At this time, suppliers are passive. They do not participate in the early "design" and "pre-production" links. They only design and produce according to specifications, and finally summarize them to Boeing. Boeing builds a "wooden aircraft actual assembly model" to test whether the parts can be assembled effectively. If a part is incompatible, it must be redesigned and produced. The feedback process is long enough to miss any business opportunities and increase costs. In fact, “suppliers” know better than Boeing how to produce the most efficient production in their own factories, and how to make the parts they produce better support Boeing’s entire aircraft manufacturing. Therefore, "suppliers" should have a certain say. Now, "Boeing Company" designs a new business model to develop the "Boeing 787" to make the world famous. "Suppliers" are added to the development process, so that the company that is best at a certain link is responsible for that link. Suppliers participate in aircraft design First of all, Boeing no longer treats all technologies as "top secret documents", but puts "coordination and cooperation with suppliers" first. Except for some very cutting-edge technologies, Boeing opens all technical information and data to its partners. In order to communicate instantly and effectively with partners around the world, Boeing and Dassault Systèmes jointly created a real-time collaboration system called the "Global Collaboration Environment" (the system is maintained by Boeing) and required All partners are required to use this online system and Dassault's application Catia. Through this system, team members can access, review and revise the design drawings at any time and place. To ensure smooth flow of communication and no delays, Boeing built ten "multimedia studios" at its Everett plant in Washington. The design of the "Boeing 787" was completed jointly by "design partners" from Japan, Russia, Italy and the United States. They will get a "master design drawing" of the new model, which will indicate the relevant design requirements. , for example, where should the landing gear be welded, how much space is there after the wings are "folded", etc. Before designing an aircraft, Boeing will also invite "airline" customers (including pilots, flight attendants, etc.) to provide relevant data, which will be compiled and forwarded to "design partners". The completed design is saved on another system of "Dassault Systems" - Enovia (this system is also maintained by Boeing). Before aircraft parts are produced, Boeing and its partners can easily find "conflicts" between aircraft components and parts through the "Global Collaboration Environment" system. If two parts are found to be installed in the same place, or if the parts do not match, a red spot will appear on the computer screen as a warning. Boeing can easily resolve compatibility issues before going into mass production. This greatly simplifies the rules and regulations set by Boeing. The "Boeing 787" rule manual for "electronic component suppliers" is only 20 pages, which is undoubtedly a qualitative leap compared to the 2,500-page manual for the "Boeing 777". Suppliers assemble "modules". Suppliers assemble "modules." Boeing's final assembly only takes three days. In the past, suppliers shipped parts to the factory and were assembled by Boeing. Now, Boeing requires its first-tier suppliers to obtain parts from second-tier and third-tier suppliers, first conduct "virtual assembly" through a "computer model", and finally assemble them into "modular" airframe parts. In terms of value, Boeing itself is only responsible for producing about 10% of the millions of parts and components of the "Boeing 787" - the "tail" and "final assembly". The rest of the production is completed by global "partners", involving suppliers in the United States, Japan, France, the United Kingdom, Italy, Sweden, Canada, South Korea, Australia, China and other countries and regions.

