What is a business model? What is the difference between a business model and a strategy? What problems can it help companies solve? What specific points does a transaction structure include? How to judge the pros and cons of a company's business model? How to optimize and design a company Business model? The following are related articles I have prepared for you. You are welcome to read them.

1. The essence of business model

In recent years, business model innovation has been surging, and any new approach is related to the business model. For example: ***shared economy, ***shared bicycles, rural e-commerce, community services, dimensionality reduction attacks, etc.

***The sharing economy is a very new business model, and it also represents the future trend:

First, it is driven by technology;

Whether it is Didi or the current Xingyou Bicycle, they all have powerful information systems. For many assets in its application: cars, drivers, and passengers, you will find that the drivers are not Didi’s own, but are all contacted by the system; we are not familiar with the drivers, and they are all matched by the system.

Secondly, it is available upon demand.

When we bought a car before, it was our own asset. But now, like a bicycle, you only use it when you need it. This is also a new business model.

Although everyone is familiar with these phenomena and has heard many business model lessons, business models are still both familiar and unfamiliar. Because when our companies discuss and apply business models, it is easy to fall into pits. This is mainly because everyone does not understand some of the core issues and logic behind the business model.

Why do we do this for the business model? Why is the business model good? How does it relate to the enterprise? We don’t know much about these. In fact, when it comes to business models, we need to pay attention to the following questions:

What is a business model?

What problems can a business model help companies solve? Any good method must be able to help companies Problem solving. However, different methods can solve different problems.

How to describe an enterprise’s business model?

Is an enterprise’s business model good? How to judge the pros and cons of an enterprise’s business model?

How to optimize and design an enterprise’s business model? ?

What is the relationship between an enterprise’s business model and its positioning, equity, and culture?

These are all things we need to know about the business model.

However, in Coca-Cola’s home country, the United States, there is an Israeli company Soda Stream that has given Coca-Cola a hard time.

This company did this: they got a machine with a water bottle and baking soda next to it. When you need to make soda, press a button and the soda ash will chemically react with water to turn into soda. Everyone has a different taste in soda. Some like lemon flavor, and some like strawberry flavor. There is also a concentrate in this machine, which can be personalized and adjusted to different flavors according to your needs. The company was very successful and was later listed on NASDAQ in the United States.

This company grabbed a lot of share from Coca-Cola as soon as it went public, and Coca-Cola has already begun to pay attention to it. Later, the company also made an advertisement, placing many bottles and cans on one wall, and one of its machines on the other side. The advertisement reads: A family needs to consume more than 10,000 bottles and cans in five years. If you are an environmentalist, after watching this ad, you will want to buy a machine to replace bottles, instead of consuming so many bottles and cans to pollute the environment.

Later, Coca-Cola began to study this advertisement, trying to find some omissions. In the end, Coca-Cola people discovered that the Coca-Cola trademark was exposed in the advertisement, which constituted infringement and unfair competition. So Coca-Cola sued the company, and the company's stock actually rose sharply.

This is because small companies are originally famous in a small area. Once a large company like Coca-Cola sues, it becomes a topic of conversation after dinner. Later, everyone tried the product and thought it was pretty good, so it became even more famous.

Coca-Cola had no choice but to stop suing and instead make a private acquisition. However, this company did not accept the acquisition. Once the news came out, the company's reputation became even greater, and its stock price soared.

This gives us some inspiration:

1. China is doing well in all kinds of beverages (such as herbal tea), but Coca-Cola cannot. This is because Chinese Coca-Cola uses the same business model when competing with Coca-Cola.

The same business model means that we are in contact with the same stakeholders. When you are a small business, it is difficult to win by using the methods that large companies are most familiar with and best at competing.

2. The Israeli company Soda Stream uses a different business model from Coca-Cola. When it sells its machines, it can continue to sell soda ash, concentrate and other consumables.

When its business model is different, it means that the stakeholders it contacts are different from Coca-Cola. The advantages that Coca-Cola had accumulated in television and channels did not exist when faced with this small company.

Because Coca-Cola’s advantage is based on its own business model. When the business models of the two are different, the advantages are ineffective. This is also an effect that can be achieved through business model design.

Therefore, when studying business models, you might as well look at the outside world, learn more from other industries, try to cross borders, and invalidate the advantages of competitors.

