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e-Business Model Analysis: A Relational-Structural View

e-Business Model Analysis: A Relational-Structural View. Sunghyun Juhn, Ph.D., Professor and Dean Graduate School of Information Science Kookmin University Korea. PACIS June, 2001 Seoul, Korea. The Questions:. The New Business Models in the New Economy . What Are They ?

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e-Business Model Analysis: A Relational-Structural View

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  1. e-Business Model Analysis: A Relational-Structural View Sunghyun Juhn, Ph.D., Professor and Dean Graduate School of Information Science Kookmin University Korea PACIS June, 2001 Seoul, Korea

  2. The Questions: The New Business Models in the New Economy. • What Are They? • Do They Have Any Generic Form? • How Do They Function? • What Value Do They Generate? • How May Firms Reap Revenues From Them?

  3. A Mindmap for Business Model Analysis: Enablers Morphology Motives Business Model Taxonomy Evolution Path Analysis Levels Value

  4. Business Model Analysis Perspectives • Focal Organization vs. Network • From a particular organization’s viewpoint vs. From a Collective of Organizations’ viewpoint • Internal vs. External • Internal: BM as Configured Business Processes • External: BM as Configured Business Relationships • Static vs. Dynamic • Static: A State Description • Dynamic: A State Transition Description: An Evolution Path • Content vs. Morphology • Content Description vs. Morphology Description

  5. The New Business Models: What Are They? • What are Business Models? • A Value Creating Mechanism. • Both Designed and Emergent. • What Does The New Economy Tell Us About Value Creation? • A unit of value creation is no longer firm. • Value stems as much from relationships as from transformation. • IT and Business Strategies engender and enable creative relational arrangements for value generation. • Value creators are therefore complex, variable, ingenious and relational

  6. The New Business Models: What Are They? “The New Business Model is a set of Value Creating Relationships Structure, both intended and emergent, that demonstrates creative business design and productive technology use.” • A departure from the focal organization point of view • Adopts a structural-relational view • Espouses both intended and emergent perspectives of strategy • An amalgamation of both business and technology ingenuity • Generates Collective, Synergetic, Systemic Value

  7. The New Business Models: What Are They? • Three Analysis Realms • A Structure Analysis • What are the structure of business models? • A Function Analysis • How do the models function? • A Value Analysis • What value do the models generate? • What revenues do the firms generate? • Why the above three? • View Business Models as a System Phenomenon. • Hence Adopt a Systems Analysis Point of View in Analysis

  8. The New Business Models: What Are They? • What to look for in a system? • Structural Configuration • What it consists of? • System Components and their Inter-Relationships • Mode of Functioning • Core System Activities and how they are executed • Goods and Offerings • What the system produces and transports • System Value • The value the system creates; • What justifies the the continued existence and survival of the system; • System Quality • System Level Characteristics

  9. A Structure Analysis

  10. Structure Analysis: The Tasks Given Business Model as a Value Creating Relationship Structure (VCRS): • 1. Look for a set of generic forms for different value creating relationship structures • 2. Identify their attributes • 3. Draw strategic implications for firms

  11. Structure Analysis: • We identify 5 generic forms of value creating relationship structure (VCRS). • A Chain Structure • A Shop Structure • A Marketplace Structure • A Community Structure • AnEcosystem Structure • The VCRSs are distinguished in terms of: • The purpose of the structure and the value it purports to generate. • The types of structural arrangement it employs for value creation. • The generic forms make up a business model, either alone or in combination with other forms.

  12. Generic VCRS: A Chain Structure • A Chain Structure • Creates value through a chain of transformation relationships. • Transformation of resources is the goal of the structure. • Value adding results. • Acquisition, Transformation, and Distribution are the key value creating mechanism. • Chain is the structural arrangement employed for value creation • Cost and Value may spill over from one phase to the next in the chain: Inheritance property • A most typical form of VCRS • Eg: A firm’s value chain, An industry’s value system, etc A Morphology of the Chain structure

  13. Generic VCRS: A Shop Structure • A Shop Structure • Creates value through chipping in and integration of resources and capabilities of individual parties to solve particular problems. • Problem Solving is the goal of the structure. • Collaboration, Coordination, and Integration are the key value creating mechanism. • Hub is the structural arrangement employed for value creation. • A Centrality may exist in the relationships structure: (eg: A below) • Value Constellation is a special case of shop where valueco-production is emphasized. A Morphology of the Shop structure A