Among them, the “wings” and part of the “fuselage” are produced in Japan, accounting for 35% of the entire aircraft workload. The main manufacturers include Mitsubishi Heavy Industries, Kawasaki Heavy Industries, and Fuji Heavy Industries. Italy's "Alenia Aircraft Company" undertakes the manufacturing tasks of components such as the "central fuselage" and "horizontal stabilizer" (accounting for about 14%). This is also the largest civilian jet project in Italy's history. As a long-term partner of Boeing, the American "Vought Aircraft Industries" is responsible for the manufacturing of the two parts of the fuselage, and cooperates with the Italian "Alenia Aircraft Company" to assemble its own and Italian-produced parts. The manufacturing tasks undertaken by French suppliers include landing gear structures, in-flight entertainment systems, electric brakes, cabin doors, etc. Chinese suppliers are responsible for the production of rudders, vertical tail leading edges, wing fairing panels, and vertical tail components. In order to transport these "modular" airframe parts, Boeing modified three 747 passenger aircraft so that they can transport these "modules." Boeing calls it a "dream transport aircraft." Finally, the individual modules are loaded into the Dreamliner and shipped to Boeing's Everett, Washington, factory. There, Boeing employees will complete the final process - assembling the switchboard. After adopting "modular production", the assembly cycle of the Boeing 787 is only 3 days, which is a full two weeks shorter than the 13 to 17 days of the "Boeing 777". Why are suppliers willing to take risks for Boeing? Why are suppliers willing to take risks for Boeing? Taking risks "We took on a lot of one-time costs upfront. Pat Russell, director of global supply for Vought Aircraft Industries, said. Since 1968, "Vought" has supplied commercial aircraft components to Boeing and is now Boeing's main partner in design, construction and assembly. Vought has invested $533 million in the 787 before receiving reimbursement from Boeing. Despite huge orders for the 787, Vought was unsure of its profitability for a long time. This situation is very common among "Boeing 787" partners. "No one dares to guarantee, everyone is complaining." said Jim Wojhewski, senior aviation industry consultant at Bearing Point, a well-known American consulting company. However, many suppliers ended up embracing the "Boeing 787" business model rather than miss out on this major project. "You only have one window into a project like this," Wojhewski said. "And in a project like this, when you sign the contract, you're taking a big gamble." Russell also said: "What Boeing wants to do will set a standard for the industry. We can't act like we did in the past. Technology changes quickly. We have to enter the market faster, otherwise, other companies will jump in front of us. " At the same time , "Suppliers" and "Boeing" are trying to master the cooperation methods required by the "Boeing 787 Project". When participating in past Boeing projects, Vought engineers only worked closely with engineers from other "suppliers" when handing over "design drawings." Now it is necessary to work closely together on materials, design, stress testing and other processes. Improving "communication skills" and building "networks" have become even more important. "We're not just doing design anymore," Russell said. The latest information shows that Vought received US$120 million in compensation from Boeing in 2008. Boeing's role transformation By introducing "suppliers" to intervene in the "pre-design" and "pre-manufacturing" links, Boeing places most of the "coordination and cooperation" links before "switchboard assembly", allowing the "suppliers" to bear the most risks. In this way, "external suppliers" become, to a certain extent, "quasi-internal stakeholders" between "external stakeholders" and "internal stakeholders". What used to be "centralized control" has now become "coordination and cooperation" and "loose management." Mike Bair, head of the Boeing 787 project, said: "We are going to have different management than we have in the past. Once we start a program, what we need to do is find collaborators, and then the real challenge is to step back. Behind the scenes, let everyone do their job.” The results were clear: In 2005, Boeing received 354 orders. This is also the first time since 2000 that Boeing has surpassed Airbus in new aircraft orders.

As of July this year, Boeing has received orders for 896 "Boeing 787" aircraft, while the order volume for "Airbus A380" at the beginning of the year was still around 200 aircraft. Throughout the entire development history of Boeing Company, it is a process of continuous reconstruction. At the beginning, Boeing produced aircraft through a "vertical integration" approach. From design, parts manufacturing to assembly of the main aircraft, most of the work was completed independently by Boeing. In the mid-term, Boeing began to hand over some unimportant and highly substitutable parts to suppliers. At this stage, Boeing gradually liberated itself partially and focused more on "complete aircraft design" and "control of key links", assuming a "centralized" role. Later, Boeing released itself from the role of "centralizer", allowing "suppliers" to communicate and collaborate with each other on a platform, and itself assumed the role of "maintainer, supervisor, promoter and supporter of the platform" Role. If its transaction structure is represented graphically, Boeing in the first stage is a "line structure"; the second stage is a "star structure" with Boeing at the center of the structure; and the third stage is a "network of distributed communication and collaboration". structure". The general trend is that "hard control" is getting weaker and weaker, but "soft control" is getting stronger and more efficient. Visa International: Visa International: Reconstructing the Credit Card Business Model The open credit card business model once experienced a failed attempt by "Bank of America" ??and then established today's Visa (VISA) business model. In 2007, Visa successfully reorganized from a "non-profit credit card organization" into a company and was successfully listed on the New York Stock Exchange in early 2008. The VISA case inspires us to use a way of thinking beyond the corporate form to create a new "business model." Let’s first understand the typical business model of a credit card. If you are a bank and want to issue credit cards, you must first issue credit cards to "enough consumers". With this credit card, consumers can spend money at "enough merchants" and then pay you back. Therefore, there must be enough "consumers" and "merchants" willing to use and accept your "credit card" for this "credit card system" to be attractive to both parties. To achieve this, it is almost impossible to rely on just one bank. If multiple banks work together, the participating banks may have to play two roles at the same time: one is to issue credit cards to consumers, which is the "card issuing bank"; the other is to sign contracts with merchants to