2. Transaction structure of business model

For a good business model, transaction structure is very important. Generally, it has the following two characteristics:

First, the company itself is very strong, and the focal company has the ability to make sustainable profits; second, the stakeholders who cooperate with the company are very strong.

At the same time, business model innovation will bring two results:

First, it will bring exponential growth. Compared with the old model, the growth rate will be faster;

The second is the black hole effect. It can attract all the stakeholders in the old model to the new model. For example: when Didi emerged, the previous black car drivers no longer existed and were transformed by the new model. New models can replace old models. When the whole thing is connected together, the industry can be upgraded.

Therefore, the business model is to realize the three directions of value enhancement, cost saving and growth acceleration by designing the transaction structure between the focal enterprise and the stakeholders. Everyone has a path when designing a business model. To evaluate whether a business model is good or not, is whether the modified actions can increase value, save costs, and accelerate growth during the correction process.

A good business model can achieve the above three directions, and it is not innovation for the sake of innovation. What we really want to do is to promote business model innovation for enterprise development and upgrading.

The transaction structure specifically includes the following points:

Who are you trading with? That is, who are the stakeholders? Including customers, partners, competitors, etc.

What to trade? What are your activities and resource capabilities?

How to trade? Allocation of responsibilities, rights and benefits.

How to price? Income, expenses, timing

When we look at an enterprise’s business model, it is basically this framework:

How is the original model? Towards a new model?

In conversion, it is generally to achieve the goals of value improvement, cost savings, and growth acceleration. At the same time, changes in any enterprise are not only changes in its own enterprise, but also bring about changes in a group of partners. Additionally, when you make a transition, you also make a lot of investments. As you transition, your partners will evaluate the opportunity costs and only choose the best options to move toward a new model with your business.

Case:

In recent years, digital cinema has represented the future, but in the past few years, digital cinema was not popular enough. This is because the original cinema needs to invest in expensive equipment and various decorations to move to a digital cinema. Later, some large theater chains, such as Wanda and China Film Group, set up a foundation to invest in equipment and put the equipment into these theaters to help with renovations, and then only collected rent. For some small theaters, this has greatly reduced investment and successfully transformed the old model into a new one.

So when we are making technological innovation, we must consider and evaluate, what changes do people need when they use this technology? Will the cost of change be too high? If it can reduce people's Cost can push the company's model forward.

It is also very important for companies to find leveraged assets, that is, to find large companies that can empower your company. Many large companies actually like to interact with small businesses. If leveraged assets can be utilized and cooperation with large enterprises can be achieved, one point of investment may produce ten times the output.

In addition, it is also important to find empowering objects. That is, who do you empower? What problems can your users solve through your system? For example, Didi, both drivers and passengers, can greatly reduce costs through this system.

3. Big changes in business models

There are big changes in business models and micro-designs. In fact, for business models, there is no need to pursue big changes. It is possible that huge benefits can be generated by just passing one point.

The major changes in business models mainly involve two issues in the transaction structure:

With whom to trade (transaction subject)? What to trade (transaction content)?

Changing stakeholders, activities, and resource capabilities are all part of a major change in the business model.

1. Stakeholders

For stakeholders, we can achieve changes in our business model by adding/reducing/splitting/aggregating/selecting/changing stakeholders.

Among stakeholders, there is another category called key stakeholders, who are people who can achieve strategic goals and make a qualitative leap in the business model. This type of stakeholder needs to be focused on in business model design.

2. Activity links

Activity links include processes such as cutting and reorganization, fragment aggregation, de-intermediation and re-intermediation. Some industries have many channels and chains, which can be shortened through business models and technological manufacturing. By removing certain links driven by information systems, efficiency can be improved.

3. Resource capabilities

Resource capabilities can be designed through new business models, allowing the enterprise's resource capabilities to create greater value.

Case: Vanke small-stock trading

Vanke used to develop in first- and second-tier cities, but in recent years it has also shifted its focus to second- and third-tier cities. Its main action is to trade small stocks by paying a small amount of shares, but it can operate the entire market, make it happen, and obtain more value returns.

Vanke’s strength lies in its development capabilities, while developers in second- and third-tier cities generally only have funds and land, but their development capabilities are average. In the traditional definition of roles, they are competitors of Vanke, but in the small-cap trading model, they are partners of Vanke.

