Emergic: Rajesh Jain's Blog

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HBR on Business Models

May 27th, 2002 · No Comments

The May issue of Harvard Business Review has an article by Joan Magretta on “Why Business Models Matter”. Business models, according to Joan, are “stories that explain how enterprises work”. Creating a new business model is a lot like writing a new story. Joan gives many examples in the article — American Express (Traveller’s Cheques), Walmart, Eastern Exclusives (coupon-based direct marketing) and Dell.

We often mistake business models and strategy. Strategy, explains Joan, takes into account competition. Business models are about making the pieces of a business fit together. In that sense, according to me, putting together a business model is a lot like writing the screenplay for a movie. It takes time, there has to be continuity, the loose ends have to be tied up, and above all, the story has to be great.

Telling a story is what a weblog helps to do well. This has been one of my learnings in the past two weeks of writing the weblog. I am actually thinking aloud the business model of Emergic. It would be good if more entrepreneurs actually did this. It will allow us to learn from each other. It allows us to look back at our decisions and why we made them and then reflect on whether we did the right thing or not. Its like a real-time case study!

Tags: Management

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