e-business model analysis: a relational-structural view sunghyun juhn, ph.d., professor and dean...

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

Prof. S. H. Juhn, Kookmin University, Korea

The Questions:

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?

The New Business Models in the New Economy.


A Mindmap for Business Model Analysis:

Business

Model

Business

Model

Morphology

Enablers

Motives

Evolution

PathTaxonomy

ValueAnalysis

Levels


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


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



“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



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



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


A Structure Analysis


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


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

An Ecosystem 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.


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


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 value co-production is emphasized.

A

A Morphology of the Shop structure


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

A Morphology of the Marketplace structure


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


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


Generic VCRSs: A Summary Profiles

Chain Shop Marketplace Community Ecosystem

Purpose Transform Problem Solving

Transaction Making

Community Building

Adaptation Growth

Form Chain Hub Hub/Web Hub/Web Web

Binding of Relations

High High Medium Low Low

Inter- dependence

Sequential Reciprocal Reciprocal Reciprocal Pooled

Pooled

Technology Long-linked

Intensive Mediating Intensive Mediating

All

Coordination Standards Supervision Mutual

Adjustment

Mutual Adjustment

Mutual Adjustment

All

Success Factors

Transform Technology

Linking

Expertise Communicat

ion

Participation Transaction

Effiency

Participation Loyalty

Value Potential


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.


A Function Analysis


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

Resource Pooling

Resource Conjugation

Resource Complement

A Dyadic Exchange

A Multi-Party Inter-linking

A Multi-Party Cyclic


A Resource Join Analysis


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 Conjugation

Resource Complement


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


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


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


Function Analysis: Modes and Motives of Resource Join

Resource Joins May Differ in Modes and Motive

Commensalistic

Resource

Exchange

Resource

Pooling

Change

Economics

Create

Innovation

Symbiotic

Resource

Complement

Resource

Conjugation

Mode of Join

Motive

of

Join


Function Analysis: Resource Join Characteristics

Motives

Resource

Exchange

Resource

Pooling

Resource

Conjugation

Resource

Complement

Modes

Strategic Mindset

Resource Homogeneity

Resource VRIO

Resource Dependency

Join Effect

Value Created

VCRS

Economy Innovation Economy Innovation

Low Low Medium High

Acquire Amplify Complement Invent

TransactionAggregationComplement innovate

MarketplaceCommunity Chain Shop

Low Low Medium High

Hetero Homo Hetero Hetero

CompetitiveCompetitive Collective Collective

CommensalCommensal Symbiotic Symbiotic


A Resource Flow analysis


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


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.


A B

B

CA

A CB*

A) A Dyadic Exchange Pattern

B) A Multi-Party Cyclic Pattern

C) A Multi-Party Inter-Linking Pattern

Function Analysis: 3 Topological Units of Resource Flow


Function Analysis: Profiles of Resource Flow Units

A Dyadic

Exchange

A Multi-Party

Cyclic

A Multi-Party

Inter-Linking

Flow Form

Causal Driver

Principals

Effect

Exchange Inter-LinkCycle

Disintermediation InfomediationValue Redemption

Remove Margin Facilitate TransExpand Flow Cycle

A Value Dyad A NavigatorA Value Cycle


A Value Analysis


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-


A Motive Analysis


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.


Motive Analysis:The types

Technological

Motives

Business

Motives

Motives


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

Transforming

Increase

Efficiency

Create

Goods

Change

Economics

Create

Innovation

Linking

Increase

Interaction

Create

New Space

Realms of Change

Nature

of

Change


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?-


Business Motives:What business to pursue with the technology?

