Business Model


Historic Examples

Fall of Blockbuster, 2010

The rise of online streaming and digital downloads crushed the physical movie/game rental market.


The business model covers the operational structure of the business, its role in the market between customer/supplier/partner relationships, its monetization strategy, and transition plan for the future.

In order to build and run a business you need a complete understanding of its general design, including R&D, operations, accounting, sales, and customer support. The strength of each department depends on its size and individual skills. Early start-ups and small businesses will require you to take on as many roles as you capably can and outsource the rest. Finding a good first business partner can be tricky and full of risk. Hiring a first employee is slightly less risky and quite costly. As the business grows, the communication structure between departments becomes increasingly important. Maturing companies often size up their human-resources (HR), quality-assurance (QA), and legal departments to protect themselves from internal problems, product/service problems, and lawsuits.

A good business model is able to adapt to changes over time in the industry and economy as a whole. A business might have to start with single-purchase monetization then shift to a subscription structure as the market saturates (ex. professional design software industry). A business might have to integrate vast amounts of automation into their operations in order to maintain a competitive price and convenient experience (ex. shipping industry). A business might have to fundamentally alter or pivot its current product to evolve its value preposition with new technologies (ex. movie/game rental industry).