  14. Generic VCRS: A Marketplace Structure • A Marketplace Structure • Creates value through setting up marketplaces and linking together buyers and sellers • Transaction Making is the goal of the structure. • Assemblage and Intermediation is the key value creating mechanism. • Hub is the structural arrangement employed for value creation. A Morphology of the Marketplace structure A

  15. Generic VCRS: A Community Structure • A Community Structure • Creates value through setting up communities and linking together their members • Community Building is the goal of the structure. • Aggregation and Sharing is the key value creating mechanisms. • Web is the structural arrangement employed for value creation. A Morphology of the Community structure

  16. Generic VCRS: An Ecosystem Structure • An Ecosystem Structure • A habitat for feeding and sustain firms. • Adaptation and Growth is the goal of the structure. • Co-evolution, Selection, Self-renewal, and Self-Organizing are the key value creating mechanisms. • Web is the structural arrangement employed for value creation. • Formed typically around a critical technology • A largest unit of VCRSs: All Inclusive A Morphology of the Ecosystem structure

  17. Generic VCRSs: A Summary Profiles

  18. Generic VCRSs: Strategic Implications for Firms • 1. Decide Which Ship to Board • Select VCRSs for the firm to participate in: • 2. Identify the Key Success Factors of the VCRS • Those factors that maximize the value creating potentials of the VCRS: • 3. Determine What You Can Do In and For the VCRS • The firm’s role and position in the VCRS • Its contribution to the VCRS KSFs. • Get the KSFs right.

  19. A Function Analysis

  20. Function Analysis: • VCRSs are founded on two critical functions • 1. Resource Join • 2. Resource Flow • We identify a set of generic forms for resource join and resource flow in the VCRSs Resource Join Resource Flow Resource Exchange A Dyadic Exchange Resource Pooling A Multi-Party Cyclic Resource Complement A Multi-Party Inter-linking Resource Conjugation

  21. A Resource Join Analysis

  22. Function Analysis: Resource Join • 4 Generic Types of Resource Join • A Resource Exchange Type • A Resource Pooling Type • A Resource Complementation Type • A Resource Conjugation Type Resource Join Resource Exchange Resource Pooling Resource Complement Resource Conjugation

  23. Function Analysis: Resource Join Types • A Resource Exchange Type • A simple exchange relationship • The most basic • A primary type of join for the Marketplace VCRS • A Resource Pooling Type • Everyone chipping in resources and form a Resource Pool • Homogeneous resources • Creates value through Aggregation • May result in the Community VCRS

  24. Function Analysis: Resource Join Types • A Resource Complementation Type • A join of Complementary resources • Generates Synergy Effect • Most typical in the Chain VCRS • A Resource Conjugation Type • A resource join that produces Innovation • Demands Ingenuity, Imagination • Mostly in the Shop VCRS

  25. Function Analysis: Modes and Motives of Resource Join • Motives of Resource Join • Economy Motive • For Efficiency; Money Saving • Innovation Motive • For Producing Something New and Creative • Modes of Resource Join • Commensalistic Mode • Residing in and sharing a common habitat • Eating from the same table • Symbiotic Mode • Cooperate toward common goals and purposes

  26. Function Analysis: Modes and Motives of Resource Join • Resource Joins May Differ in Modes and Motive Mode of Join Commensalistic Symbiotic Motive of Join Change Economics Resource Exchange Resource Complement Create Innovation Resource Pooling Resource Conjugation

  27. Function Analysis: Resource Join Characteristics Resource Exchange Resource Pooling Resource Complement Resource Conjugation Motives Economy Innovation Economy Innovation Modes Commensal Commensal Symbiotic Symbiotic Strategic Mindset Competitive Competitive Collective Collective Resource Homogeneity Hetero Homo Hetero Hetero Resource VRIO Low Low Medium High Resource Dependency Low Low Medium High Join Effect Acquire Amplify Complement Invent Value Created Transaction Aggregation Complement innovate VCRS Marketplace Community Chain Shop