The 5 options

Business On the Internet

Business For the Internet

Business With the Internet

Business Through the Internet

Business Around the Internet

Internet

Business

on

Through With

ForAround

With

Business

For

Business

On

Business

Through

Business

Around

Business

internet as action space

e-Shop

internet as product domain

ISP

Internet as action

mechanism

e-Procurement

Internet Related

businesses

Telecom Animation

Internet as basis for

business design

Virtual Corp


Motives and Value


Motives Create Value:

Motives

TransformingIncrease

Efficiency

IT

Eff

ects

Ch

an

ge

Econ

om

ics

Cre

ate

Inn

ovati

on

Linking

Transforming

Linking

Increase

Interaction

Create

Goods

Create

New Space

Value at

Transforming

Value at

Linking

Value at

Goods Creation

Value at

Market Making

Value

Technological Motives and Value


Motives Create Value:

Motives

On

Business

For

Business

With

Business

Around

Business

Value at

Market/Transaction Making

Value at

Goods Creation

Value at

Business Process Facilitating

Value at

Business Complementation

Value

Business Motives and Value

Through

Business

Value at

New Business Design


Motives Also Conjoin for More Value:

Increase

Efficiency

Increase

Interaction

Create

Goods

Create

New Space

Technological and Business Motives

With

Business

For

Business

On

Business

Through

Business

Around

Business


VCRS Form and Value


VCRS Form Specifies Value:

VCRS

Form

Chain

Shop

Marketplace

Community

Value Adding

Problem Solving

Transaction Making

Community Building

Value

VCRS Form and Value


Resource Join and Value


Resource Join Creates Value:

Motives

Commensal

-istic

Resou

rce J

oin

Resource

Exchange

Ch

an

ge

Econ

om

ics

Cre

ate

Inn

ovati

on

Symbiotic

Commensal

-istic

Symbiotic

Resource

Complement

Resource

Pooling

Resource

Conjugation

Value at

Transacting

Value at

Complementation

Value at

Aggregation

Value at

Innovation

Value

Resource Join and Value


Resource Flow and Value


A B

B

CA

A CB*

Resource Flow and their Causal Driver

Disintermediation

Value Redemption Cycle

Infomediation


A B

B

CA

A CB*

Resource Flows Engender New Business Entities

Aggregator

Community

Value Cycle

Navigator

Infomediary


A B

B

CA

A CB*

Resource Flow Generates Value

Value at Transacting

-Remove Intermediary-

Value at Co-Living ( 共生 )

-Expand Flow Cycle-

Value at Consolidating

-Facilitate Transaction-

Resource

Flow Value


Value Constellation


Value Constellation: Value Drivers Summary

Value at

Market/Trans Making

Value at

Goods Creation

Value at

B. Proc Facilitating

Value at

B. Complementation

Value

Value at

New Bus Design

Value at

Transforming

Value at

Linking

Value at

Goods Creation

Value at

Market Making

Value

Value Adding

Problem Solving

Trans Making

Com Building

Value

Value at

Transacting

Value at

Complementation

Value at

Aggregation

Value at

Innovation

Value

Value at

Transacting

Value at

Co-Living

Value at

Consolidating

Value

Business

Motives

Technology

Motives

VCRS

Form

VCRS

Functions

-Resource Join-

VCRS

Function

-Resource Flow-


Value Constellation

The Value Drivers Conjoin to Form Various

Types of Value Constellations

-The Technological Motives and the Business Motives-

-The VCRS and the Business Motives-

-The Technological Motives and the VCRSs-

-The Resource Join and the Resource Flow-

-The Resource Join, Flow, and VCRSs-

----

----

An Implication: We have an infinite set of configurations

for business model values.


Value Constellation

Types of Value Conjoin

Generative Join

Join Between the Same Types of Value Drivers

Technology Motive Join, Business Motive Join VCRS Form Join, VCRS Function Join

eg.) VCRS Form x VCRS Form (Chain x Marketplace)

Configurative Join

Join between Complementary Value Drivers

VCRS Form x Function Join

Technology Motive x Business Motive Join

Integrative Join

Generative Join x Configurative Join

VCRS Form x VCRS Function x Technology Motives x Business Motives


Value Constellation: An Exmaple

Value at

Transacting

Value at

Complementation

Value at

Aggregation

Value at

Innovation

Value at

Transforming

Value at

Linking

Value at

Goods Creating

Value at

Market Making

Technology Motives x VCRS Function (Resource Join)


A Revenue Analysis


The Question:

Where and How Can Revenue be Generated in a VCRS?

-What Are the Value Junctures Where Revenue Can be Generated?-

-Develop A Revenue Model for Firms-

Revenue Analysis calls for a change in perspective from that of a network’s to that of a focal

organization’s.