Vanke provides a small part of the funds and holds a small share; small developers provide the land and most of the funds; Vanke invests in the team to be responsible for the management and development, and obtains project management fees, share dividends, project premium income, etc. Vanke has established an innovative transaction structure with developers in second- and third-tier cities. This is Vanke's small-stock trading model.

For many small businesses, they can actually keep an eye on large companies, not to compete, but to gain insight into what they will do next and to figure out their business models. If the shortcomings of a large company are exactly the strengths of your own company, you might as well cooperate and transform from a competitor into a partner.

When a small business reaches a certain level, the best way to grow is to compete with large companies. Only in this way can we fully utilize the leveraged assets of large enterprises to develop ourselves. When many small businesses develop into large enterprises, they take advantage of the leverage assets of large enterprises at key points to take advantage of the situation.

Thinking about the business model is not only to look at your own business model, but also to think about the business models of other companies. Small businesses can think about big companies, and even design business models for them, so that they can be part of the big companies.

When we design a business model, if we are making major changes, we must analyze the stakeholders, activities, and resource capabilities, as new value may be generated.

IV. Business model micro-design

In terms of business models, some tiny designs, especially small designs targeted at corporate bottlenecks, can also create huge value. Generally, the micro-design of the business model is cut through the transaction method (how to trade) and transaction pricing (how to price).

Case 1: Feidai

Feidai is a mobile credit company in Shenzhen. Its business model changes have experienced a triple jump:

The first stage: credit factory.

Solve the problem of lenders/enterprises having difficulty obtaining loans from banks. Its approach is to first collect information about lenders/enterprises, then through screening, and then recommend users to banks, so that users can obtain bank loans. Disadvantages: requires a lot of labor, low efficiency in making money, and limited scale.

The second stage: Make credit mobile and Internet-based.

What it did was develop the Feidai app. Since the real-name system is now adopted, there are many credit records. Through credit records and its own technology, it can determine a person's behavior and whether he can get a loan.

The third stage: Make money through technology and focus on financial technology.

What it did was find a national guarantee company. Although guarantee companies also lend money, their understanding of users is relatively insufficient and their technology is relatively weak. Introducing this company will provide technical support to the guarantee company, and Feidai will be able to make money through technology. At this time, scale and capital are no longer bottlenecks for Feidai.

Therefore, when designing a business model, the micro-design targeted at enterprise bottlenecks, although the action is small, is of great value. The reason why this company has transformed is mainly due to the combination of technological innovation and business model innovation.

Technological innovation includes: digitizing all content; realizing online sharing of data; intelligence (interactive feedback, deep learning, artificial intelligence, etc.).

Business model innovation has three characteristics:

First, it is social and obeys human nature;

Second, it is available on demand and priced according to the right to use;

For example, buying a car used to cost hundreds of thousands of assets at a time, but now with Didi, you spend money once per transaction.

The third is to make full use of leveraged assets and empowerment.

For example, Vanke’s small-stock trading operation cooperates with developers in second- and third-tier cities to copy its own development model and gain huge profits at the same time. For developers in second- and third-tier cities, they can finally reap huge profits after being empowered by the large enterprise Vanke. Micro-design can also be implemented in transaction pricing.

Case 2: Tetra Pak

In the early days, when Tetra Pak entered China, its main business was the sales of packaging paper and packaging equipment. However, because Tetra Pak equipment is expensive, generally costing millions of yuan, it is difficult to open the market for a while.

Tetra Pak packaging

Later, Tetra Pak made a move to modify the pricing. It used to be that I had to pay several million in one lump sum to buy the equipment, but now I have switched to an 80/20 equipment investment plan. Customers only need to pay 20% of the payment to install the equipment. In the next four years, as long as they order a certain amount of Tetra Pak packaging materials every year, they will be exempt from paying the rest of the equipment payment. Just by modifying one pricing, Tetra Pak opened up the market and occupied more than 90% of China's dairy packaging market.

As competition further intensified, in order to save costs, companies took out their financial statements and discovered that the largest cost expenditure turned out to be Tetra Pak's packaging materials. When some companies tried to replace packaging materials, they found that they could not be replaced. Because Tetra Pak has patented the barcode filling machine so that other brands of packaging materials cannot be used on Tetra Pak's equipment.