acquire bills, which is called "Acquiring Bank". In a transaction, as the "card issuing bank", after the consumer makes a purchase, it collects payment and interest from the consumer; as the "acquiring bank", it pays the payment to the merchant on behalf of the consumer (and charges a certain percentage of fees. As a bank income from assuming credit risk). The "Issuing Bank" then pays and settles the payment to the "Acquiring Bank" and shares the revenue according to the agreed ratio. However, in the early stages of development, due to the lack of a large transaction network, if the "issuing bank" and "acquiring bank" are not the same bank, there will be problems with clearing between banks. Only when the "card issuing bank" and "acquiring bank" can facilitate clearing, can transactions between different "card holders of the issuing institution" and "contracted merchants of the acquiring institution" be facilitated. This requires a large "interbank organization". The credit card model established by Bank of America In 1966, Bank of America, the largest commercial bank in the United States at the time, took the first step to solve the problem of credit cards. "Bank of America" ??uses a "franchise" business model: it issues "business licenses" for its credit card brand "BankAmericard" across the country. Under its authorization, banks interested in developing credit card business can issue credit cards using its brand. At the same time, cardholders of each contracting bank and contracted merchants recognize each other. This model formed the first bank credit card network system. In this model, "Bank of America" ??is the dominant player in the system and owns the "brand of the credit card system" and the "authorization system". At the same time, rules are formulated for card issuance, merchant services, and various credit card business operations. "Authorized banks" are divided into Category A and Category B. Among them, "Class Bank" can represent "Bank of America" ??"A", and the new "Class B Bank" is contracted. Authorized banks issue their own credit cards using the "American Bankcard" brand.

At the same time, it attracts merchants to purchase its transaction business and add them to the credit card system. At that time, this "franchise" business model promptly solved the problem of lack of nationwide network. Soon, the "American Bank Card System" had 200 fully authorized "Class A banks" and nearly 2,500 authorized "Class B banks". But problems soon arose. First of all, the big banks at the time, such as Wells Fargo in California and Chase Manhattan Bank in New York, were unwilling to issue credit cards under the Bank of America brand. However, developing a "closed card system" like American Express requires signing merchants and issuing cards from scratch, which consumes too many resources. Moreover, in the credit card model of "Bank of America", it is both a "brand authorizer" and a "market competitor". When formulating rules, it is inevitable to start from its own perspective, causing other banks to be unwilling or unable to comply with its rules. This also makes the "authorized banks" unable to adapt to local market needs and formulate strategies, and the homogeneity of credit cards among different banks is serious. Secondly, the trading network at that time was also relatively primitive, without electronic data recording and electronic clearing systems. Clearing between the "Issuing Bank" and the "Acquiring Bank" is done manually and through the postal system. "Bank of America" ??cannot build a large-scale electronic transaction network on its own. In addition, due to insufficient manpower in the credit card department of Bank of America, it cannot solve security problems well, and there are many counterfeit cards and stolen cards. In the 1960s, the two largest credit card alliances at the time - "Bank of America" ??and MasterCharge (the predecessor of MasterCard) lent a total of US$2.6 billion. However, due to operational errors, counterfeiting, etc., the losses were as high as Hundreds of millions of dollars. In the mid-to-late 1960s, the U.S. credit card industry was almost on the verge of collapse. "Visa International" was born "Visa International" In 1968, at a meeting between "Bank of the United States" and "Authorized Banks", Dee Hauck, Vice President from "National Commercial Bank" believed that "Domination-Control" "Business system" is the source of problems and confusion. He proposed to reconstruct the business system of "American Bank Card" and use a "distributed, self-organized business system" to replace the original model ("self-organization" means system tacit understanding (automatic and coordinated formation of an orderly structure based on certain rules). In the end, he persuaded "Bank of America" ??to reconstruct the original "American Bank Card System" according to a new business model, and went through the process of reconstruction. "National American Bank Card Company" was established in 1970, and "Visa International" (VISA) was established in 1976. The original "signing banks" joined the newly established "Visa" on a membership basis. "International Organization" is a non-stock, non-profit, "membership private company" jointly owned by member banks. The company's ownership cannot be bought, sold, transferred or deprived of, and it is a "competitive-cooperative organization". " There is no control center within Visa International, but multiple boards of directors. The board of directors is composed of directors from different regional Visa organizations, and the "regional Visa organizations" are composed of directors from different countries or groups, each responsible for different tasks. Regions or different affairs. There is no hierarchy between different boards of directors. Most of the elected directors are leaders of the main member banks. Members are divided into "card issuing banks" and "acquiring banks" according to the business they undertake. Most member banks have both identities. "Visa International" is not directly involved in the business of issuing or acquiring cards. These businesses are entirely conducted by member banks. Therefore, there is no competitive relationship between it and its members. In addition, "Visa International" "International Organization" has a global electronic transaction settlement network. It uses a streamlined team to only engage in the limited business that member banks have agreed to cooperate with, such as operating bank card authorization and clearing systems, brand promotion, research and development and other matters. It It is not for the purpose of profit, nor does it distribute dividends to members. Instead, it invests all the surplus in network construction, expansion and maintenance. The "Visa International Organization" distributes rights and functions to the maximum extent and implements distributed management. Promote member cooperation. In this business system, each regional company has a high degree of autonomy. The "Visa International Organization" allows member banks to develop new products and services and set their own prices and promotions.