  28. A Resource Flow analysis

  29. Function Analysis: Resource Flow • Resource Flow • Transfer of Goods from One Party to Another • Goods include Product, Service, Information, Capital, Attention, Reputation, Authority, Trust • Tangible and Intangible, Actual and Anticipated • We Identify 3 Topological Units of Resource Flow based upon the Resource Flow Closure Hypothesis • A Dyadic Exchange Pattern • A Multi-Party Cyclic Pattern • A Multi-Party Inter-Linking Pattern

  30. Function Analysis: A Resource Flow Closure Hypothesis • A Resource Flow Closure Hypothesis • A Resource Flow is Closed When the sum utility of outbound resource flow is compensated by the sum utility of inbound resource flow • A firm participates in business relationships if and only if there is a resource flow closure, i.e., for each outbound resource flow is a corresponding inbound resource flow.

  31. Function Analysis: 3 Topological Units of Resource Flow A) A Dyadic Exchange Pattern A B B B) A Multi-Party Cyclic Pattern A C C) A Multi-Party Inter-Linking Pattern A B* C

  32. Function Analysis: Profiles of Resource Flow Units A Dyadic Exchange A Multi-Party Cyclic A Multi-Party Inter-Linking Flow Form Exchange Cycle Inter-Link Causal Driver Disintermediation Value Redemption Infomediation Effect Remove Margin Expand Flow Cycle Facilitate Trans Principals A Value Dyad A Value Cycle A Navigator

  33. A ValueAnalysis

  34. Value Analysis: The Question What Value Do New Business Models Generate? We Identify 4 Value Drivers -The Underlying Motives- -The Form of VCRS- -The Nature of Resource Join- -The Nature of Resource Flow-

  35. A Motive Analysis

  36. Motive Analysis: The Question • The Questions: • What are the motives that underlie and are at work in the business model ? • How do the motives conjoin with one another to generate value? • What value do the motives collectively generate? The value that a business model generates is the result of a complex interplay and intertwining of various motives, both technological and business, which occurs at an individual level as well as at a collective level.

  37. Motive Analysis:The types Technological Motives Motives Business Motives

  38. Technological Motives: What and Where • The Question • What is it that IT makes possible? - IT as an Enabler • What is it that IT calls for? – IT as a Driver • IT Effects • Nature of Change: • Change Economics • Create Innovation • Realms of Change: • Transformation • Linking Realms of Change Transforming Linking Nature of Change Change Economics Increase Efficiency Increase Interaction Create Innovation Create Goods Create New Space

  39. Business Motives: The Questions How can we exploit the technology for business? -What kinds of business to pursue with the technology?- -What value will the business generate?-

  40. Business Motives:What business to pursue with the technology? on • The 5 options • Business On the Internet • Business For the Internet • Business With the Internet • Business Through the Internet • Business Around the Internet For Around Internet Business Through With On Business For Business With Business Through Business Around Business internet as action space e-Shop internet as product domain ISP Internet as action mechanism e-Procurement Internet as basis for business design Virtual Corp Internet Related businesses Telecom Animation

  41. Motives and Value

  42. Motives Create Value: Technological Motives and Value Motives Value Transforming Increase Efficiency Value at Transforming Change Economics Increase Interaction Value at Linking Linking IT Effects Create Goods Value at Goods Creation Create Innovation Transforming Create New Space Value at Market Making Linking

  43. Motives Create Value: Business Motives and Value Motives Value On Business Value at Market/Transaction Making For Business Value at Goods Creation With Business Value at Business Process Facilitating Around Business Value at Business Complementation Through Business Value at New Business Design

  44. Motives Also Conjoin for More Value: Technological and Business Motives On Business For Business With Business Through Business Around Business Increase Efficiency Increase Interaction Create Goods Create New Space

  45. VCRS Form and Value

  46. VCRS Form Specifies Value: VCRS Form and Value VCRS Form Value Chain Value Adding Shop Problem Solving Marketplace Transaction Making Community Community Building

  47. Resource Join and Value

  48. Resource Join Creates Value: Resource Join and Value Motives Value Resource Join Commensal -istic Resource Exchange Value at Transacting Change Economics Resource Complement Value at Complementation Symbiotic Resource Pooling Value at Aggregation Commensal -istic Create Innovation Resource Conjugation Value at Innovation Symbiotic

  49. Resource Flow and Value

  50. Resource Flow and their Causal Driver Disintermediation A B Value Redemption Cycle B A C Infomediation A B* C

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