Revenue Source: Conceptual, Instrumental Branching

General versus VCRS specific Sources

On VCRS versus For VCRS Sources

Support versus Twist Sources

Structural versus Functional Sources

Infra Support versus Method/Application Support

Execution versus Modal Change


Revenue Source: General versus VCRS Specific SourcesGeneral

Revenue Domain

VCRS Structure: Actors and Relationships

VCRS Function: Execution and Execution Infrastructure

Revenue Generator

Provide Support for the VCRS

Make a Twist of the VCRS

VCRS specific

Identify the KSF’s of the VCRS

At Structure and Function of VCRS

Determine what you can offer for the KSF’s

Support and Twist


Revenue Source:

Twist

Support

VCRS StructureActors and Relationships

VCRS FunctionExecution and Infrastructure

Marketization

Aggregation

(Amplify Actors)

Infra Support

Method Development

Role Reversing

Disintermediation

(Actor Displacement)

Modal Twist


VCRS Revenue Source: A General Model

Actors InfrastructureExecutionRelationships

VCRS Form VCRS Function

Role Expansion

(Participation)

Role Enlarging

(Infomediary)

PowerAmplification

(Demand Pooling)

Relationships

Solidifying

(Concentration)

(Institutionali-

Zation)

Role Reversing

(Reverse Auction)

Role Bypassing

(Disintermediation)

Relationships

Disruption

(Marketization)

Infrastructure

Support

(Standardization)

Infrastructure

Twist

(Modal Twist)

(Decoupling of

Info and Things)

Execution

Support

(Service

Provider)

(Method

Develop)

Execution

Twist

(Method Substi.)

(Tech.

Irrelevance)

Su

pp

ort

Tw

ist


VCRS Revenue Source: A VCRS-specific Model

Actors InfrastructureExecutionRelationships

VCRS Form VCRS Function

S T S T S T S T

KSF

1

<A Revenue Model for A VCRS>

KSF

2

KSF

--

VC

RS

KS

Fs


Revenue Source: A Chain Structure

What are KSFs for the Chain VCRS?

Resource Acquisition

Transform

Linkage

What you can offer:

Facilitate Resource Acquisition: B2B

Develop Transformation Method and Technology

Reduce Interdependence: B2B, B2C

A Morphology of the Chain structure


Revenue Source: A Shop Structure

What are KSF’s for the Shop VCRS?

Expertise

Coordination and Integration

What you can offer:

Solicit and assemble expertise: P2P

Facilitate coordination and integration: Play Integrator

Develop and Provide Collaborative Technology

A

A Morphology of the Shop structure


Revenue Source: A Marketplace Structure

What are KSF’s for the Marketplace VCRS

Buyer-Seller Participation

Transaction Making

What you can offer:

Help assemble buyers and sellers: Community

Facilitate Transaction: Price Determination Mechanism

A

A Morphology of the Marketplace structure


Revenue Source: A Community Structure

What are KSF’s for the Community VCRS?

Participation

Loyalty

What you can offer:

Induce Participation

Cultivate Loyalty

A Morphology of the Community structure


Conclusions

Contributions

An Enriched Conceptualization of Business Models

A Contexualized View of Business

A Good Exercise in Theorizing…

Needs further research on:

A Generic Revenue Model: How revenue can be generated in a VCRS

A dynamic, evolutionary account of Business Model generation

Empirical validation of the analysis models

Draw practical implications and guidelines for business

Develop Context-driven Strategy Model for Firms


Conclusions

Implications for Business and Firms – The Ten Commandments 1. Understand the New Economy Context for Business

2. Determine What You Can Do with Technology

3. Consider Value Creation from A Network Perspective

4. Determine Which VCRSs to Join

5. Maximize Value Potentials of the VCRS

6. Generate Revenue by Contributing to the VCRS Value Maximization

7. Design Value Redemption Cycle

8. Develop Resources Others Want – It’s a small world

9. Be Creative in Resource Join – Imagination is the only resource to run out of

10. Learn to Live with Others – You never go at it alone anymore.


..Thank You and Good Day..

e-business model analysis: a relational-structural view sunghyun juhn, ph.d., professor and dean...

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