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Keywords
Modelling, Business development
Abstract
This paper explores the underlying principles on which effective model building can be explained in fast-moving environments through an examination of qualities that govern the effectiveness of businesses and are shared by models that represent them. By studying a number of generic and specific cases three strands are shown to be of central importance: the way of thinking, operational system, and capacity for value generation. These three strands, which are interrelated, form the basis of a meta-model for business models. Whilst specific business models always represent a choice between alternatives, each of which rests on different assumptions regarding the reality of business and its environment, the ability to generalise business models from one context to another is the function of the meta-model. The application of the meta-model will enable businesses to adapt themselves naturally to their environment which is changing at an ever-increasing rate.
1. Introduction
Models are vital tools representing the essential characteristics of reality as well as imaginary ideals, thereby playing an important role in decision making. According to Herbert (1981), "we all employ models by which we operate the world. Our models are our conceptual understanding of the parts important to us. The model serves as a kind of filter, eliminating or straining out extraneous or confusing data, while highlighting meaningful patterns". While this function of models is true generally, what is often ignored is the relationship between the inception and development of specific models and the underlying assumptions and context that govern their creation. It is this relationship that determines the meaning, legitimacy and impact of models. In the context of business, this can be illustrated using business model waves as an example.
Business model waves are influential movements in management thinking and practice, which profoundly influence businesses in general. These waves are similar to Kuhnian paradigm shifts, where "a series of peaceful interludes [is] punctuated by intellectually violent revolutions" (Kuhn, 1996). Thus, in both science and business, one conceptual worldview periodically replaces another. As with all successful business model waves, what emerges is a view on how best to conduct business, an ideal, which promises a panacea to current business developments and pressing business problems. Thus, in contrast with the majority of...