Business Models: Reworked for a financialized world

Why use the term 'business model' (henceforth BM), especially when there has been substantial disappointment and disillusion with its use and its association with the tech stock bubble, Enron, World.com and the failure of the banking business model (see Chapter 8)? Although the term business model is associated with 'disappointment and disillusion', we argue in this chapter that there are strong reasons why a reworked BM conceptual framework can support innovative and insightful critical reflection(s) about the possibilities and limitations of economic transformation. There are many definitions of 'shareholder value' and so it is also with business models. Business models have become a short-hand for the way in which products, services, business processes and organization functions such as information systems, marketing and distribution might be reworked to transform firm, industry and national economic performance. In the literature the terminology used to construct BMs varies across academic disciplines such as information systems, strategy, innovation studies and entrepreneurship. The result is that there are substantial differences in scope and purpose attached to the BM concept because it is applied in many different contexts. In an extensive review of the BM concept, Osterwalder et al. (2005) usefully classify the existing definitions into three broad generic approaches according to level of application and abstraction. Thus a BM can be viewed as: i an overarching conceptual framework for describing all real world businesses at the most abstract level; ii a classification scheme for describing different types of generic business models with common business characteristics, such as the banking, pharma, e-business and no-frills air-travel business models; or iii specific operational business models in the real world, such as the Dell or Amazon business models. In this text we argue that a loose BM conceptual framework should provide an overarching abstraction about the real world, generate a system of classification and reveal the specific activity characteristics of focal firms in their business model. The loose conceptual framework developed in this text incorporates three elements: structure, purpose and evaluation. In terms of structuring business models we first draw upon the notion of a BM located in an information genotype where focal firms share a similar stakeholder information network. One of the first definitions that became popular was prop