What about replacing equipment? The cost is even higher. At this time, the price of complete sets of milk filling equipment has increased to tens of millions. If all equipment is replaced, dairy companies will face the risk of bankruptcy and liquidation. There is no other way. China's dairy companies can only continue to use Tetra Pak's packaging materials and continuously create profits for Tetra Pak.

Of course, Tetra Pak also provides customers with many valuable value-added services. For example: production process tracking model technology.

The production process tracking model can realize product traceability function.

If there is a problem with a box of milk that a customer buys from the supermarket, based on the information stored in the product, the production process can be rechecked to know which link went wrong, thus realizing the visualization of the production process.

At the same time, manufacturing companies can quickly and accurately define the responsible links and product scope of faulty products, so as to recall faulty products in a targeted manner. This technology not only saves costs for companies, but also eliminates potential harm to consumers from products as quickly as possible.

Regarding pricing, the following key points are mainly:

Reduce one-time investment and greatly save negotiation costs;

If the pricing of new products is too high , it is difficult to open the market. If it is too low, it will be difficult to bring benefits to stakeholders;

The 80/20 plan is actually a razor-blade model. The equipment is the razor and the packaging paper is the blade. The two form a tie. Certainly.

Therefore, when applying any business model, you need to understand the logic behind the business model.

5. The three era driving forces of business models

Business models are related to the times, and behind the changes in business models are the driving forces of the times. Different eras have different business models. For example, the business model of the catering industry has been changing with the times. Catering was originally a single-store model, with no leverage effect and very limited value. Later, catering chains emerged that had a relatively leverage effect.

All chains need to have two core competitiveness: one is front-end standardization; the other is back-end capabilities.

Front-end standardization refers to how strong a company’s replication capabilities are and whether the time to open a store is short enough. Replication capabilities are related to backend unification. You know, when you own many chain stores, your benefits are spread and your disadvantages are magnified.

The busiest and best time for the catering industry is meal time and dine-in time. When it is too busy, we need to consider whether to add staff, which will increase manpower investment. But when it's not meal time, catering companies are relatively leisurely. Every catering company has encountered such a problem. This is an industry problem and an industry opportunity. How to solve the dilemma of busy and busy?

Case 1: Beijing catering company Jinwanwan

Jinwanwan is positioned as the central kitchen for the people in the community, and they have created a new product category, called quasi-finished products. It is a kind of catering takeout between finished products and semi-finished products. The dishes are developed by Jin Wanwan, and the raw materials and seasonings are prepared. The user can directly put them into the pot in order to complete.

Many people don’t like cooking. The main reason lies in the series of preparation actions before cooking: buying vegetables, washing vegetables, and cutting vegetables. This mode of Jin Million allows users to only do the last dish. Process: Simply stir-fry, which greatly saves users’ time and cost, and allows users to enjoy their own meals at home.

The finished product of Jinwanwan is prepared by other restaurants. Between meals, such as the morning between breakfast and lunch, and the afternoon between lunch and dinner, the restaurant's kitchen is idle and has excess production capacity. It can help prepare finished products and solve the tasks of buying, washing, and chopping vegetables. question.

The more traditional an industry is, the more opportunities it has to achieve iteration. The main forces driving them to iterate include:

Consumption upgrade;

Capital promotion;

Once a good business model comes out, there will be a lot of capital investment Go up. In the end, it evolved into a fight between enterprises, and they were all driven by the power of capital.

Technological change.

Many industries have been changed by technology. For example, the emergence of takeout comes from the popularity of mobile Internet. There are two main reasons for the popularization of mobile Internet: one is positioning, and the other is mobile payment.

Many companies do not necessarily need to study in-depth technology, but they need to understand the development of technology and what technologies are related to the industry. Nowadays, the technical threshold is getting lower and lower. There are many cloud technologies that everyone can use, but enterprises pay less attention to them.

Due to the promotion of the three forces of consumption upgrading, capital power, and technological change, a good business model will have to change within a few years.

A single model is easily restricted by these forces, so it is important to evolve and iterate the model.

Each model has its own characteristics and it is difficult to directly apply it to your own enterprise. However, we can understand the logic behind the entire business model. Only by comprehensively considering the external environment, internal structure, technology, etc. can we see a business model more thoroughly and avoid falling into pits.