How do you innovate your business model? There are a lot of design choices you can make in business model innovation. Where do you start? Which choices to make? Where to stop?

To help you, there are several catalogs of business model design tactics [1] [2]. Each tactic is a possible design decision about your business model. We have integrated these and other [3] [4] [5] [6] tactics and structured them according to the TVE business model template.  The result is available in a freely available white paper.

The core idea of our catalog is this: Given a value proposition, the major decisions to make are about value creation and the profit model. So in addition to value proposition design tactics, there are two kinds of tactics:

• Value creation tactics: Which value creation activity to outsource to a partner and which to automate?
• Profit model tactics: Which profit model to select?

As a hint for what is in the catalog, I briefly discuss these two kinds of tactics.

Value creation tactics

As explained in an earlier blog, product, services and platforms each have their value creation logic.

Value creation activities in each of these logics may be outsourced to partners and/or they may be automated. For example, design may be crowdsourced, production may be undertaken by a joint venture or completely outsourced, etc. There are tactics for sourcing innovation, production, marketing, selling, branding, servicing, and evaluating your offering in your value network. Platforms may outsource governance tasks. All of these are value network tactics, which are a subset of value creation tactics.

In addition, value activities may be automated. Technology drivers here include wireless networking, sensor technology, machine learning, robot technology, 3D printing, drones, and more. Whatever technology is chosen, to exploit this in a value network you need to consider data sharing and process coordination technology across your extended enterprise. All these decisions are technology tactics, which is the second subset of value creation tactics.

Profit model tactics

Value creation tactics must be guided by a profit model. There are many decisions to be made here.

What do you exchange with partners, suppliers and customers: ownership or access to value objects? If access is traded, does the counterparty pay per transaction, per use, per performance level?  Who sets the price? When does payment take place? Do you count on many transactions with a small margin or a few transactions with a high margin? Do you charge the same price to all customer segments? For multisided platforms, is there a money side that you need to subsidize?

These and other decisions determine whether the business model is commercially viable in the long run.

Please join us

Our white paper contains a current list of business model design tactics. We expect more tactics to emerge in the future. If you are aware of other tactics that you think should be included in the catalog, please contact us at contact@thevalueengineers.nl. We will acknowledge the contributors of any addition to the catalog.

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