Member banks are not only competitors for customers, but at the same time, in order for the system to operate properly and achieve scale effects, they must cooperate with each other. Merchants must accept cards from any bank or card issuer in the organization. This business system harmonizes "competition and cooperation", and each member bank exists in the Visa system in a "self-organizing" manner. Under this new business model, "Visa International" is fully committed to building the "key resource capabilities" required for this model: "participants", "trading network" and "brand". The huge number of "cardholders" and "contracted merchants" is the biggest attraction of "Visa International". It has issued 1.2 billion Visa cards worldwide and has more than 30 million "signed merchants". New members can share these resources immediately. After 20 years of maintenance, VISANet of "Visa International" has become the world's largest electronic payment network connected to artificial satellites and submarine optical cables, and can achieve real-time 24 hours a day. Internet-connected service, capable of processing 8,000 transactions per second, and approving an ordinary transaction within 2 seconds. Since members only use a dedicated electronic transaction system, Visa can concentrate resources on building the platform, which greatly improves the security of VISANet. "Visa International" has also invested huge resources in "brand" building. By sponsoring international sports events such as the Olympic Games and FIFA, it has successfully created a world-famous "payment pass" brand image. In the minds of consumers, having a "Visa Card" means they have the most reliable and convenient consumption guarantee. A multi-party winning transaction structure. The profit of "Visa International" comes from two parts: "membership fee" and "transaction share". For example, a medium-sized card issuer with 80,000 accounts and $4.5 billion in assets will need to pay a "membership fee" of approximately $1.5 million in the first five years after joining Visa International. The entire credit card system charges a "transaction fee" of 3% to 5% on each successful transaction, and Visa generally shares the revenue at a 10% rate. After the reconstruction, "Visa International" entered a stage of rapid development, with an annual growth rate of 20%-50%. It currently handles more than $4 trillion in annual global transactions, accounting for 60% of all global payment card brand transactions. In this structure, each "stakeholder" derives huge benefits. Financial institutions interested in engaging in credit card business can immediately share the huge number of "ATMs", "contracted merchants" and "cardholders" around the world as long as they join Visa International, and quickly develop their own credit card business. "Consumers" hold a Visa credit card and can make purchases and loans around the world without hindrance, and have more credit card products to choose from. Merchants sign up with financial institutions authorized by Visa International to accept 1.2 billion Visa credit cards worldwide. The original brand licensor, Bank of America, has gained revenue from this expanded market far exceeding the previous "licensing revenue". "Visa International" began a comprehensive reorganization in 2006 and was reorganized into a new joint-stock company, Visa Inc., owned by "Visa members". Each bank member will make a conversion based on their respective "business volume" and finally determine the shareholding ratio. In early 2008, affected by the subprime mortgage crisis, the U.S. financial sector was in a gloomy situation. On March 19, the New York Stock Exchange witnessed the largest IPO (initial public offering of stock) in the history of the United States, with a financing amount of US$17.9 billion, exceeding the 133 IPOs in the United States in the first three months of 2008. The company's total financing (US$16 billion) is almost equal to the sum of the two largest IPOs in US history (AT&T US$10.6 billion and Kraft Foods US$8.7 billion).