Organizing Business Knowledge The Mit Process Handbook [Electronic resources] نسخه متنی

8.6 MIT Business Model Archetypes

In addition to the MIT Business Activity Model, the Process Handbook also includes a set of six different business model archetypes that companies can use. Our hypothesis is that all the different business models companies use can be naturally classified into one of these six types or some combination of them. We call these six models the MIT Business Model Archetypes (for a more detailed description of these models and how they were derived, see Herman, Malone, and Weill 2003).

We define a business model as consisting of two parts: (1) what a business does and (2) how the business makes money from its activities. For example, the traditional part of General Motors'business model is to make and sell automobiles and to make money from the difference between the costs of making the cars and their sales prices. We call this business model a Creator. Walmart, by contrast, distributes products they don't make, and makes money from the difference between what they pay for the products and what they sell them for. We call this business model a Distributor.

Figure 8.11 shows the six different models classified according to the two dimensions that distinguish them: what is sold and how much the inputs are transformed. The definitions of the different models are as follows:

Figure 8.11: MIT Business Models Archetypes (from Herman, Malone, and Weill 2003). ''Asset''can be physical, informational, or financial. ''None''means broker never takes ownership of what is sold.

A Creator buys raw materials or components from suppliers and transforms or assembles them to create a product (or service) sold to buyers. The product or service may be physical, informational or financial (e.g., an insurance policy). This business model is common in industries like manufacturing and construction.

A Distributor buys a product and resells the product to someone else. The Distributor may provide additional value by, for example, transporting or repackaging the product, or providing customer service. This business model is common in wholesale and retail trade.

A Broker facilitates sales by matching buyers and sellers. A Broker may also provide advice to either or both parties. Unlike a Distributor, a Broker does not take possession of the product being sold. The Broker receives a fee from the buyer, the seller, or both. Often this fee is in the form of a commission based on a percentage of the sale price or on volume. This business model is common in a number of industries, such as real estate brokers, stockbrokers, and insurance brokers.

A Landlord sells the right to use, but not own, an asset. The asset may be a location (e.g., a hotel room, apartment, or amusement park), an event (e.g., a concert), or equipment (e.g., a rental car or recording studio). Depending on the kind of asset, the payments by customers may be called ''rent,''''lease,''''admission,''or other similar terms. This business model is common in industries like real estate rental and leasing, accommodation, arts, entertainment, and recreation.

A Contractor sells a service provided primarily by people, such as consulting, construction, education, personal care, and healthcare. Payment is in the form of a fee for service, often (but not always) based on the amount of time the service requires. Most services involve a combination of both people and nonhuman assets, but if the service being sold involves more nonhuman assets than people, the business model is classified as a Landlord rather than a Contractor.

An Attractor attracts people's attention by providing things like television programs or web content and then ''sells''that attention to advertisers. The attractor may devote significant effort to creating or distributing the things that attract attention, but their source of revenue is from the advertisers who pay to deliver a message to the audience that is attracted. This business model is common in radio and television broadcasting, some forms of publishing, and some Internet-based businesses.

Of course, many real businesses include some combination of these six business model archetypes, but our experience so far suggests that these models can be used to classify all the different combinations that exist in reality. In a related project (see Herman, Malone, and Weill 2003), we have so far classified over 500 companies (including over 450 of the Fortune 500) according to the combinations they use of these six business model archetypes. In addition the Process Handbook includes over 200 innovative ebusiness case examples classified according to these categories.

These different business models are included in the Process Handbook as specializations of 'Produce as a business'in a bundle called 'Produce with what business model?'